Commodity Groups Work to Maintain Current Policies03/20/2018
In the frenzied political environment of 2018, the U.S. soybean industry has it pretty good right now.
Soybean prices have risen and are mostly at breakeven or higher and demand remains strong; and soybean farmers want to keep it that way. Actions at the American Soybean Association voting session at Commodity Classic were mostly noncontroversial.
Delegates to the voting session worked on many of the same issues as their corn and wheat colleagues – the Farm Bill, crop insurance, biofuels, infrastructure and trade agreements – as they planned their direction and lobbying efforts going forward.
“Crop insurance and farm bill were probably the two highest priorities,” said Joel Schreurs of Tyler, Minn., and a director on the American Soybean Association board. “We would like crop insurance to stay the same if at all possible, but on the Farm Bill, the only big change is for the election to choose ARC or PLC on a year-by-year basis rather than being locked in the whole time.”
The ability to select Agriculture Risk Coverage or Price Loss Coverage yearly would counterbalance the volatility of the markets that are difficult to forecast over the entire life of a farm bill.
The weaving of crop insurance into the 2014 Farm Bill has complicated things, said Nancy Johnson, executive director of the North Dakota Soybean Growers Association.
“Technically, crop insurance is separate legislation, and yet in the last Farm Bill, a number of things related to crop insurance were included in the Farm Bill,” she said. “There is huge support for retaining crop insurance as is, but now the Farm Bill is going to expire.”
She added that many N.D. farmers use the harvest price option with their crop insurance, and the program is opposed by some outside groups. The N.D. soybean delegates intended to seek an ASA resolution supporting the harvest price option.
A number of states brought forward resolutions related to crop insurance at the March 1 meeting, she said. The final ASA 2018 resolution on crop insurance is “ASA supports the continuation of harvest price option in revenue protection policies while preserving current levels of underwriting premium support.”
While weather is one unknown that requires the use of crop insurance, political wrangling with other countries also necessitates crop insurance and a farm bill safety net.
Schreurs sits on the ASA Trade Policy and International Affairs committee, an area of interest for him at both the state and national level.
“When you have outside forces, i.e. the government working on trade, it’s hampering our trade. In essence, just about all trade wars are built on agriculture. It’s just the way it is. There’s always retaliation,” he said.
From his perspective, new trade agreements might be good, but don’t hurt the current agriculture trade and the relationships that farmers have built with customers overseas.
“The farm bill is coming up yet, and we have high hopes there will be some trade agreement made with Canada and Mexico, because they are the two biggest trading partners we have,” he said.
“There is a lot of meal that comes out of this area that goes to Mexico and many countries in South America,” he added. “That is really important and there is a fair amount of soy oil that goes into South Central America.”
Wheat Growers seek fairness
With work beginning in earnest on the 2018 Farm Bill, wheat farmers want to be certain they have Federal programs in place so they can continue to raise this important crop.
State wheat associations across the U.S. previously met to prioritize their legislative concerns. Leadership brought those items on Feb. 27 to the National Association of Wheat Growers (NAWG) Board of Directors meeting held during Commodity Classic in Anaheim, Calif.
“Everyone is trying to figure out how to get more wheat acres planted,” said Jeff Mertz, North Dakota Grain Growers Association president. Mertz farms near Hurdsfield, N.D., located north of Steele in Wells County, and he attended the NAWG annual meeting.
With the weather being unpredictable, the number one priority for NAWG and the N.D. Grain Growers is crop insurance, he said.
Semi-arid farmlands are not immune from heavy rain events. This can cause quality problems (falling numbers – degree of sprouting) in wheat. Montana, Idaho, Washington State, North Dakota, South Dakota, Minnesota and Michigan have all experienced this loss of quality and crop insurance has not always reflected that lost value.
At the NAWG meeting, the N.D. Grain Growers brought a resolution to allow a 10 percent buy-up for prevented plant insurance provisions. Previously, the Risk Management Agency allowed this 10 percent buy-up that would help pay expenses if the crop was damaged by heavy rains leading to falling numbers.
Currently, the RMA allows only a 5 percent buy-up.
“A lot of people in North Dakota were using it, and they took it off, just because they thought they would save some money; but we used prevented planting as risk protection,” said Mertz. “It is just an option that used to be there, and they took it away, and we’re trying to get it back.”
As large rain events become more common, other states are seeing the value of the prevented planting insurance provision too, he said. Crop insurance has become the backbone of farming.
“In the prior Farm Bill, we gave up direct payments. We took a big hit and saved the country a lot of money. We understand that we have to have our fiscal house in order at the U.S. level too. We all have to give some, but we need a safety net to be strong enough to continue to farm,” he said.
The Administration’s FY 2019 budget calls for cuts to vital Farm Bill programs, including crop insurance, according to a news release from NAWG.
“The Administration’s proposed cuts to key Farm Bill programs are not only detrimental to wheat growers but all farmers across the country,” stated NAWG President and Outlook, Montana farmer Gordon Stoner. “The Farm Bill provides crucial safety net programs that growers need to ensure a safe and abundant food supply. It also provides funding for important programs in conservation, research, and trade that help keep America’s wheat industry productive and competitive on a global scale.”
The FY2019 Budget would establish a $500,000 Adjusted Gross Income (AGI) limitation for crop insurance, commodity, and conservation program eligibility. The proposal also calls for a reduction to the average premium discount in the crop insurance programs, cutting $22.4 billion over 10 years. Further, the Budget caps underwriting gains for crop insurance companies at 12 percent which is $3 billion in cuts over 10 years.
“These cuts to the Farm Bill’s crop insurance programs are simply unacceptable,” continued Stoner. “These programs aren’t hand-outs, but rather they provide a risk management tool for growers who face unforeseeable disasters and allow them to farm another year. Further, the 12 percent cap on underwriting gains prevents crop insurance companies from being able to provide strong policies to growers.”
Another item that was addressed was trade, said Mertz.
NAWG is asking President Donald Trump to re-engage the United States in the Trans-Pacific Partnership. The board members also agreed that doing no harm to the North American Free Trade Agreement was desired.
NAWG also voted for a legislative fix to section 199A. The provision inadvertently grants farmers a larger tax deduction if they sell their commodities to cooperatives vs. independently-owned buyers. Commodity groups are working in unison to ask Congress to pass a solution to Section 199A that provides support for free market competition.
“Various people are working on a fix, and hopefully we can get this into the omnibus bill,” said Mertz.
The organization also supported a waiver for livestock haulers and truckers hauling grain regarding Electronic Logging Devices.
The number one priority remained the need for crop insurance, he said.
“We always knew crop insurance was important in North Dakota, but I think now at the national level they are realizing how important it is,” said Mertz.
Source: Farm & Ranch Guide