A Hearing to Review the Efficacy of the Farm Safety Net (June 23, 2021)
Summary
Transcript of "A Hearing to Review the Efficacy of the Farm Safety Net" before the Subcommittee on General Farm Commodities and Risk Management of the Committee on Agriculture, June 23, 2021, Serial No. 117-10, with Chair Cheri Bustos presiding in person and via Webex. Ms. Bustos said the Subcommittee would examine how weather and economic conditions affect farmers and how safety net programs are functioning. Witnesses were Jeff Kirwan of Kirwan Farms, Brian Talley of Talley Farms and Talley Vineyards, Wes Shannon of Shannon Family Farm, Robert Tate of Crop Revenue Consultants and Gary D. Schnitkey of the University of Illinois. At the close the Chair said the testimony would inform work toward the next farm bill and kept the record open for 10 calendar days.
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“A Hearing to Review the Efficacy of the Farm Safety Net (June 23, 2021).”
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[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
A HEARING TO REVIEW THE EFFICACY OF THE FARM SAFETY NET
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
GENERAL FARM COMMODITIES
AND RISK MANAGEMENT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
JUNE 23, 2021
__________
Serial No. 117-10
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-842PDF WASHINGTON : 2022
COMMITTEE ON AGRICULTURE
DAVID SCOTT, Georgia, Chairman
JIM COSTA, California GLENN THOMPSON, Pennsylvania,
JAMES P. McGOVERN, Massachusetts Ranking Minority Member
FILEMON VELA, Texas AUSTIN SCOTT, Georgia
ALMA S. ADAMS, North Carolina, Vice ERIC A. ``RICK'' CRAWFORD,
Chair Arkansas
ABIGAIL DAVIS SPANBERGER, Virginia SCOTT DesJARLAIS, Tennessee
JAHANA HAYES, Connecticut VICKY HARTZLER, Missouri
ANTONIO DELGADO, New York DOUG LaMALFA, California
BOBBY L. RUSH, Illinois RODNEY DAVIS, Illinois
CHELLIE PINGREE, Maine RICK W. ALLEN, Georgia
GREGORIO KILILI CAMACHO SABLAN, DAVID ROUZER, North Carolina
Northern Mariana Islands TRENT KELLY, Mississippi
ANN M. KUSTER, New Hampshire DON BACON, Nebraska
CHERI BUSTOS, Illinois DUSTY JOHNSON, South Dakota
SEAN PATRICK MALONEY, New York JAMES R. BAIRD, Indiana
STACEY E. PLASKETT, Virgin Islands JIM HAGEDORN, Minnesota
TOM O'HALLERAN, Arizona CHRIS JACOBS, New York
SALUD O. CARBAJAL, California TROY BALDERSON, Ohio
RO KHANNA, California MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida TRACEY MANN, Kansas
J. LUIS CORREA, California RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota MARY E. MILLER, Illinois
JOSH HARDER, California BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa KAT CAMMACK, Florida
KIM SCHRIER, Washington MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California JULIA LETLOW, Louisiana
ANN KIRKPATRICK, Arizona
SANFORD D. BISHOP, Jr., Georgia
______
Anne Simmons, Staff Director
Parish Braden, Minority Staff Director
______
Subcommittee on General Farm Commodities and Risk Management
CHERI BUSTOS, Illinois, Chair
ANGIE CRAIG, Minnesota AUSTIN SCOTT, Georgia, Ranking
FILEMON VELA, Texas Minority Member
SALUD O. CARBAJAL, California ERIC A. ``RICK'' CRAWFORD,
TOM O'HALLERAN, Arizona Arkansas
AL LAWSON, Jr., Florida RICK W. ALLEN, Georgia
SANFORD D. BISHOP, Jr., Georgia DAVID ROUZER, North Carolina
TRACEY MANN, Kansas
MARY E. MILLER, Illinois
Joshua Tonsager, Subcommittee Staff Director
(ii)
C O N T E N T S
----------
Page
Bustos, Hon. Cheri, a Representative in Congress from Illinois,
opening statement.............................................. 1
Prepared statement........................................... 2
Scott, Hon. Austin, a Representative in Congress from Georgia,
opening statement.............................................. 3
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 25
Witnesses
Kirwan, Jeff, Owner, Kirwan Farms, New Windor, IL................ 5
Prepared statement........................................... 6
Talley, Brian, President and Chief Executive Officer, Talley
Farms and Talley Vineyards, Arroyo Grande, CA.................. 7
Prepared statement........................................... 8
Shannon, Wayne Earl ``Wes'', farmer, Shannon Family Farm, Tifton,
GA............................................................. 9
Prepared statement........................................... 11
Tate, Robert, Crop Insurance Agent, Crop Revenue Consultants,
Cannon Falls, MN............................................... 12
Prepared statement........................................... 14
Schnitkey, Ph.D., Gary D., Full and Associate Professor,
Department of Agricultural and Consumer Economics, University
of Illinois, Urbana, IL........................................ 19
Prepared statement........................................... 20
A HEARING TO REVIEW THE EFFICACY OF THE FARM SAFETY NET
----------
WEDNESDAY, JUNE 23, 2021
House of Representatives,
Subcommittee on General Farm Commodities and Risk
Management,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 1:12 p.m., in
Room 1300 of the Longworth House Office Building and via Webex,
Hon. Cheri Bustos [Chair of the Subcommittee] presiding.
Members present: Representatives Bustos, Craig, Carbajal,
O'Halleran, Lawson, Bishop, Austin Scott of Georgia, Allen,
Rouzer, Mann, Miller, and Thompson (ex officio).
Staff present: Lyron Blum-Evitts, Prescott Martin III,
Joshua Tonsager, John Konya, Patricia Straughn, Trevor White,
Erin Wilson, and Dana Sandman.
OPENING STATEMENT OF HON. CHERI BUSTOS, A REPRESENTATIVE IN
CONGRESS FROM ILLINOIS
The Chair. This hearing of the Subcommittee on General Farm
Commodities and Risk Management entitled, A Hearing to Review
the Efficacy of the Farm Safety Net, will come to order.
Welcome, and thank you for joining today's hearing. After brief
opening remarks, Members will receive testimony from our
witnesses today, and then the hearing will be open to
questions. Members will be recognized in order of seniority,
alternating between Majority and Minority Members, and in the
order of arrival for those Members who have joined us after the
hearing was called to order. When you are recognized you will
be asked to unmute your microphone, and will have 5 minutes to
ask your question or make a comment. If you are not speaking, I
ask that you remain muted in order to minimize background
noise. In order to get to as many questions as possible, the
timer will stay consistently visible on your screen. In
consultation with the Ranking Member, and pursuant to Rule
XI(e), I want to make Members of the Subcommittee aware that
other Members of the full Committee may join us today.
Thank you to all of our witnesses, and my colleagues, for
joining us here today. I am excited to chair this Subcommittee
this Congress, and to work with my colleagues to dive into how
weather and economic conditions impact our farmers, and how
safety net programs are functioning to help them through tough
times. We have heard time and again how critical crop insurance
is as a risk management tool for farmers, and how necessary
title I farm programs are to address market and production
challenges. We have a great panel of witnesses here today,
including several farmers who will talk about production and
weather conditions in recent years, a crop insurance agent who
will give an overview of how the program works, and an ag
economist who will give us insight on the state of the farm
economy, and considerations for the safety net.
This is an important hearing to get input from you about
how the 2018 Farm Bill programs are working, and to get a
better understanding of what is happening in the countryside.
We are interested to hear more about the considerations given
in signing up for ARC or PLC, and how changes we made to those
programs have worked for growers. And in particular we want to
hear about how crop insurance has kicked in, in times of need.
Building up to this hearing we have held a series of
meetings with stakeholders and have led roundtables with this
Subcommittee to hear Members' priorities, as well as to get
input from national farm organizations. In addition to hearing
from this panel today, we intend to hold additional hearings to
help inform the Subcommittee on the impacts of the dire drought
conditions affecting much of the West, the Upper Great Plains,
and the Midwest, as well as to understand how other severe
weather events this year have affected farmers. The information
we gather from you today, and in future hearings, is critically
important in our work to ensure that help is here when times
are tough, and when disasters strike.
[The prepared statement of Mrs. Bustos follows:]
Prepared Statement of Hon. Cheri Bustos, a Representative in Congress
from Illinois
Thank you to all the witnesses and my colleagues for joining us
here today.
I am excited to chair this Subcommittee this Congress and to work
with my colleagues to dive into how weather and economic conditions
impact our farmers and how safety net programs are functioning to help
them through tough times.
We have heard time and again how critical crop insurance is as a
risk management tool for farmers, and how necessary title I farm
programs are to address market and production challenges.
We have a great panel of witnesses here today, including several
farmers who will talk about production and weather conditions in recent
years, a crop insurance agent who will give an overview of how the
program works and an ag economist who will give us insight on the state
of the farm economy and considerations for the safety net.
This is an important hearing to get input from you about how 2018
Farm Bill programs are working and to get a better understanding of
what is happening in the countryside.
We are interested to hear more about the considerations given in
signing up to ARC or PLC, and how changes we made to those programs
have worked for growers. And in particular, we want to hear about how
crop insurance has kicked in, in times of need.
Building up to this hearing, I've held a series of meetings with
stakeholders and have led roundtables with this Subcommittee to hear
Members' priorities as well as to get input from national farm
organizations.
