Insurance cuts worry farm industry

In a time of national financial stress, Congress is trimming its monetary-assistance programs whenever it can.

America’s crop-insurance industry is the latest business sector to experience insurance cuts – six billion in target crop insurance cuts throughout the next 10 years to be exact.

The 2008 Farm Bill provided funding for crop insurance and permanent disaster relief programs to benefit farmers nationwide. But in February, the Obama administration announced plans to amend the safety-net provisions specified in the Farm Bill.

The Obama administration estimates $2.26 billion can be saved throughout a 10-year period by reducing federal farm payments to "wealthy farmers," while $8 billion can be saved by reforming the crop insurance program to end what it calls "huge windfall profits" for insurance companies, according to a Corn & Soybean Digest article.

Federal crop insurance is sold and serviced by means of private insurance companies. A portion of the premium, as well as the administrative and operating expenses of the private companies, is subsidized by the federal government. The Federal Crop Insurance Corporation re-insures the companies by absorbing some of the losses of the program when indemnities exceed total premiums.

The United States Department of Agriculture released its final Standard Reinsurance Agreement (SRA) contract June 29, outlining the details of the $6 billion cut:

• Lowers the projected long-term return for insurers to about 14.5 percent by modifying the terms under which the Risk Management Association provides re-insurance
• Phases out federal crop subsidies to people with more than $250,000 in adjusted gross income (AGI) from off-farm sources or more than $500,000 in on-farm AGI
• $2 billion will be used to “strengthen successful, targeted risk-management and conservation programs
• $4 billion is intended to reduce the national deficit
• Imposes a cap on commissions at 80 percent of the administrative and operating (A&O) subsidy to carriers under the program and a cap of no more than 100 percent of A&O when profit sharing is included

Insurance companies have 30 days to respond and make technical corrections.

In a letter to members of the Senate Committee on Agriculture, Nutrition and Forestry July 2, Roger Johnson, president of the National Farmers Union (NFU) said:

“The fact that the number of farmers has declined is not a reason to weaken the farm safety net. The population of our country - the people fed by American farmers - continues to grow. We must work together to provide sufficient federal investment in domestic food production.

Since the last farm bill was enacted, many farmers have endured some of the most difficult economic conditions in decades,” said Johnson. “The next farm bill must address the new realities we face: extreme volatility in market prices for commodities, extended periods of extraordinarily high energy costs and the ongoing exodus of young people and job opportunities from our rural areas.”

The National Association of Crop Insurance Agents also wrote to Congress to express its members’ concern about proposed legislation.

“While the farm economy is currently strong, we should be careful to avoid doing anything that could undermine the financial infrastructure of rural America. Although farm prices are generally up, farm input costs have risen even faster in many cases. This makes crop insurance even more important to farmers who need credit in order to plant a crop.”

Individuals may write to his/her respected legislator to offer opinions at http://pianet.capwiz.com/pianet/issues/alert/?alertid=15150501&type=CO.

Do you feel that the USDA should resume its intent to cut funding? Are there other ways to contribute to the national deficit? Do farmers deserve federal safety nets?

*Photo obtained from: http://insurance.yoursfree.biz/crop_insurance.htm

Tree producers getting disaster relief

Crop farmers aren’t the only agricultural producers who are eligible for agricultural assistance.

Because of the Agricultural Disaster Relief Trust Fund, the 2008 Farm Bill opened the door to possible support not just to crop farmers but also to tree farmers across the country.

Thanks to financing provided by the fund, the United States Department of Agriculture (USDA) Farm Service Agency (FSA) created the Tree Assistance Program (TAP). This program provides financial assistance to those orchard and nursery tree growers that must replant or rehabilitate eligible trees, bushes and vines damaged by natural disasters. To be eligible the damage had to occur on or after Jan. 1, 2008 and before Oct. 1, 2011.

"This program helps our orchardists and nursery tree growers replant and get back on their feet after natural disasters," said Tom Vilsack, agriculture secretary.

The tree industry is commonly overlooked. What most people don’t realize is that the fruit and tree-nut industry alone adds an average of $18 billion to the nation’s economy. According to the USDA, the average person consumes about 270.9 pounds of tree-bearing fruit each year.

