Farm Policy Facts - News About Farm Policy

Farm Groups Urge Farm Bill Passage; Voice Opposition to Harmful Crop Insurance Amendments

FarmPolicyFacts — Thu, 13 Jun 2013 15:11:38 +0000

Members of the agriculture community applauded the House Committee on Agriculture for moving forward on a five-year farm bill and called for timely action by the full House of Representatives in a letter sent to lawmakers this week.

“Failure to pass a five-year farm bill before the end of September would mean continued uncertainty for farmers, ranchers and their rural communities; it would also mean that American taxpayer would see none of the budget savings achieved,” the letter stated.

To view the letter in its entirety, click here.

In a separate letter, more than 50 national and regional trade associations representing agribusinsesses expressed their support for crop insurance and opposition to amendments that will limit its effectiveness.

“Crop insurance is different than traditional farm policy and any amendments should be cautiously considered,” the letter stated. “ As with other lines of insurance, crop insurance requires a broad pool of participants to function properly. Amendments to arbitrarily cap premium support or assign a means test for support will impact the pool of participants nationwide, both in the near term and longer term.”

The organizations noted that insurance products offered through crop insurance are key to food security, allowing farmers and ranchers to secure operating capital from lenders each year and produce food for a growing world population.

“The Farm Bill approved by the House Agriculture Committee strengthens and enhances crop insurance protection. We urge you and your colleagues to reject amendments that discourage producer participation or undermine private sector delivery,” the letter concluded.

To view this letter in its entirety, click here.

Farm Policy Facts Launches ‘Real Farms, Real Families’ Ad Campaign

FarmPolicyFacts — Wed, 12 Jun 2013 13:01:04 +0000

Farm Policy Facts, a diverse coalition of agricultural organizations dedicating to raising awareness about the important role agriculture plays in our economic recovery and national security, today launched a new ad campaign, “Real Farms, Real Families.”

The ad campaign, which will run during the upcoming Congressional Farm Bill negotiations, will feature real photos taken by farmers and farming advocates illustrating what rural America means to them.

The first advertisement, showcasing a photo taken by Janelle Seedall of Bonneville County, Idaho, debuted today in Roll Call. The photograph is an image of Seedall’s farm taken through the window of her family’s farm vehicle.

“This particular picture was taken soon after we built our home … the piece of land is very dear to us as I know many family farmers understand,” Seedall told Farm Policy Facts when submitting her photo for consideration.

The second advertisement will appear in The National Journal on Thursday. This advertisement will feature a stormy farm horizon shot by Terry O’Donnell that he entitled “Heartland.” The image was taken by O’Donnell during a trip to Iowa.

Said O’Donnell of the photograph: “I photographed for almost an hour, with the tractor and farmer slowly working their way back and forth across the horizon. … At one time the tractor and worker disappeared altogether, and then a pickup truck pulled up beside me, offering help if needed. It turned out to be the farmer himself. After seeing me parked for so long, he thought my car had broken down and was offering help.”

Advertisements featuring these photographs and additional work by Joan Classen (Ayr, Neb.), Kayla Ferris (Dalhart, Texas) and Becky Holmes (Traverse City, MI) are also slated to appear in the Washington Post, The Hill, Financial Times and online at www.thehill.com and http://www.hagstromreport.com.

“These are not actors—they’re real farmers and farm families with important stories to tell,” said former House Agriculture Committee Chairman Larry Combest, who works with the coalition. “We hope that these stories will serve as a reminder of the importance of preserving strong farm policies, not just for these families, but for all of us.

A full compilation of the advertisements will be available on www.farmpolicyfacts.org following the campaign.

Farmers Belong on a Tractor, Not Under the Bus

FarmPolicyFacts — Fri, 07 Jun 2013 16:24:13 +0000

Guest opinion by Mark Gerdes, as appears in Ames Tribune

One of the beauties of life in our great democracy is that spirited debate about important public policies is not only expected, it’s encouraged. One of the intrinsic rules of these discussions, if they are to be productive and fair, is that the policy itself should be scrutinized from every angle without demonizing or castigating the various groups affected by these policies.