In addition to hearing from this panel today, we intend to hold
additional hearings to help inform this Subcommittee on the impacts of
the dire drought conditions affecting much of the West, Upper Great
Plains, and Midwest, as well as to understand how other severe weather
events this year have affected farmers.
The information we gather from you today and in future hearings is
critically important in our work to ensure that help is there when
times are tough and when disasters strike.
I'd now like to welcome the distinguished Ranking Member, the
gentleman from Georgia, Mr. Austin Scott, for any opening remarks he
would like to give.
The Chair. I would now like to welcome the distinguished
Ranking Member, the gentleman from Georgia, Mr. Austin Scott,
for any opening remarks he would like to give.
Mr. Austin Scott of Georgia. Thank you, Chair Bustos. This
is an extremely important hearing to evaluate the importance of
the farm safety net programs--okay.
The Chair. We are going to take a brief recess. We have
some technical issues, and we will resume as soon as we get
those taken care of.
[Recess.]
The Chair. All right, we will come back to order. At this
point I would like to welcome the distinguished Ranking Member,
the gentleman from Georgia, Mr. Austin Scott, for any opening
remarks he would like to give.
OPENING STATEMENT OF HON. AUSTIN SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
Mr. Austin Scott of Georgia. Yes. Thank you, Chair Bustos.
I will try to move pretty quick so we can get back on time
after the technical difficulties. This is an extremely
important hearing to talk about the farm safety nets from the
last farm bill, and changes that can be made as we work into
the new farm bill. Certainly in my state, the State of Georgia,
after Hurricane Michael we saw the shortcomings of the crop
insurance program. We have heard a lot about the NAP Program,
the Noninsured Crop Disaster Assistance Program, and changes
that can be made there, and look forward to hearing the
testimony from the farmers on the ground about their
recommendations, and how we create a better safety net for our
producers that are important to the food supply of all
Americans.
A couple of things that I would like to mention.
Maintaining a stable and reliable safety net for these farmers
in the event of natural disasters, or in the event of a
crippled economy, or collapse in economy prices, need to be
addressed in the farm bill. The other issue, Communist China.
In the last decade alone, the Chinese Government has wreaked
havoc on markets for cotton, sorghum, rice, wheat, corn, and,
of course, soybeans. Their actions in the markets this past
week are indicative of who they are as a bad trade partner. I
also have significant concerns about the Chinese ownership of
the input, and suppliers of our food processing, and look
forward to hearing from the producers on the ground about how,
as we push forward into the farm bill we use not only the USDA
but the Commodity Futures Trading Commission to protect our
producers from unfair practices of foreign adversaries. With
that, I yield back.
The Chair. Thank you, Mr. Scott. The chair would request
that other Members submit their opening statements for the
record so witnesses may begin their testimony, and to ensure
that there is ample time for questions. I am pleased to welcome
such a distinguished panel of witnesses to our hearing today.
Our witnesses bring to our hearing a wide range of experience
and expertise, and I thank them for joining.
Our first witness today is Mr. Jeff Kirwan. Jeff is a
leading edge corn and soybean farmer from the Congressional
district that I serve in west central Illinois. I have known
him for several years, and I have appreciated the input he has
provided me in serving on the Farm Profitability Task Force on
my Ag Advisory Committee. He is a forward-thinker in his use of
new technology and his business management skills to enhance
farm productivity. We appreciate your willingness, Jeff, to
appear before us today, and we look forward to your testimony.
To introduce our second witness, I am pleased to yield to
our colleague on the Subcommittee, the distinguished gentleman
from California, Representative Salud Carbajal.
Mr. Carbajal. Thank you, Chair Bustos. It is an honor for
me to welcome a constituent of mine from the Central Coast of
California to testify before our Subcommittee today. Brian
Talley is the CEO of Talley Farms and Talley Vineyards in my
district. He is a third generation farmer, and second
generation winegrower, who was born and raised in Arroyo
Grande, California, and began his career in the family
business, harvesting vegetables when he was 12 years old. Brian
went on to earn degrees from UC Berkeley in History and Natural
Resource Economics. Brian's family farming operation produces
more than 20 different specialty crop commodities, including
vegetables, citrus, avocados, and wine grapes. In addition to
managing his farming operation, Brian also serves as Director
of Farm Credit West. I look forward to Brian's testimony at our
Committee today, and encourage all my colleagues to try all his
excellent wines when you have a chance. Madam Chair, I yield
back.
Mr. Talley. Thank you. Thank you.
The Chair. Thank you, Mr. Carbajal. To introduce our next
witness today, I am pleased to yield to the Ranking Member, the
distinguished gentleman from Georgia, Mr. Scott.
Mr. Austin Scott of Georgia. Thank you, Chair Bustos. It is
my pleasure to introduce my friend and constituent Wes Shannon.
He and his wife Rhonda have been farming with their family in
Tift County, Georgia for 44 years. They have survived the
1980s, the floods, the droughts, the hurricanes, and everything
else since then. They know a tremendous amount, and will be
able to provide a tremendous amount of insight into the
challenges that our farmers face, including transitioning the
farm to the next generation. He is a great American, a great
farmer, a great friend, and so it is my pleasure to introduce
the Committee to Mr. Wes Shannon.
The Chair. Thank you, Mr. Scott. To introduce our fourth
witness, I am pleased to yield to our distinguished colleague
on the Subcommittee, the gentlewoman from Minnesota, Ms. Craig.
Ms. Craig. Thank you so much, Chair Bustos, and the Ranking
Member. I am so pleased to be able to introduce to the
Subcommittee today Mr. Rob Tate. Mr. Tate is a farmer and crop
insurance agent from just outside of Cannon Falls, a great town
in southeastern Minnesota. Mr. Tate has worked as a crop
insurance agent and crop revenue consultant in Cannon Falls for
the past 16 years. He is also a farmer, growing corn and
soybeans on his fifth generation family farm. Mr. Tate's
comprehensive ag background gives him unique and comprehensive
insight into issues facing our farmers today, especially when
it comes to the importance of crop insurance and a strong farm
safety net. In addition to farming, working as a crop insurance
agent, and advising farmers in his community, he also serves on
the Board of the Minnesota Corn Growers' Association, and on
various civic boards in our community. Mr. Tate and his wife
Kelly have two sons. Thank you, Mr. Tate, for your work in
southeast Minnesota, and for taking the time to share your
thoughts with us today, taking the time to share your thoughts
with me on what we should be doing here in Congress. And with
that, Chair Bustos, thank you again for inviting Mr. Tate to
testify before the Subcommittee today, and I yield back.
The Chair. Thank you, Congresswoman Craig. Our fifth and
final witness is Dr. Gary Schnitkey. I am honored that we will
be able to hear from Dr. Schnitkey today. He is well-renowned
in the farm policy world for his analysis and his insights. He
is a Professor in the Department of Agriculture and Consumer
Economics at the University of Illinois. Much of his work is
focused on analyzing the profitability of farms and helping
farmers to mitigate risk. He has developed tools to help
farmers select commodity programs and crop insurance options,
and he writes the weekly Farm Economics article, which appears
every week on the farmdoc Daily website. Dr. Schnitkey, thank
you for agreeing to join us today, and to share your insights.
So welcome to all of our witnesses. We will now proceed to
hearing your testimony. You will each have 5 minutes. The timer
should be visible to you on your screen, and will count down to
zero, at which point your time has expired. We will start with
Jeff Kirwan. Mr. Kirwan, please begin when you are ready.
STATEMENT OF JEFF KIRWAN, OWNER, KIRWAN FARMS, NEW WINDSOR, IL
Mr. Kirwan. Good afternoon, and thank you, Madam Chair
Bustos, Ranking Member Scott, and everyone on the Committee. I
am Jeff Kirwan, a corn and soybean farmer from New Windsor,
Illinois that is about 20 miles south of the Quad Cities, and
about 25 miles east of the Mississippi River. I can tell you
that the last 3 years have posed a series of major challenges
for me, my neighbors, and for farmers across the country. Many
of us are still working through those challenges and trying to
process what they mean for our industry. In 2018, the previous
Administration launched a trade war with China, causing prices
of soybeans to fall dramatically, before they rebounded. In
2019, we witnessed heavy rains and flooding across much of
Illinois and the Midwest, causing planting delays, late
harvests, grain quality, and storage issues.
Then came 2020, a once in a lifetime pandemic that
disrupted the ag supply chains across the country in a way that
we have never witnessed. COVID wreaked economic havoc on our
industry. Add to that a derecho that caused $4 billion in
damages to Iowa farms, and millions of dollars' worth of damage
on our side of the river. Never in recent memory, nor in my
farming career, has agriculture become so reliant for such an
extended period on emergency assistance. While we might not
always express it, farmers greatly appreciate the efforts that
Congress and the USDA over the past 3 years have done to
address the magnitude and cumulative impact caused by each of
these natural and economic disasters.
Crop insurance is a cornerstone of my operation. Our
ability to market our grain, manage our risks, and financially
survive depends on crop insurance. Hundreds of thousands of
dollars are invested in a growing crop that can be wiped out in
one weather event, and there are broader impacts on the ag
economy. Considering what farmers spend on ag inputs,
machinery, equipment, and crop protection, we must be
successful for everyone else. That is why crop insurance is so
critical for our entire industry.