Recently, the 2008 Farm Bill extended the program to include Christmas tree growers who were previously ineligible under prior legislation.

The Christmas tree industry is larger than most give it credit for. Here are a few facts about Christmas trees that many people do not realize:

• There are roughly 40 million trees sold during the Christmas season in the United States.
• There are about 1 million acres in production for growing Christmas trees.
• The industry is valued at approximately $506 million.
• Christmas tree growing contributes to the economies of all 50 states.
• For every tree harvested two to three seedlings are planted in its place.
• Each acre of trees grown provides daily oxygen for 18 people.

In an executive summary by the Environmental Defense Fund (EDF), the Agriculture Disaster Relief Trust Fund was created with the intent to compensate farmers who have experienced weather-related losses.

According to Vilsack, orchardists and nursery tree growers were eligible to start applying for benefits under the TAP in May of this year.

To be eligible for TAP, producers must have suffered more than a 15 percent death loss because of the natural disaster after adjustment for normal mortality. TAP is a cost-reimbursement program, with payments covering up to 70 percent of replant costs and 50 percent of pruning, removal and other salvaging costs for replacing or salvaging damaged trees.

Eligibility:

• Trees, bushes and vines from which an annual crop is produced for commercial purposes
• Nursery trees include ornamental, fruit, nut and Christmas trees produced for commercial sale
• Trees used for pulp or timber are ineligible

What are your thoughts about the program? Should the USDA offer more relief programs to other areas of agriculture? Should the program include trees used for timber and pulp?

*Photo obtained from: http://www.texaschristmastrees.com/

Biological research advances American agriculture

Industries large and small utilize research and technology to develop and provide goods and services to society. Now, the U.S. agriculture sector can reap more technological benefits resulting from biological research under the direction of the U.S. Department of Agriculture (USDA).

Agriculture research has produced disease testing for livestock, specialty-crop varieties and GPS technology for farm equipment to name a few.

The Agriculture and Food Research Initiative (AFRI), sponsored by USDA and created within the 2008 Farm Bill, established a competitive grant program to provide funding for fundamental and applied research, extension and education in food and agricultural sciences with a focus in six development areas. Grants that emphasize sustainable agriculture are preferred.

Priority Issues for Grant Applications

1. Plant health and production and plant products
2. Animal health and production and animal products
3. Food safety, nutrition and health
4. Renewable energy, natural resources and environment
5. Agriculture systems and technology
6. Agriculture economics and rural communities

"By focusing our resources on achievable and measurable outcomes, USDA's investment in science will help address some of America's – and the world's – intractable problems," said USDA chief scientist and director of USDA's Nation Institute of Food and Agriculture (NIFA) Robert Beachy.

"Today's announcement demonstrates USDA's commitment to supporting research, education and extension to bring about true change in areas like climate change, obesity and bioenergy."

In addition to the six priority issues for grant funding, the 2008 Farm Bill added conventional (classical) plant breeding, conventional (classical) animal breeding, renewable energy, domestic-marketing strategies and rural entrepreneurship as grant focal points.

There are also five designated primary challenge areas around which AFRI is structuring the grant program.

Challenge Areas

1. Keep American agriculture competitive while ending world hunger
2. Improve nutrition and end child obesity
3. Improve food safety for all Americans
4. Secure America’s energy future
5. Mitigate and adapt to climate change

Agriculture Sec. Tom Vilsack allotted $262 million to this effort. State agricultural experiment stations, colleges and universities, university-research foundations, other research institutions and organizations, Federal agencies, national laboratories, private organizations or corporations and individuals are eligible to apply for grants. Grants are awarded on a 10-year basis and some grants are eligible for renewal upon conclusion of the term.

The benefits of research and technology to society cannot be quantified. The USDA has stepped to the plate to motivate the sustainability, efficiency, profitability and development of one of the nation’s most economically providing sectors.

Do you agree that the selected issues and challenge areas should be addressed, or are there other issues? Should more or less money be awarded for research grants? Do you think the research will result in significant technological gains?

*Photo obtained from http://ucommphoto.nmsu.edu/newsphoto/anderson_john.jpg