In other words, we should be able to discuss education policy without demonizing teachers or impugning the integrity of students. Likewise, we should be able to debate defense policy without bashing soldiers or peace activists. Unfortunately, when it comes to discussions about farm policy — in particular the decision by many farmers to purchase crop insurance — critics have chosen to throw farmers under the bus time and time again instead of debating the policies on their merits.

Last year, we had one of the worst droughts our nation has seen in decades. And while America’s farm families watched their crops shrivel in the fields, some critics said “farmers are praying for drought, not praying for rain.” Another critic said that farmers who purchased crop insurance last summer “were laughing all the way to the bank.” In short, they argued that farmers make more money from collecting a crop insurance check than harvesting a crop, and would prefer to watch their crops wither or livestock die to collect a crop insurance check rather than take the fruits of their labors to market.

As a farmer, I must point out that statements about the integrity and motivation of farmers and their decision to purchase crop insurance demonstrates both incredibly poor math skills as well as a complete lack of understanding about the core values and beliefs of America’s farmers.

Take, for example, the charge that farmers hope their crops will fail so that they can collect a crop insurance check. Critics are quick to point out that more than $17 billion will be paid out to farmers and ranchers who purchased crop insurance for their losses in 2012. The implication here is that the $17 billion is some sort of windfall being bestowed upon farmers by the federal government.

But the math tells a very different story. Insurance policies must first be purchased, and then policy holders must absorb the policy’s deductible after suffering a verifiable loss, before they can collect a single dime. In 2012, farmers paid $4.1 billion out of their own pockets to purchase crop insurance policies. Then, farmers shouldered $12.7 billion in losses as part of their crop insurance policy deductibles. Together, these total about $17 billion.

Thus, if farmers had approximately $17 billion in uninsured losses and premium expenditures out of their own pockets to collect $17 billion in crop insurance indemnities, would they really be “laughing all the way to the bank”?

Of course not. Farmers who purchased crop insurance got enough back from their policies to recover some of their losses, allowing them to, in essence, live to plant yet again next year. Had their crops not withered in the fields, however, they would have had a large crop to sell in a year when commodity prices were at or near record highs. So were they really “praying for drought, not praying for rain”? Of course not.

Finally, let’s look at the notion that after planting a crop or helping a cow have a calf, a farmer would rather watch that crop wither or that calf die than to take it to market and sell it at the end of the season. Besides the fact that this is probably one of the most mean-spirited and slanderous arguments I have ever heard, it shows a complete lack of knowledge of why farmers love their vocation and why most of them hope their children follow in their footsteps.

Farmers like me see ourselves as one of the backbone industries of the nation, living an honest and hard-working life close to the earth, respecting the bounty of nature and working to ensure the continuation of a plentiful and affordable food supply. There is a nurturing sense in the heart of every farmer that seeks to enrich the soil in the pursuit of more and better crops every year. Planting something in hopes of watching it die is simply not in our nature.

All the name-calling in the world will not change the fact that over the last decade, there has been a growing consensus among farmers, the financial community and members of Congress from both sides of the aisle that crop insurance is the risk management tool of choice — one that helps farmers manage risk while ensuring taxpayers that if the bottom falls out, they won’t get stuck picking up the tab by themselves.

Mark Gerdes, a fourth-generation farmer, raises corn, soybeans and cattle on 2,800 acres in Aredale, Iowa.

America’s Farmers Rolling in The Dough? Now That’s Rich

FarmPolicyFacts — Tue, 04 Jun 2013 16:48:04 +0000

by Tonya Allen

As Farm Bill negotiations continue, opponents of farm policy are again ratcheting up the rhetoric about all of the “rich and famous farmers” in America that are rolling in the dough.

It might make for a nice sound bite, but it’s hardly the truth.

There’s a “thin green line” of only 210,000 full-time U.S. farms that produce 80 percent of our food and fiber. These are the big, rich agribusinesses that farm opponents are talking about.

Virtually all of these farms are family enterprises facing tight margins to feed more and more consumers. In fact, for every dollar spent on food, farmers receive less than 12 cents for the raw products.

These family farms also brave exceptional risks unique to agriculture — from floods, to droughts, to late freezes to unexpected drops in commodity prices as crops come to harvest.

Hardly a recipe for riches.