On top of crop insurance, looking at the recent past,
whether it was CFAP, WHIP+, or Market Facilitation Program
payments, the timely emergency assistance that you and the USDA
provided allowed farmers like me to meet the challenges, pay
our bills, and continue to produce. Through it all, the farm
safety net, ARC/PLC, also played a key role in keeping farmers
afloat. But in the absence of ad hoc disaster assistance, there
is no question that those programs, and the timing of payments,
were simply not designed to address extraordinary economic and
weather-related disasters. There needs to be a review of these
programs, and farm organizations need to be part of that
conversation.
The big picture of the last 3 years has demonstrated that
the farm safety net, farm programs, and crop insurance
performed well, but the recent past has also clearly revealed
that the size of the Commodity Credit Corporation has neither
kept up with inflation, nor the potential for more frequent
natural disasters on major production disruptions. As we move
forward as an industry, that is something that we must be
taking into account. Illinois farmers have been talking about
the potential for participating in voluntary carbon markets. We
are considering what types of government programs exist, and we
could develop to incentivize soil carbon and reward producers
with a demonstrated track record of soil health practices that
sequester carbon. That policy discussion has also highlighted
what many farmers consider to be a shortage of NRCS technical
assistance.
Finally, USDA's recent announcement creating a Pandemic
Cover Crop Program is welcomed by my fellow Illinois producers,
many of whom have taken advantage of our $5 per acre crop
insurance discount offered the last 2 years by the Illinois
Department of Ag. I would like to thank the Chair, the Ranking
Member, and Committee for the opportunity to testify, and I
look forward to your questions. Thank you.
[The prepared statement of Mr. Kirwan follows:]
Prepared Statement of Jeff Kirwan, Owner, Kirwan Farms, New Windor, IL
I'm Jeff Kirwan, a corn and soybean farmer from New Windsor,
Illinois--that's about 20 miles south of the Quad Cities and about 25
miles east of the Mississippi River.
I can tell you the last 3 years have posed a series of major
challenges for me, my neighbors, and for farmers across our country.
Many of us are still working through those challenges and trying to
process what they mean for our industry.
In 2018, the previous Administration launched a trade war with
China causing prices of soybeans to fall dramatically before they
rebounded. 2019 witnessed heavy rains and flooding across much of
Illinois and the Midwest causing planting delays, late harvests, and
grain quality and storage issues.
Then came 2020, and a once-in-a-century pandemic that disrupted
agricultural supply chains across the country in a way we've never
witnessed. COVID wreaked additional economic havoc on our industry. Add
to that, a derecho that caused $4 billion in damage to Iowa farms and
of millions of dollars' worth of damage on our side of the river.
Never in recent memory--nor in my farming career--has agriculture
become so reliant for such an extended period on emergency assistance.
While we might not always express it, farmers greatly appreciate the
efforts of Congress and USDA over the past 3 years to address the
magnitude and cumulative impact caused by each of these natural and
economic disasters.
Crop insurance is the cornerstone of my operation. Our ability to
market our grain, manage risk, and financially survive depends on crop
insurance. Hundreds of thousands of dollars invested in a growing crop
can be wiped out in one weather event. And there are broader impacts on
the ag economy. Considering what farmers spend on ag inputs, machinery,
equipment, and crop protection, we must succeed for the entire
industry. That why crop insurance is so critical.
On top of crop insurance, looking at the recent past, whether it
was CFAP, WHIP+, or Market Facilitation Program payments, the timely
emergency assistance that you and USDA provided allowed farmers like me
to meet each of these challenges, pay our bills and continue producing.
Through it all, the farm safety net--ARC-PLC--also played a role in
keeping farmers afloat. But in the absence of ad hoc disaster
assistance, there's no question those programs--and the timing of
payments--were simply not designed to address extraordinary economic
and weather-related disasters. There needs to be a review of these
programs, and farm organizations must be part of that conversation.
Big picture--these last 3 years have demonstrated that the farm
safety net--farm programs and crop insurance--performed well as it
could. But the recent past has also clearly revealed that the size of
the Commodity Credit Corporation has neither kept up with inflation nor
with the frequency of natural disasters and major production
disruptions. As we move forward as an industry, that's something that
must be taken into account.
In Illinois, farmers have been talking about the potential for
participating in voluntary carbon markets. We're considering what types
of government programs exist or could be developed to incentive soil
carbon and reward producers with a demonstrated track record of soil
health practices that sequester carbon. That policy discussion has also
highlighted what many farmers consider to be a shortage of NRCS
technical assistance.
Finally, USDA's recent announcement creating a pandemic cover crop
program is welcomed by my fellow Illinois producers, many of whom have
taken advantage of $5 per acre crop insurance discounts offered over
the last 2 years by Illinois Department of Agriculture.
I'd like to thank the Chair and the committee for the opportunity
to testify and look forward to your questions.
The Chair. Thank you, Mr. Kirwan. Mr. Talley, please begin
when you are ready.
STATEMENT OF BRIAN TALLEY, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, TALLEY FARMS AND TALLEY
VINEYARDS, ARROYO GRANDE, CA
Mr. Talley. Madam Chair, and Members of the Committee,
thank you very much for the opportunity to speak to you today.
I have participated in the Federal Crop Insurance Program for
more than 20 years for lemons, avocados, and wine grapes at the
catastrophic level, which means that we must suffer a loss of
more than \1/2\ of our crop for a claim to pay off. And during
our history in the program, we have experienced losses, and had
claims paid, in all three of our insured commodities. Some of
these losses have been associated with catastrophic events,
like the historic freeze of 2007 that affected the entire State
of California, and resulted in significant frost damage and
losses in my lemon orchard. More than \1/2\ of my crop either
fell on the ground or was sent to be juiced with almost no
return. Other times these have been more subtle events, such as
in 2017, when El Nino conditions resulted in poor pollination,
and production of less than \1/2\ of my normal avocado crop in
2018. In each of these instances, I have been pleased with the
service that I received to get my claims paid in a timely
manner, and I consider the role of independent crop insurance
agents who provide the service, in terms of collection of
premiums and payment of claims to be one of the strengths of
the crop insurance program, and I hope that there will always
be a role for independent insurance agents in the program.
Moving forward to more recent events, I would like to talk
a little bit about 2020, when much of the West Coast was
impacted by devastating wildfires. I am blessed that the crops
that I grow were largely unaffected, because we had no major
wildfires in San Luis Obispo County. And though the smoke was
nearly unbearable for days on end, we did not experience any
smoke taint in our wines. Other winegrowers were not so
fortunate, and many will be faced with a total loss of the 2020
vintage, or a difficult choice between selling a damaged
product with their name on it, selling off inventory in bulk at
a loss, or simply dumping it down the drain. A leading expert
in the California wine industry, John Moramarco, has estimated
that losses will reach $3.7 billion due to the wildfires of
2020, and that impacts will be felt into the year 2023.
Everyone I talk to in the wine industry assumes that this will
be an ongoing challenge. Scientists and consulting winemakers
are extremely focused on establishing new protocols to treat
smoke-tainted wine, but having dealt with smoke-tainted grapes
in 2015 due to a local wildfire, and comparing notes with
colleagues recently, I can assure you that the technology does
not exist to truly fix smoke-tainted wine.
On a somewhat related note, I would like to share with you
that just a few weeks ago we learned that Nationwide Insurance,
who handles the liability insurance for our companies, made the
decision to exit the California market in many agricultural
sectors. As I understand it, this decision was largely driven
by losses due to wildfires over the past 3 years. And I
recognize that this is not within the purview of this
Committee, but wanted to make you aware of the challenges that
farmers in California face as we move forward. And while I am
not going to dwell on the issues associated with current
drought conditions, which are extreme, I will tell you that the
lack of rainfall and insufficient groundwater are just adding
to the challenges that we face here in California.
In closing, I want to emphasize that I view the Federal
Crop Insurance Program to be a fundamental element of the
safety net that secures the survival of domestic food
production, which I consider to be of critical national
importance for all Americans. I hope that any changes
contemplated to the Federal Crop Insurance Program only serve
to strengthen it. Thank you very much for taking my testimony
today.
[The prepared statement of Mr. Talley follows:]
Prepared Statement of Brian Talley, President and Chief Executive
Officer, Talley Farms and Talley Vineyards, Arroyo Grande, CA
My name is Brian Talley and I am a third generation farmer and
second generation winegrower located in the San Luis Obispo Coast
region of California, Congressional District 24. I operate a
diversified family farming operation that produces more than 20
different commodities, predominantly vegetables, citrus, avocados and
wine.
I have participated in the Federal Crop Insurance Program for more
than 20 years for lemons, avocados and wine grapes at the Catastrophic
level, which means that we must suffer a loss of at least half of our
crop to file a claim. During our history in the program, we have
experienced losses and had claims paid in all three of our insured
commodities. Some of these losses have been associated with
catastrophic events, like the historic freeze of 2007 that affected the
entire state of California and resulted in significant frost damage and
losses in my lemon orchard. More than half of my crop either fell on
the ground or was sent to be juiced, with almost no return. Other
times, these were more subtle events, such as in 2017 when El Nino
conditions resulted in poor pollination and production of less than
half my normal avocado crop in 2018. In each of these instances, I have
been pleased with the service I've received to get my claims paid in a
timely manner. I consider the role of independent crop insurance agents
who provide the service in terms of collection of premiums and payment
of claims to be one of the strengths of the crop insurance program, and
I hope that this will always be the case.
Moving forward to more recent events, I'd like to talk about 2020
when much of the West Coast was impacted by devastating wild fires. I
am blessed that the crops I grow were largely unaffected--we had no
major wild fires in San Luis Obispo County, and though the smoke was
nearly unbearable for days on end, we did not experience any smoke
taint in our wines. Other winegrowers were not so fortunate and many
will be faced with total loss of the 2020 vintage or a difficult choice
between selling a damaged product with their name on it, selling off
inventory in bulk at a loss, or simply dumping it down the drain. A
leading expert in the California Wine Industry, Jon Moramarco, has
estimated that losses will reach $3.7 billion due to the wildfires of
2020, and that impacts will be felt into 2023. Everyone I talk to in
the wine industry assumes that this will be an ongoing challenge.
Scientists and consulting winemakers are extremely focused on
establishing new protocols to treat smoke tainted wine. Having dealt
with smoke tainted grapes in 2015 due to a local wildfire, and
comparing notes with colleagues recently, I can assure you that the
technology does not exist to truly fix smoke tainted wine.
On a somewhat related note, I would like to share with you that
just a few weeks ago we learned that Nationwide Insurance, who handles
the liability insurance for our companies, made the decision to exit
the California market in many agricultural sectors. As I understand it,
this decision was largely driven by losses due to wild fires over the
past 3 years. I recognize that this is not within the purview of this
Committee, but wanted to make you aware of the challenges that farmers
in California face, as we move forward. While I won't dwell on the
issues associated with current drought conditions, I will tell you that
lack of rainfall and insufficient groundwater are adding to these
challenges.
In closing, I want to emphasize that I view the Federal Crop
Insurance Program to be a fundamental element of the safety net that
secures the survival of domestic food production, a matter of critical
national importance for all Americans. I hope that any changes
contemplated to the Federal Crop Insurance Program only serve to
strengthen it.
The Chair. Thank you, Mr. Talley. Mr. Shannon, please begin
when you are ready.
STATEMENT OF WAYNE EARL ``WES'' SHANNON, FARMER, SHANNON FAMILY
FARM, TIFTON, GA
Mr. Shannon. Thank you, Congressman Scott, for that
introduction. Madam Chair, Congressman Bishop, and other
Committee Members, thank you all for the opportunity to be with
you today. I am Wes Shannon, a farmer from Tift County,
Georgia, part of Georgia's 8th Congressional District. My
grandfather was a farmer, my father was a farmer and
agricultural researcher with the University of Georgia.
Throughout my years in the agricultural industry I have been
active in several groups that advocate for farmers, including
the Georgia Peanut Commission, National Peanut Board, Georgia
Farm Bureau, and the National Cotton Council. I have also been
involved with a peanut buying point and a cotton gin.
I began working on the farm before I even graduated high
school. Our farm grew peanuts, corn, soybeans, hogs, and
cattle. It was in those early days on the farm that I realized
the importance of a strong farm safety net. My first experience
with crop failure was in 1977, when our corn crop was
negatively impacted by drought and aflatoxin. Three years
later, in 1980, I took out an operating loan from a local bank,
planted my first peanut crop. Drought and insects caused the
crop to fail. At the end of that first crop year, I had a
negative net worth.
My wife and I were married in 1981. We bought our first
farm in 1985. In 1990 we purchased an adjoining farm that we
had been renting. We lived frugally, with a plan to pay those
mortgages off as soon as possible because we had seen what debt
had done to so many farmers during those tough times. We were
set to have our farms paid for by the time we were 40 years
old, and then came the drought decades of the 1990s. It seemed
as if every year we were dry, except for 1994, when a tropical
storm flooded Albany, Georgia, 40 miles west. A storm in
October of that year, right around peanut harvest time, made
the field so wet harvest was almost impossible.
We were able to pay off both farms, but our carryover debt
by that time was quite large. Then another drought and short
crop in 2000, we had to refinance both our farms. We were
basically starting over again. Had to buy the same farms for
the second time due to natural disasters. We worked through the
first decade of this century as carefully as we could, while
trying to raise a son and daughter, pay for our farms all over
again. Our farms produced pretty well, but there was never
anything extra left over.
I am now in my early 60s, and despite the assistance we
have received from safety net programs, I have had to refinance
our two farms for the third time. Our dream of having our farms
paid for continues to evade us. Our stress and anxiety levels
remain high. I wish I could tell you that our experience is an
isolated case, but it is not. Many farmers across the South
could share similar stories. My family's story, and the stories
of our fellow farmers in the area, are exactly why we need a
very strong safety net. Crop insurance is a vital tool to
farmers, and Congress must not do anything to undermine it. I
do believe the crop insurance program could be improved. I
would like to see a crop insurance program that better covers
our cost of production. If we are making \1/10\ of a percent
profit with a good crop, that is one thing, but if we are
insured at the 75 percent level, we must lose 25 percent before
we can even collect indemnities. We simply do not have that
kind of profit margin.
Title I programs are another very important tool to
farmers. For me, the peanut and seed cotton programs are a
must. These programs should be continued at a level that will
allow me to service my farm debts during tough times.
Increasing references prices or the percentage of base acres on
which farmers can collect would be ideal. Congress should also
maintain the separate payment limit for the peanut program.
Peanuts are a unique, cost-intensive crop which require
equipment that cannot be used for any other purpose on our
farm. I have heard that Chairman David Scott would like to
establish a permanent disaster program. I believe this is an
idea a lot of farmers in our state could get behind. Though a
new program couldn't come at the expense of the existing safety
net, having a standing program in place would remove the
political challenge associated with ad hoc disaster bills, and
hopefully get assistance to where it is needed in a more timely
manner.
Family farms have always been, and hopefully will continue
to be, the backbone of rural economies in this country. It is
our job as farmers to provide food, fiber, and shelter to the
American people, and others across the world. I urge you all to
do everything in your power to help farmers continue the
important work we do. Thank you again, Mr. Scott, for the
invitation and introduction. Madam Chair and Committee Members,
thank you all for the time and attention today. I would be
happy to answer any questions. Thank you.
[The prepared statement of Mr. Shannon follows:]
Prepared Statement of Wayne Earl ``Wes'' Shannon, Farmer, Shannon
Family Farm, Tifton, GA
I am Wayne Earl Shannon (``Wes''), a farmer from Tift County,
Georgia, which is in Georgia's 8th Congressional District. I grew up on
a small farm in the southwest part of Tift County. My grandfather was a
farmer. My father was also a farmer and a researcher at the University
of Georgia's Coastal Plains Experiment Station in Tifton.
Throughout my years in the agriculture industry, I have been active
with several groups that advocate for farmers, including the Georgia
Peanut Commission, the National Peanut Board, Georgia Farm Bureau, and
the National Cotton Council. I have also been involved with peanut
buying points, cotton gins, and PB2 peanut butter.
I began working as a farmer before even graduating from high school
in 1977. On my first farm, we grew peanuts, corn, soybeans, hogs, and
cotton. It was in those early days on the farm that I realized the
importance of a strong farm safety net. My first experience with crop
failure happened in 1977, when our family corn crop was negatively
impacted by a drought. Aflatoxin was also a problem that crop year. In
the end, we could feed the corn to the market hogs but not the breeding
stock.
Three years later, in 1980, I took out an operating loan from a
local bank and planted my first peanut crop. Drought and insects caused
the crop to fail. At the end of my very first crop year, I had a
negative net worth. Loans from the Small Business Administration (SBA)
helped a little, but it took me a few years to get over that initial
setback.
My wife and I were married in 1981, and we bought our first farm in
1985 using owner financing. In 1986, we built a small house on our
farm. We lived frugally with the plan to pay those mortgages off as
soon as possible after seeing what debt had done to so many farmers
during tough times. In 1990, we purchased an adjoining farm that we had
been renting, also using owner financing.
We were set to have our farms paid for by the time we were forty
years old, and then came the drought decade of the 1990s. It seemed as
if every year was dry--except for 1994, when a tropical storm flooded
Albany, Georgia, 40 miles to our west. A storm in October of that year,
right around peanut harvest time, made the fields so wet harvest was
almost impossible. During the storm, the dam on our farm pond broke,
which made matters even worse.
In the end, we were able to pay off both farms that were owner
financed, but our carry over debt was quite large. After another
drought and short crop in 2000, we had to refinance both of our farms.
We were basically starting over again, having to buy the same farms for
a second time due to natural disasters.
We worked through the first decade of this century being as careful
as we could, while trying to raise a son and daughter and pay for our
farms all over again. Our farms produced pretty well over those years
but never seemed to deliver any extra money.
Our son was strongly encouraged to go to college and find an
easier, more stable way to make his living. He graduated high school
and had interest in building farm equipment, which led to him working
at a farm machinery manufacturing company in Tifton following
graduation. He then entered college and had thoughts of pursuing an
engineering degree.
After a few years of college and working at the farm equipment
plant, our son decided he wanted to farm. Things looked promising for
production agriculture at that time, and we worked to expand our
operation to accommodate him. We were in a steady growth pattern until
Hurricane Hermine in 2016, Hurricane Irma in 2017, and Hurricane
Michael in 2018. Three hurricanes, back-to-back-to-back.
Our son and his wife had their first child in 2018, right before
Hurricane Michael hit. He decided to use his education, rather than try
to continue farming, so that he did not have to borrow money for
expenses only to lose it all on account of a natural disaster. We
certainly encouraged him to do that if he could.