As for the “famous” farmers, Farm Policy Facts (FPF) has been monitoring and debunking these outlandish attacks on rural America since 2007. But groups like the Environmental Working Group (EWG) continue to spin complicated webs of half-truths to garner media headlines.

Just this week, for example, the Heritage Foundation parroted the results of EWG’s “farm subsidy database,” which includes a number of “celebrity recipients.” What is rarely mentioned when this database is frequently trotted out is that most of these recipients are collecting conservation payments — not payments for agricultural production.

To put it another way: Beverly Hills residents aren’t out plowing fields, but they are collecting environmental subsidies, which EWG ironically supports.

For years, EWG has added years and farmers together to distort figures and make farm policy costs sound more expensive and egregious. EWG ignores the funding cuts made to farm policy while other federal policies continue to grow. And EWG still ignores the foreign farm subsidies used by some of the world’s biggest polluters to rapidly expand production.

Now, EWG has set its sights on crop insurance, and its tactics are just more of the same.

Last summer, EWG claimed that farmers were “praying for drought, not praying for rain,” a statement that is a clear reflection of EWG’s lack of understanding of the farm community and rural economy and its unwillingness to learn more about it.

The fact is, farmers had insurance deductibles so they shouldered at least $12.7 billion in losses before they collected a single check from their insurance companies. On top of that, farmers paid $4.1 billion out of their own pockets to purchase those insurance policies.

Not exactly “laughing all the way to the bank.”

National Crop Insurance Services president Tom Zacharias responded to EWG’s claim in an op-ed in The Hill earlier this year:

“While opponents of crop insurance criticize a policy that has been embraced by farmers, farm groups, bankers and politicians of all political stripes, it is noteworthy that critics have conveniently glossed over the fact that this policy ensures that taxpayers are never stuck with the whole tab, as they were in the era of ad hoc disaster assistance, and they can rest assured that the food production system is financially stable.”

It’s really no surprise that EWG has been so relentless in its attacks, considering its close ties to Brazil, a country that has the most to gain from dismantling U.S. farm policy and weakening its biggest competitor on the global stage.

But EWG isn’t the only one attacking our farm safety net. For-hire university economists have joined the chorus, making outrageous and, quite frankly, unprofessional claims, going so far as to compare farmers to cheap drunks at an open bar and claim that the USDA should be dismantled and turned into a museum for D.C. tourists.

We can’t expect these vocal farm policy opponents to change their tune since they are singing for their supper, but the rest of us have a responsibility to start asking them some tough questions, such as: who is funding you, how much are they giving, and how does that money figure into the public policy positions that you take?

Analysis of NTE and SPS Reports Reveals Uneven Playing Field for U.S. Ag Exporters

FarmPolicyFacts — Thu, 30 May 2013 13:24:58 +0000

A new comprehensive analysis of the recently released National Trade Estimates (NTE) and Sanitary and Phyto-Sanitary (SPS) reports show an international playing field sharply tilted against U.S. producers.

The analysis, authored by veteran trade advisor and former Assistant U.S. Trade Representative Don Phillips, details the many barriers and obstacles currently facing U.S. exporters (both tariff and non-tariff).

“This reality needs to be taken into account as Congress debates the next Farm Bill. To abandon the modest safety net provided to U.S. farmers under these conditions would amount to unilateral disarmament, a policy which has never proved wise,” Phillips concludes.

To access the analysis, click here.

Durbin Amendment Would Increase Farmer Premiums by 45%

FarmPolicyFacts — Thu, 23 May 2013 16:32:35 +0000

On the issue of means testing in crop insurance, the devil is certainly in the details. But in order to actually find that devil, all you need is a calculator.

Take, for example, the introductory remarks on the Senate floor by Sen. Dick Durbin (D-IL), who in the context of his amendment to means test crop insurance, inaccurately stated that farmers who were flagged by the amendment for making too much money or having too large of an operation would see a small, 15 percent increase in their premium.

What the Senator was actually describing would be a 15 percentage point reduction on the premium discount, which would result in huge increases in the real cost of farmer premiums. For example, for those farmers who purchase 75 percent coverage, premiums would rise by 37 percent. And the lower the level of coverage purchased by farmers (meaning the higher the deductible the farmer must pay) the higher the increase on the percent of their premiums they have to pay. For example, a farmer who purchases 50 percent coverage will see a 45 percent increase in the premiums he or she pays.