I am now in my early sixties, and despite the assistance we
received from the Wildfire Hurricane Indemnity Program (WHIP) and other
safety net programs, I have had to refinance our two farms for a third
time. Our dream of having our farms paid for continues to evade us, and
our stress and anxiety levels remain high. I wish I could tell you all
that our experience is an isolated case, but it is not. Many farmers
across the south could share similar stories.
My family's story--and the stories of our fellow farmers in the
area--are exactly why we need a very strong farm safety net. There are
times when farmers need help repaying debts left over after short
crops--short crops that occur through no fault of the farmer. We cannot
control the weather, and we do what we can to mitigate the risk. But a
there is only so much we can do.
Crop insurance is a vital tool for farmers, and Congress must not
do anything to undermine it. That said, I do believe the crop insurance
program could be improved. I would like to see a crop insurance program
that better covers our cost of production. If we are making a ten
percent profit with a good crop, that is one thing. But, if we are
insured at seventy-five percent, we must lose twenty-five percent
before we can even collect indemnities. We simply do not have that kind
of profit margin.
Title I programs are another very important tool for farmers. For
me, the peanut and seed cotton programs are a must. These programs
should be continued at a level that will allow me to service my debts
and make the necessary payments on my farms, which I have refinanced
for the third time due to natural disasters, not poor management.
Increasing reference prices or the percentage of base acres on which
farmers can collect would be ideal. Congress should also maintain the
separate payment limit for the peanut program, as peanuts are a unique,
cost-intensive crop, which require specialized equipment that cannot be
used for any other purpose on the farm.
I have heard that House Agriculture Committee Chairman David Scott
(D-GA) would like to establish a permanent disaster program. I believe
this is an idea a lot of farmers in my state could get behind, though a
new program should not come at the expense of the existing safety net.
So many of us waited a very long time to receive WHIP assistance after
the hurricanes I mentioned earlier, and even when that assistance
finally arrived, it was insufficient for some. Most farmers found a way
to continue their operations, but many others could not make the math
work and had to shut down their farm. Having a standing program in
place would remove the political challenges associated with ad hoc
disaster bills, and hopefully get assistance to where it is need in a
more timely manner.
Family farms have always been, and hopefully will continue to be,
the backbone of rural economies in this country. It is our job as
farmers to provide food, fiber, and shelter to the American people and
others across the world. I urge you all, as Members of the House
Agriculture Committee, to do everything in your power to help farmers
continue the important work we do!
The Chair. Thank you, Mr. Shannon. Mr. Tate, please begin
when you are ready.
STATEMENT OF ROBERT TATE, CROP INSURANCE AGENT, CROP REVENUE
CONSULTANTS, CANNON FALLS, MN
Mr. Tate. Chair Bustos, Ranking Member Scott, and Members
of the Subcommittee, thank you for holding this hearing today.
My name is Rob Tate. I am a farmer, crop insurance agent, and
crop revenue consultant, which means I work with fellow farmers
to help them develop comprehensive risk management strategies
for their farms. I am also a Board member of the Minnesota Corn
Growers' Association. My wife Kelly is a healthcare worker,
providing palliative care, and we raise two boys, Logan and
Johnathan, just outside of Cannon Falls, Minnesota, where we
are represented by Angie Craig, who I know had something to do
with my invitation to testify today. Thank you, Congresswoman.
I grew up in Farmington, a Twin Cities suburb, but now I live
in Cannon Falls, on a family farm that my ancestors homesteaded
generations ago. We love living and working on our fifth
generation family farm, and as a crop revenue consultant, I
look at the whole financial picture of farmers. I help with,
and today I mainly want to focus on, crop insurance.
A strong farm bill safety net and the ad hoc relief that
you have provided over the past several years have been vital
to the survival of farm families. MFP, CFAP, WHIP+, and the
Pandemic Assistance for Producers Initiative have not been
perfect, but I would not want to imagine what farm country
would look like without them. American agriculture has been in
an economic ditch for about 7 years before we started to re-
emerge earlier this year. Thanks to the rising global demand
and higher commodity prices, it is a relief. The overreaching
theme in my testimony this morning, or, excuse me, this
afternoon, is that Federal crop insurance is an absolute
mainstay for the rural Minnesotan farm families like mine. If
Washington does anything on farm policy, it should first do no
harm to crop insurance. Second, for producers in regions and
crops where the program is not working optimally, I would urge
Congress and USDA to work with producers to address these
situations through the 508(h) process, research and
development, and pilot programs, which are all authorized under
the statute.
Farming is a very risky business, and the stakes keep
getting higher and higher. Crop insurance is not only vital to
producers in recovering from natural disasters, but it is also
essential in securing credit. The best way to help beginning
farmers, socially disadvantaged farmers, or other producers
who, like me in my early years, may not have a lot of capital
at their disposals to help these producers manage their risk
through Federal crop insurance. We mainly grow corn and
soybeans in my area, though we have had a good crop mix in
Minnesota, dairy and livestock as well. For years livestock and
dairy were underserved by crop insurance, but now roughly 35
percent of the milk market in the United States is insured
under crop insurance. Over 700,000 head of cattle are insured
under the LRP, or Livestock Risk Protection. These are two
great precedents about what can be done for underserved
producers using policy development authorities under crop
insurance.
The innovations that built the successful crop insurance
program began in 1980, when Congress turned the sales and
servicing of insurance over to the private-sector. Now an
indemnity is usually received within 30 days of a finalized
claim. This is incredibly efficient, especially when compared
to disaster programs, which can take years. In 1994 and 2000
Congress increased the premium discount for farmers to
encourage producer participation in crop insurance at higher
coverage levels. These innovations achieved great success, and
largely eliminated the need for ad hoc disaster until the first
WHIP Program in 2017. And, finally, another innovation is Dr.
Art Barnaby's development of the revenue coverage products.
These innovations have caused Federal crop insurance to take
off over the last 41 years.
Importantly, there are more premiums paid into the system
than indemnities paid out. Farmers have skin in the game. One
area where there is room for improvement is on deductibles. A
farmer has a deductible on the face of his policy. If he has a
75 percent coverage, he has to lose 25 percent of his crop
before he can collect indemnity beyond that. The other is a
hidden deductible when the APH, the amount that he can insure
based upon past yields, lags behind what they can actually
produce. Trend adjusted yields and yield exclusions are
examples where Congress, RMA, and private-sector development
have worked hard to tackle a problem, but there is still room
for improvement.
As we continue to work to improve crop insurance, I
appreciate Chairman Scott's interest in a standing disaster
program as a potential bridge that complements, rather than
undermines, crop insurance, that does not result in lower crop
insurance participation or coverage levels. Finally, I hope to
steer you away from a couple of things as policymakers. There
have been proposals in the past that would undo every success
of crop insurance and return it to the days of when it did not
work for farmers. Cutting premium discounts, eliminating the
Harvest Price Option, private-sector delivery, undermining
producer confidentiality, and imposing pay limits and AGI
testing are proposals that would be extremely harmful. Thank
you, and I hope my testimony has been helpful, and I look
forward to answering your questions.
[The prepared statement of Mr. Tate follows:]
Prepared Statement of Robert Tate, Crop Insurance Agent, Crop Revenue
Consultants, Cannon Falls, MN
Chair Bustos, Ranking Member Scott, Members of the Subcommittee,
thank you for holding this hearing and for inviting me to testify.
My name is Rob Tate and I am a farmer, a crop insurance agent, and
a crop revenue consultant--which means I work with fellow farmers to
help them develop comprehensive risk management strategies for their
farms.
I am also a new member of the Minnesota Corn Growers Association
Board.
My wife, Kelly, is a full-time health care social worker, providing
palliative care in our area so she has a very demanding job in addition
to her helping on the farm.
Together, we raise two boys, Logan and Johnathan.
We live outside of Cannon Falls, which is a small town in
southeastern Minnesota, about a half hour south of Saint Paul and about
the same distance from the Mississippi River and the Wisconsin border.
We are represented in Congress by Rep. Angie Craig who I know had
something to do with my being invited to testify today.
Thank you, Congresswoman Craig.
I actually grew up in Farmington, which is a suburb of the Twin
Cities.
But, my grandparents owned and operated the family farm that my
ancestors homesteaded generations ago.
I fell in love with the place and, at the age of 16, I actually
planted and harvested my first corn crop by myself when my father was
unable to help due to health issues.
Although I've worked as a lender in the Farm Credit System and now
also work as an agent and crop revenue consultant, my family's first
love is living and working on our fifth-generation family farm.
Our boys are in 4-H and they are excited to show steers and heifers
at the county fair this year now that COVID restrictions have been
relaxed.
So, we're all in on farming and life in a great rural community and
I very much appreciate you holding this hearing on the value of the
farm safety net because it is important to families like mine.
I'm going to largely defer to my fellow producers on the panel to
discuss in more detail the importance of the farm bill's safety net
provisions in order to focus my comments on Federal crop insurance.
As a crop revenue consultant, I do look at the whole financial
picture of the farmers I help in terms of risk management, including
farm bill programs, but I want to go a bit deeper into the weeds on
crop insurance as an agent and as a former lender.
That said, I do want to emphasize that a strong farm bill safety
net is extremely important as has been the ad hoc relief that you have
provided farm families over the past several years to help mitigate the
harsh impacts of trade disruption, the pandemic, and severe natural
disasters affecting many regions of the country.
The Market Facilitation Program, the Coronavirus Food Assistance
Program, the Wildfire and Hurricane Indemnity Program (WHIP) Plus, and
the Pandemic Assistance for Producers may not have been perfect in
their design or implementation, but I would not want to imagine what
farm country would look like in Minnesota or elsewhere without the
help. Farm bills and crop insurance are not designed to handle all of
that at once.
American agriculture had been in an economic ditch for about 7
years before we started to reemerge earlier this year, thanks to rising
global demand and higher commodity prices. It's a welcome relief.
Seven tough years is a lot to dig out from under and our doing so
still hinges on global demand and prices continuing to improve and
Mother Nature's cooperation, but there is a hopefulness in the
countryside despite the growing concerns over the drought gripping many
places, including parts of Minnesota.
With all of this as a backdrop, if I had an overarching theme in my
testimony before you this morning, it is this: Federal crop insurance
has been an absolute mainstay for rural Minnesota and farm families
like mine.
If Washington does anything on farm policy, it should first, do no
harm to crop insurance.
And, second, for producers, regions, or crops where the program is
not working optimally, I would urge Congress and USDA to work to work
with these producers to address those situations through the 508(h)
private policy development and submission process, research and
development, and pilot programs which are all authorized under statute.
Crop insurance is, hands down, the most highly regarded component
of the farm safety net in the estimation of Minnesota farmers.
And the numbers speak for themselves.
In Minnesota, 97 percent of row crops are insured at an average
coverage level of 78 percent.
84 percent of total Minnesota acreage is insured under Federal crop
insurance.
We have about $8 billion in liability protection in force and have
a loss ratio in the state of just 0.57, meaning we are paying more
premium in comparison to the indemnities that we receive--but that is
how insurance is supposed to work.
It's not about receiving a payment--although an indemnity is
certainly appropriate if a farmer suffers a loss--but it is all about
managing risk.
I know it sounds cliche because it's said so often, but farming is
a very risky business--and the stakes just keep on getting higher and
higher.
We long ago reached the point where crop insurance is not only
vital to producers in recovering from a natural disaster, but it is
just as essential in securing credit to plant a crop in the first
place.
This is especially true for farmers who may not have a lot of
capital, like me when I first started out as a beginning farmer in
1991.
The best way to help beginning farmers, socially disadvantaged
farmers, or other producers who, like me in my early years, may not
have a lot of capital at their disposal, is to help these producers
manage their risk through Federal crop insurance.
And if the menu of policies available out there does not address a
unique peril for a producer, a crop, or a region, let's encourage the
development of effective policies to get the job done using the
authorities under the Federal Crop Insurance Act to make it happen.
We are a heavily corn and soybean area in my part of the country,
though we do have a good crop mix in Minnesota and certainly dairy and
livestock, as well.
For years, livestock and dairy were underserved by Federal crop
insurance--partly due to a legal limitation on their participation that
Congress thankfully got rid of recently.
And, now, just a few short years later, about 35 percent of all
milk marketed in the United States is insured under Federal crop
insurance and the number of livestock crop insurance policies is
climbing rapidly, with about 706,000 head of cattle insured under
Livestock Risk Protection so far this year.
Livestock has really never had much in the way of a safety net and
the farm bill safety net for dairy has been all over the board over the
past 25 years and disappointing to many producers.
But, crop insurance has begun to flip the script. Now, livestock
and dairy producers can buy effective crop insurance coverage and, by
doing so, take greater control over their operations in terms of risk
management.
These are two great precedents about what can be done for
underserved producers and commodities using policy development
authorities under the Crop Insurance Act.
The successes in crop insurance have been a long time in the
making.
From 1938 to 1980, the program barley limped along, and was often
mothballed. There were even calls for its repeal.
But, a few events changed all of that and helped build the success
story we have today.
First, in 1980, Congress turned the sales and servicing over to the
private-sector, to companies, agents, and adjustors to deliver
insurance.
This has been huge.
Remember, the first thing a farmer will ask when he gets hit by a
disaster is, when will I receive an indemnity to cover my losses?
The answer to that question under Federal crop insurance is usually
within 30 days of a loss claim being finalized.
When a loss event occurs, the farmer calls the agent. Once the
agent turns in the notice of loss an adjustor is sent to the field, an
adjustment is made, and the loss claim is processed, all in accordance
with the Risk Management Agency's Loss Adjustment Manual.
Now, compare this to the time it has taken producers to receive a
payment under the WHIP+ program.
I know that Chairman David Scott has expressed his concern with
aspects of the WHIP+ program and Ranking Member Austin Scott worked
hard to secure disaster aid funding, only to be disappointed in its
administration.
Producers certainly share a lot of the same frustration. They
cannot count on an ad hoc disaster program being passed. They cannot
secure credit on the possibility that it might be. Once passed, they
cannot count on it being fully funded, nor can they control the details
as it relates to their farming operation.
These shortcomings bring into relief the benefits of crop insurance
where farmers pay a premium for certain protection that is tailored to
their farms which they and their lenders can be confident in. The
uncertainties and inequities of politics are removed.
Now, to be clear, my aim here is not to criticize the Farm Service
Agency and the important work they do, including with respect to WHIP+.
They've had a lot of programs to carry out in addition to the farm
bill and they've had strained conditions due to the pandemic.
But, the simple fact is that after a loss, Federal crop insurance
has quickly delivering indemnities to producers down to a science--
which is one of the reasons why crop insurance was called on to deliver
the so-called ``top up payments'' under the WHIP+ disaster program's
prevented planting provisions.
A second cause for crop insurance's current success is smart,
bipartisan legislation, both in 1994 and again in 2000, where Congress
stepped in to increase the premium discount for farmers to encourage
producers to participate in crop insurance--and at much higher coverage
levels.
The legislation went a long way in achieving both objectives and,
in addition to that, largely eliminated the need for ad hoc disaster
for roughly a decade until the first WHIP program in 2017.
Some might find fault in crop insurance that WHIP and WHIP+ became
necessary, but this fails to take into account that the existence of
property and casualty insurance for homes and businesses has not
totally obviated the need for disaster relief when hurricanes,
wildfires, and some other natural disasters of seemingly Biblical
proportion have hit parts of the country, and seemingly with greater
severity and frequency.
My strong policy preference is to continue to improve and expand
crop insurance with the tools we have to optimize the program for all
producers, but I also understand why the WHIP programs were needed and
appreciate the fact that Congress and USDA worked to ensure that these
programs complemented, rather than undermined crop, insurance.
And, finally, a third factor in crop insurance's success is Dr. Art
Barnaby's development of revenue coverage for producers. That was a
game changer and another example of private-sector innovation to
address a unique peril for farmers.
Again, these innovations have caused Federal crop insurance to take
off over the last 41 years, as measured by any number of metrics,
including acres insured, liability protection in force, and coverage
levels, as the illustrations below indicate.
Crop Insurance Acreage
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Liabilities
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Average Coverage Level
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Actuarially, the program is also sound, with more premiums paid
into the system than indemnities being paid out, as required by law.
Farmers having skin in the game is extremely important and Congress
has done a good job of making certain that premium discounts are enough
to encourage participation and the purchase of higher coverage levels
but not so great as to encourage moral hazard.
However, one area where there may be room for improvement is on the
issue of deductibles.
A farmer has a deductible on the face of his policy. For example,
if the producer insures his crop at a 75 percent coverage level, he has
to lose 25 percent of his crop before he begins to collect an indemnity
on any losses beyond the 25 percent.
However, the farmer often has another, hidden deductible, when his
actual production history (APH)--the amount he can insure based on past
yields--lags behind what he can actually produce because it's not kept
up with technological advances or because of severe, frequent weather
anomalies that depress his APH and therefore what he is able to insure.
Trend adjusted yields and Yield Exclusion are a couple of examples
where Congress, USDA's Risk Management Agency, and private-sector
development have worked to tackle the issue, but there is still some
work to do as evidenced by Chairman David Scott's interest in
establishing a standing disaster program to complement Federal crop
insurance.
The Supplemental Coverage Option--which is essentially an area wide
policy that can ride on top of individual yield protection--was
authorized by Congress back in the 2014 Farm Bill to help in this
situation but the program does not have much allure in Minnesota
because our producers prefer buying coverage that is tailored to their
specific farming operations. This is because their risks may not
entirely align with the risks of an entire area.
In any case, while I do believe that the best thing we can do to
help producers is make for certain they have a crop insurance policy
that works for them, I appreciate the Chairman's interest in a standing
disaster program as a bridge that complements, rather than undermines,
crop insurance, and that does not result in lower crop insurance
participation or coverage levels--and perhaps that even encourages
greater participation and coverage.
Finally, there are a couple of things I would hope to steer you
away from as policymakers.
The first is a number of proposals that have been offered in years
past that would undo every success of Federal crop insurance and return
the program to the days prior to 1980 when the program simply did not
work for anyone: Proposals to cut premium discounts that would put crop
insurance out of reach for farmers. Proposals to eliminate the Harvest
Price Option which is basically replacement cost insurance for farmers,
so farmers are indemnified for the true value of the crop they lose.
Proposals to cut private-sector delivery again when it was cut deeply
back in 2011. Proposals to undermine producer confidentiality.