The problem with increasing crop insurance premiums is that it reduces participation in crop insurance, reduces coverage levels that farmers can afford, and drives up the cost of premiums for everyone else purchasing policies, particularly small and medium-size farmers.

Remember that farming is feast or famine. Earnings in one good year must be able to cover not just that year but also perhaps the next year or maybe a successive number of bad years. By increasing premiums on farmers by as much as 45%, we are injuring a farmer’s or rancher’s ability to do this.

Here’s to hoping there are lots of Senators, and staffers, who will do the math and reject this amendment.

Foreign Food Dependence: A History Lesson

FarmPolicyFacts — Tue, 21 May 2013 14:43:49 +0000

by Rene Pastor

It’s hard to imagine food rationing was part of daily life in the United States, especially when you can go into your grocery store of choice and buy everything from a steak to a sack of sugar.

That wasn’t the reality more than 70 years ago during World War II when German U-boats prowled the Atlantic and Japanese carriers came within an ace of achieving supremacy in the Pacific so they could carry out raids on the U.S. West Coast.

Back then, America didn’t have a nationwide domestic sugar industry and the Western States relied on shipments from the Philippines and Hawaii.

But the Japanese conquered the Philippines and ships in Hawaii normally used to ship sugar were needed for the war effort.

The country’s supply of sugar was cut by a third, and sugar was officially rationed in May 1942.

The government’s Office of Price Administration issued 123 million copies of War Ration Book One, which contained stamps people could use to buy sugar. The rationing did not end until supplies were normalized in 1947, two years after the war’s end.

“Sugar was so important and so scarce that it was the first crop on the rationing list and it was the last crop off the rationing list,” Phillip Hayes, spokesperson of the U.S. sugar industry group American Sugar Alliance (ASA), said in an interview with Farm Policy Facts.

The lesson of that conflict became clear – depending on others for food is a recipe for disaster – and it helped establish the modern-day U.S. sugar industry and U.S. sugar policy.

Fast-forward the situation to today.

“There is a movement to once again make America more dependent on subsidized foreign sugar suppliers by gutting current U.S. policy and threatening domestic production,” said Hayes. “If folks think food scarcity is a thing of the past, just look at Europe.”

After losing a case in the World Trade Organization to top sugar exporters Brazil, Australia and Thailand, the European Union (EU) overhauled its sugar policy in 2006 in favor of foreign suppliers.

Subsidized imports quickly flooded the EU market and drove domestic producers out of business, explained Patrick Chatenay, an economist based in England who once worked for Saint Louis Sucre, France’s second biggest sugar producer.

A study by Chatenay on the topic found that 83 EU sugar mills closed following the policy shift, leading to 120,000 jobs lost. And when worldwide supplies contracted years later and expected imports failed to materialize, Europe didn’t have homegrown supplies to fall back on.

The result, noted Chatenay, was a sugar shortage and a 20 percent price hike for EU consumers on sugar containing products.

“At considerable cost to stakeholders and without any measurable benefit to the consumer, the European Union has thus put at risk the safety of its supply of sugar,” he concluded. “Surely, there are lessons to be pondered here as American policymakers look to decide on the future of the U.S. sugar policy.”

That lesson, explained ASA’s Hayes, is simple. “Keep U.S. policy strong to ensure America isn’t held hostage to Brazil, Mexico and other heavily subsidized producers.”

The thing to remember, sweetener industry officials say, is that sugar is not merely a luxury found in cakes, cookies or chocolate bars. It is a food staple needed in bread, yogurt, cereal and other healthy foods.

“Sugar, whatever its form, is a source of the carbohydrates essential to our health and well-being,” a report by the U.N.’s Food and Agricultural Organization noted.

“It is a sweetening, coloring and bulking agent and a preservative. It can alter boiling and freezing points, affect the flavor and smell of foods, and add bulk to foods,” it said.

Not many Americans are left who can remember first hand the challenges faced during rationing, but Hayes says ASA hopes to send a gentle reminder to lawmakers as they debate the future of farm policy.

Each member of Congress today received a personalized replica of a sugar rationing coupon.

Total Farm Safety Net Spending Drops By Two-Thirds as More Farmers Purchase Crop Insurance

FarmPolicyFacts — Thu, 16 May 2013 13:15:11 +0000

Total government spending on farm safety net programs – including all commodity programs and crop insurance – dropped by two-thirds from fiscal years 2000 to 2012, according to data provided by USDA and the Congressional Budget Office. The reduction took place as spending on commodity programs – including direct, counter-cyclical, loan deficiency and other payments which once represented the lion’s share of safety net spending – has been slowly phased down in favor of crop insurance, which is partially self-funded through farmer premiums and farmer deductibles.

In 2000, nearly $28 billion was spent on commodity programs and less than $3 billion on crop insurance. Over the course of 12 years, the overall amount of spending slowly but consistently fell and commodity spending and crop insurance spending equalized. In 2012, total farm safety net spending was $10 billion, and was split equally between the two.

During the same period, while spending on farm safety net programs dropped precipitously, the value of crop sales more than doubled, from roughly $93 billion in 2000 to nearly $220 billion in 2012. This exponential growth in crop values was cited by the Federal Reserve as one of the brightspots that brought the country out of the long recession, by bolstering rural America as well as giving a strong shot in the arm to U.S. exports.

Moving forward over the next two years, crop insurance spending will be up in 2013, due to the 2012 drought, but still small in comparison to past disasters. Beyond that, USDA projections show spending on commodity programs (even before sequestration and farm bill cuts) will remain flat at $5 billion, while crop insurance spending will decline from the 2013 level. The Farm Bills proposed by both the House and the Senate will cut an additional roughly 10 percent from commodity programs and crop insurance.

As U.S. Farm Bill Negotiations Begin, Brazil Doubling Down On Ag Subsidies

FarmPolicyFacts — Mon, 13 May 2013 16:00:00 +0000

by Tonya Allen

As the United States Congress begins negotiating a new five-year Farm Bill and discussing major spending reductions, Brazil, one of America’s largest competitors in the global marketplace, is doubling down its rate of subsidization.

Brazilian farm subsidies increased two-fold in the past three years, according to the Brazilian government’s own recent report to the World Trade Organization (WTO).

And Brazil isn’t even showing all of its cards.

“These reports illustrate only the specific definitions of ‘subsidies’ or ‘support’ and do not capture many government tools used to boost an industry,” says Patrick Chatenay, a sugar and ethanol expert from the UK-based company ProSunergy who spent months unearthing hidden Brazilian sugar subsidies, and recently made this report available to U.S. lawmakers.

Sugar producers in Brazil alone get $2.5 billion a year in subsidies, his research found.

In addition, Chatenay says, WTO rules allow trade-distorting subsidies in developing countries to amount to 10 percent of agricultural revenues before even being counted against subsidy caps. And in the WTO, Brazil is considered a developing country despite its sophisticated agricultural empire. That’s because the WTO lets countries designate themselves as developing or developed, and Brazil has deemed itself a small startup.

Another category of aid which is largely unaccounted for in Brazil’s WTO bookkeeping is composed of financial and tax debts write-offs.

One example of this was an 81 percent write off of taxes in 2010 for the country’s fifth largest sugar and ethanol company, Guarani, totaling $34 million.

All told, Chatenay estimates $1.5 to $2.6 billion in agricultural loans have been written off, with another $5.9 billion under debt restructuring schemes.

Then there’s the brand-new subsidies. Brazil’s Finance Minister Guido Mantega just announced another massive ethanol industry bailout, with a package of tax cuts and credit breaks that will cost nearly $500 million this year alone. This is unlikely to show up in future support estimates either.

Sounds like Brazil is playing by House rules.

Standing in contrast to this tangled web of hidden subsidies is the United States, which as detailed in the handbook of foreign farm subsidies published by Texas Tech University, ranks low on both the tariff and subsidization scale when compared to its competitors.

Veteran trade advisor and former Assistant U.S. Trade Representative Donald M. Phillips says we are just beginning to realize the magnitude of the spike in the subsidization of agriculture by Brazil and other countries, as highlighted in a 2011 study on the issue by DTB Associates. And this information should serve as a strong argument for the importance of keeping America’s agriculture policies intact as Farm Bill negotiations continue.