Proposals to impose pay limits and AGI means testing on crop insurance
under the mistaken notion that this might help small and mid-sized
farmers. These are all really bad ideas. For example, the average size
farm that I serve is 419 acres. If we drive good farmers out of crop
insurance by imposing pay limits or AGI means testing, or otherwise
cause them to reduce their participation, we adversely impact the risk
pool, driving premiums up for producers left in the pool, including my
small and mid-sized producers. That triggers even less participation
and lower coverage levels. That's going backwards, not forward.
The second is avoiding the linkage of crop insurance with climate
change initiatives. Even though agriculture accounts for a small
percentage, only about nine or ten percent, of greenhouse gases, and
agriculture already does a great deal to reduce carbon, through things
like no till, the planting of cover crops, the use of methane
digesters, and through biofuels, farmers are willing to do more to help
sequester and reduce carbon if given the right tools. Voluntary,
incentive-based approaches are what will motivate farmers, as we have
seen under the conservation programs of the farm bill. This approach is
the right track to go down to effectively sequester or reduce carbon.
But, conditioning a producer's eligibility for crop insurance or the
premiums they pay on participation or performance in greenhouse gas
reduction efforts will not work, not because producers are not
interested in helping but because agriculture is so diverse that what
may work for some producers will not work for others. I appreciate that
the Biden Administration has recognized this and called for voluntary,
incentive-based efforts and that a number of Members of Congress have
looked to increased funding for conservation programs as the most
effective means of recruiting innovative farmers to help in
sequestering or reducing carbon.
I hope my testimony has been helpful and I look forward to
answering any questions that you may have.
The Chair. Thank you, Mr. Tate. Dr. Schnitkey, our final
witness for today, please begin when you are ready.
STATEMENT OF GARY D. SCHNITKEY, Ph.D., FULL AND
ASSOCIATE PROFESSOR, DEPARTMENT OF AGRICULTURAL AND CONSUMER
ECONOMICS, UNIVERSITY OF ILLINOIS,
URBANA, IL
Dr. Schnitkey. Chair Bustos, Members of this Subcommittee,
I thank you for the opportunity to address you today. I am a
professor in farm management, and work with farmers in Illinois
and the Midwest as they make their farm management and risk
management decisions. As has been mentioned a number of times,
the last 5 years have been tumultuous in agriculture, with many
detrimental end paths. The trade disputes in 2018 caused
commodity prices to fall, weather and agricultural disasters
occurred, including hurricanes, wildfires, and wet weather. In
the Midwest heavy rainfall in the latter half of 2018 through
2019 caused flooding, and widespread delays, and prevented
planting. In 2020 the coronavirus and its attendant control
measures led to severe supply chain issues, particularly for
livestock and dairy producers.
According to the ERS, the net farm income in the United
States fell from a high of $140 billion in 2012 to an average
of $74 billion from 2016 to 2019. Incomes projected--or
rebounded to a forecast of $123 billion in 2020, but the trade
disputes, weather issues, along with high yields, contributed
to abundant supply, led to these lower incomes. Without the
Federal safety net, farm incomes would have been much lower.
Payments from farm safety net programs and net insurance
payments were 20 percent of net income in 2018, 33 percent in
2019, and 59 percent in 2020. Traditional farm safety net
programs, and that would include the commodity title and crop
insurance programs, did provide support from 2018 to 2020,
however, a great deal of the support came from three additional
sources. First were Congressionally passed disaster
legislation, leading to the WHIP and WHIP+ programs. The
Administration had instituted Market Facilitation Program
payments to counter adverse impacts of trade disputes, and the
CFAP Program to counter COVID-19 control measures. Finally, the
Small Business Administration programs, including the Paycheck
Protection Program and EIDL programs provided support.
One hopes that the worst of the trade disputes and COVID
control measures are behind us, but there is no guarantee of
that. Still, the justification for the MFP and CFAP programs
may have exposed weaknesses to the existing commodity title
programs. Many commodities, including corn and soybeans, had
low prices in recent years, including 2018 and 2019. For
example, market year average prices for soybeans were $8.48 per
bushel in 2018 and $8.57 in 2019, their lowest levels since
2006. In both 2018 and 2019 those soybean prices did not
trigger PLC payments, and ARC payments were at a relatively
modest level of $563 million for soybeans in 2019.
WHIP+ provided relief for many producers, and included
additional payments for crops protected by federally regulated
crop insurance programs and national Noninsured Crop Disaster
Assistance Program. In addition, prevent plant payments in 2019
were increased either 15 or 10 percent, and those additional
payments made prevent plant more equal to the support provided
by the MFP payments for planted crops. These program payments
perhaps signaled needed changes to strengthen existing crop
insurance programs, such that additional ad hoc programs are
less needed in the future.
Revisiting payment rating issues may aid in the process as
well. From 2015 to 2018 the loss ratio on all Federal products
averaged .67, well below target ratios. Corn and soybeans had
lower ratios, respectfully, at .52 and .53. Many commodities
have had higher prices since late summer 2020, and income
looked better in 2021. This more robust outlook differs from
what many, myself included, would have expected last year at
this time, and that just illustrates how situations can change
abruptly in agriculture. The Committee's evaluation of the
efficacy of the programs is timely, as the safety net will
continue to come into play into the future.
[The prepared statement of Dr. Schnitkey follows:]
Prepared Statement of Gary D. Schnitkey, Ph.D., Full and Associate
Professor, Department of Agricultural and Consumer Economics,
University of Illinois, Urbana, IL
Chair Bustos and Members of the Subcommittee on General Farm
Commodities and Risk Management, I thank you for the opportunity to
address this committee on the topic of a ``Review of the Efficacy of
the Farm Safety Net.'' I am a Professor in farm management at the
University of Illinois. I have worked with Illinois and Midwest
farmers, helping those farmers to understand how farm programs impact
the risk situations of their operations and make decisions relative to
the Federal safety net.
The last 5 years have been tumultuous in agriculture, with events
occurring that were detrimental to agriculture. Trade disputes in 2018
caused commodity prices to fall, resulting in low incomes, particularly
for crop farms. Weather and agricultural disaster occurred, including
hurricanes, wildfires, and wet weather. In the Midwest, heavy rainfall
in late the latter half of 2018 through 2019 caused flooding and
widespread delays and prevented planting in 2019. In 2020, the
Coronavirus and its attendant control measures led to severe supply
chain issues, particularly for livestock and dairy producers, initially
leading to sharp declines in prices of agricultural commodities.
According to the Economic Research Service, net farm income U.S.
fell from a high of $140 billion in 2012 to an average of $74 billion
from 2016 to 2019. Incomes rebounded to a forecast of $123 billion in
2020. Trade disputes, weather issues, along high yields contributing to
abundant supply led to these lower incomes. Without the Federal safety
net, farm incomes would have been much lower. Payments for farm safety
net programs and net insurance payments were 20% of net income in 2018,
33% in 2019, and 59% in 2020.
Traditional farm safety net programs--the commodity title and crop
insurance programs--provided support from 2018 to 2020. However, much
of the support came from three additional sources:
1. Congressionally passed disaster legislation leading to the
Wildfire Hurricane Indemnity Program (WHIP) and WHIP+
programs.
2. Administration instituted Market Facilitation Program (MFP) to
counter adverse impacts of trade disputes and the
Coronavirus Food Assistance Program (CFAP) to counter
COVID-19 control measure.
3. Small Business Administration (SBA) programs including the
Paycheck Protection Program (PPP) and Economic Injury
Disaster (EIDL) programs.
One hopes that the worst of the trade disputes and COVID control
measures are behind us. Still, the justification for MFP and CFAP
programs may have exposed weaknesses in the existing commodity title
programs. Many commodities, including corn and soybean, had low prices
in recent years including 2018 and 2019. For example, market year
average (MYA) prices for soybeans were $8.48 per bushel in 2018 and
$8.57 in 2019, their lowest levels since 2006. In both 2018 and 2019,
those soybean prices did not trigger PLC payments. ARC payments were at
a relatively modest level of $563 million for soybeans in 2019.
WHIP+ provided relief for many producers and included additional
payments on crops protected by federally-regulated crop insurance
programs and the Noninsured Disaster Assistance (NAP) program
administered by the Farm Service Agency (FSA). In addition, prevent
plant payments in 2019 were increased either 15% or 10%, additional
payments that offered support that was being provided on planted crops
by MFP. These programs perhaps signal needed changes to existing crop
insurance programs. Revisiting rating issues may aid in this process.
From 2015 to 2018, the loss ratio on all Federal products averaged .67,
well below target ratios. Corn and soybeans had lower loss ratios,
respectively, at .52 and .53. These loss ratios include 2019, which had
relatively large prevent plant payments.
Many commodities have had higher prices since late summer 2020, and
income looks good in 2021. This more robust outlook differs from what
many--me included--would have expected last year at this time,
illustrating how situations can change abruptly in agriculture. The
committee's evaluation of the efficacy of the programs is timely as the
safety net will come into play in the future.
The Chair. Thank you, Dr. Schnitkey. At this time Members
will be recognized for questions in order of seniority,
alternating between Majority and Minority Members. You will be
recognized for 5 minutes each in order to allow us to get to as
many questions as possible. Please keep your microphones muted
until you are recognized in order to minimize background noise.
I will recognize myself for 5 minutes. And just so our
witnesses know, we have been called for votes over on the House
floor, so I will be going in and out of the chair here, and Mr.
Carbajal will be filling in for me. Mr. Scott went over to
vote. He will be back. So, we just want to make sure that our
witnesses knew that.