“Given the obvious escalation of farm subsidies in Brazil and other emerging countries, often in violation of their WTO commitments, it makes no sense for the U.S. to unilaterally disarm by crippling the safety net programs for U.S. farmers,” Phillips said.

Congress holds the cards. Why gamble with our farm futures?

Brazil and the Anti-Farm Lobby – Strange Bedfellows

FarmPolicyFacts — Tue, 07 May 2013 13:59:38 +0000

by Tonya Allen

The old saying is that politics makes for strange bedfellows.

Case in point: Brazil and U.S. farm policy critics.

It’s really no surprise that these two have danced together time and time again, considering Brazil, more than any other country, has the most to gain from dismantling U.S. farm policy and weakening its biggest competitor on the global stage.

But you might be surprised how far this alliance goes in our own country.

One of Brazil’s most prominent partners of recent years, for example, has been agriculture economist Daniel Sumner. According to a 2004 article in the Washington Post, Sumner, a professor at the University of California at Davis, served as a paid consultant during Brazil’s efforts to use the World Trade Organization (WTO) to attack U.S. cotton policies in the 2000s.

His actions were reviled by farmers across the nation, who understandably couldn’t comprehend why an American economist would want to cozy up with a foreign government intent on gaining a competitive edge over Americans and outsourcing U.S. jobs.

What many didn’t realize is that Sumner – who most recently attacked popular crop insurance policies after last year’s historic drought and suggested eliminating the USDA – has long opposed U.S. farm policies in general. He’s noted that he “sees little rationale for protecting farmers from market forces.”

It’s an ironic stance for Sumner considering Brazil’s well-documented subsidization and market manipulating policies keep such free market forces from ever materializing.

But the irony is even thicker for the Environmental Working Group (EWG), an environmental activist group that teamed with Sumner and Brazil to attack U.S. cotton producers.

According to a March 2005 National Journal article, “Environmental Working Group President Ken Cook … served as a consultant to the Brazilians.” Yes, the same Brazilians who have been skewered by the international community for environmental atrocities.

Hard to believe that environmentalists would team with the very industry criticized for tearing down the rain forests. But Brazilian farming interests and EWG are actually so close that they share the same K Street lobbying shop.

Mehlman Vogel Castagnetti began lobbying for EWG to great fanfare last year, with The Hill reporting that the firm was focusing on commodity policies, crop insurance, and conservation programs on EWG’s behalf.

The firm also represents Brazil’s biggest farming interest, UNICA, otherwise known as the Brazilian Sugarcane Industry Association. UNICA is the predominant force behind the country’s sugar and ethanol industries, and it has paid the lobbying shop $380,000 since the 2008 Farm Bill was passed to influence U.S. policy, according to company disclosures.

Mehlman Vogel Catagnetti had other clients with anti-ethanol agendas during that time as well, including oil interests and the Grocery Manufacturers Association.

The UNICA link stretches beyond K Street into the world of spin, too. PR powerhouse Fleishman-Hillard has represented UNICA for years, and even won awards for their attacks on U.S. ethanol policy and support of Brazil’s sugar industry.

Not surprisingly, the National Confectioners Association (NCA) – the U.S. based lobbying arm for the candy industry, which is bankrolling efforts to dismantle U.S. policy – has paid the same firm more than $1.5 million over the past three years, according to IRS filings.

NCA and Brazilian interests also share lobbyists at the Altrius Group.

Of course, while Brazil and their U.S. allies have been busy tearing down the U.S. farm safety net in the halls of Congress, the Brazilian government has been busy rapidly expanding its own subsidization.

A recent study by an England-based sugar researcher shows more than $2.5 billion a year in sugar subsidies alone are now flowing to Brazilians with the total farm budget in Brazil nearing $70 billion.

U.S. trade experts DTB Associates now predict that Brazil is some $2 billion over its agreed-to WTO subsidy cap. And that was before Brazil announced a new slew of ethanol subsidies just last week.

Will Brazil face penalties at the same WTO where the alliance between Brazil and U.S. farm opponents was first concocted all those years ago? Hard to say, but chances are good Brazil’s U.S. bedfellows won’t make a peep against them.