I am going to start out by saying thank you very much to
all of you for your testimony. It is obviously clear that we
have a lot of agricultural production represented here, and
different impacts and challenges that you have faced in the
recent years. I very much appreciate the perspective that all
of our witnesses have provided for us today, and look forward
to discussing several issues with you. I am going to start out
with my line of questioning to Dr. Schnitkey.
The drought obviously has absolutely ravaged the West
Coast, and the Upper Plains, and now we are starting to see it
creep into the Midwest. In my Congressional district, the upper
four counties in my Congressional district are beginning to see
that impact. I am wondering, Dr. Schnitkey, what are the
measurable economic impacts that we have seen so far, and what
do you see going forward?
Dr. Schnitkey. Yes. Again, there is widespread drought in
the western part of the country, and again we will see those
areas suffer from a yield standpoint. And, we could again see
that particularly now in Iowa, and western Illinois. Hopefully
that will break in the future, but one never knows that. The
attendant yield losses associated with those situations can
result in harm to those operations, and crop insurance will aid
in covering those losses, particularly for commodity-type
agriculture.
The Chair. So what does the participation in crop insurance
look like in the West Coast and the Upper Plains, and how does
that compare to the Midwest?
Dr. Schnitkey. I don't have specific knowledge of what the
West Coast participation would look like. In the Midwest, corn
and soybeans is federally insured right at the 90 percent mark.
My understanding is that that would be less than that in the
western part of the country.
The Chair. Can you talk a little bit, Dr. Schnitkey, about
how the University of Illinois's Farm Program Decision Tool was
developed, and what sort of factors are incorporated into the
recommendations that are made to farmers?
Dr. Schnitkey. Yes. Our tools work across the United
States, and were developed with the aid of funding from the
Federal Office of Chief Economist several farm bills ago now,
but what we do is make projections of prices, at the point of
time at which farmers have to make those decisions, provide
farmers a comparison between PLC and ARC accounting for the
particular crops in every county in the United States. The
farmers, again, obviously projections are what they are, and
are made at a time when we don't know what prices or yields
will be. For example, we made projections prior to the March 15
deadline for the current sign-up year.
Many of the farmers find those useful not only from giving
an expectation of payments for the coming marketing year, but
also for looking at how those items will impact risk. And
obviously that varies over time, as prices change, and ARC-
County benchmark prices change as well as we move through time.
The Chair. All right. Thank you, Dr. Schnitkey. I am going
to switch over to Jeff Kirwan. Jeff, again, thank you very much
for taking the time to be one of our witnesses here today. I
wanted to ask you how the risk management tools, like crop
insurance, have worked for you. And the reason I am asking,
Jeff, is that, as this Subcommittee conducts oversight of the
2018 Farm Bill implementation, and we are also looking to lay
the groundwork for the 2023 Farm Bill, how can we make the
tools work better?
Mr. Kirwan. They are very successful now. I look back at my
farming career, and the importance of crop insurance as I was a
young, undercapitalized farmer. It allowed me access to credit.
It allowed me to market my products while we had an opportunity
to do that at a profitable level. If anything it is to keep
where we are at and build on it, and I would say anything that
we can do to increase the amount of coverage, whether that is
top-up type programs, or the additions to get into those higher
percentages of an insured crop--or insuring the crop would be a
real benefit.
The Chair. All right. Thank you very much again, Jeff. I
really appreciate you being here. I am out of time, so at this
point I will yield to Mr. Rouzer, the gentleman from North
Carolina, for 5 minutes.
Mr. Rouzer. Thank you, Madam Chair, and I appreciate the
panelists for being with us today, although I wish we were all
here in person. I am still trying to get used to all this Zoom.
But hopefully here in the near future things will be back to
normal in Congress.
Southeastern North Carolina, and this is true all across
the country, you have disasters. In southeastern North Carolina
we get hit with hurricanes, early freezes, too much rainfall
just due to a regular thunderstorm that ends up flooding my
district. There are obviously disasters of all types that
happen all over the country. This question is for the entire
panel, basically, or whoever wishes to chime in, but I would
like to know what you think has worked well with the ad hoc
disaster programs that have been put in place, and, granted,
oftentimes they come late in the game. There will be a
disaster, and it takes Congress a while to figure out exactly
how we want to handle it. But in those times when we have put
ad hoc disaster programs in place, whether it is related to the
pandemic, or directly disaster related, I would be curious what
you think has worked well and what you think has been a real
obstacle that Congress just never seems to get right. I will
just throw that open for anyone and everyone that wants to
weigh in.
Dr. Schnitkey. I would weigh in on that, the MFP, the CFAP
Program, and WHIP+ Program did provide needed support during
these last 3 years when things were up in the air. It is often
difficult for farmers and economists--for farmers to make
decisions as those are formulated, and one of those key times
was during the 2019 prevent plant decisions, but the difficulty
in making decisions when you don't know what the programs are
is always something to consider. And, knowing what the policy
is always, in my opinion, a good thing.
Mr. Rouzer. Anybody else have an opinion?
Mr. Shannon. The MFP money moved pretty fast, and that was
one thing we appreciated about that. If we qualified for it, we
got it. It came in a hurry. The WHIP money maybe not so much,
and we might qualify for some money, and then get factored
down, and then the timeliness of it coming. Many farmers had
already made some other arrangement before that WHIP money got
to us. Thank you all for everything you have done for us.
Mr. Talley. If I could, and I don't have as much experience
with crop insurance, as some of my fellow farmers on the panel;
but, I am a big advocate for involving the private-sector. As I
said in my comments, I think independent insurance agents play
a vital role, and for us PPP was a huge benefit, and being able
to deal directly with the bank, or banks to secure that support
was critical. So the private-sector plays an important role.
Mr. Kirwan. So I would chime in that--a little bit to what
Dr. Schnitkey had said, that--I can tell you that in 2019 I was
in an area that was severely affected by the flooding and
drought--or the flooding and prevent plant, and those were very
tough decisions to make, not knowing. And really crop insurance
isn't bound until you plant the crop, so not having the crop
planted, and facing deadlines, and trying to make decisions
with that. Certainty is important, and the faster and easier
that you can make it in helping us through those decisions--and
I sure can't complain through the implementation of some of the
other programs, but that is a stressful time in a farm, when
you have situations like that.
Mr. Tate. I would have to agree with the other panelists
here. Obviously crop insurance serves very well in many of
these cases, but these extra programs have been extremely
beneficial. Me personally, on my farm, I applied for a WHIP
payment, and it took a long time to get that WHIP payment. And,
in fact, it was on my 2018 crop, and I didn't get it paid until
just recently. So there is a long lag time in there, I guess,
would be my only complaint.
Mr. Rouzer. Thank you, Ms. Chairman. My time has expired.
Mr. Carbajal [presiding.] Thank you. Ms. Craig, are you
here? I know you went to go vote. Not hearing from Ms. Craig, I
will recognize myself. Mr. Talley, my questions will be
directed to you.
Over the past decade California has become more prone to
weather extremes, and the Central Coast is no exception. Our
community has felt the climate crisis in a multitude of ways.
More severe droughts, increasing frequency of heat waves, and
record-setting wildfires. Unfortunately, we are likely to see,
and are already seeing, another active year-round wildfire
season and extreme drought conditions. Mr. Talley, could you
talk about current drought conditions, how they are affecting
your operations, and other farmers in California, and what you
expect to happen to the crops if the situation doesn't improve?
Mr. Talley. Well, thank you, Congressman Carbajal, both for
the question, and for the opportunity to talk to folks today.
Speaking of wildfires, right now just to the north of us there
is a fire that is already impacting air quality in the Bay
Area. And, that is one of the real issues with wildfire in the
West now. It is not so much that we fear that our structures
will be burned down, or that kind of thing, at least right
where we are located. But the air quality, which has such
deleterious effects on both people and, in some cases, on the
crops that we grow. And, that is really what my comments were
about with respect to smoke taint in wine.
In terms of the drought, it does appear that we are headed
into--or we have already, according to the National Drought
Monitor, we are in severe drought at this time. And I can tell
you the decisions that we are making right now are about
fallowing ground where we have insufficient groundwater to
basically support the crops that we would normally grow. And so
it is a real challenge, going forward, and I am not quite sure
what else to say other than that.
Mr. Carbajal. Thank you, Mr. Talley. Continuing, wine
grapes are the second largest value crop in my district, which
is why I have continuously advocated for critical disaster
assistance for growers who are impacted by smoke taint. Mr.
Talley, as a producer, can you talk about the impact of smoke
on the quality of grapes, and what it means for the price a
farmer may receive?
Mr. Talley. Well, again, as I pointed out in my testimony,
it is really a wide-ranging effect. And even though we had days
here where we were just completely inundated by smoke, we,
quite frankly, were blessed to have none of our wines actually
affected by smoke taint. Again, wine growers just to the north
of us in Monterey County--I mean, I know people personally who
will have zero revenue from their operations associated with
the 2020 vintage. They either made the decision not to harvest
the crop, or, in some cases, harvested the crop, produced wine
that they then determined was completely unsalable.
And, this is becoming a problem all over the world. I mean,
it started in Australia probably more than a decade ago, and
there are a lot of folks that are putting a lot of effort into
trying to figure out how to cure this problem. And, having
dealt with it once personally, I can tell you that the
remediation of the problem is severe. It requires very invasive
filtration of the wine, and even after we go through that
process, which is also expensive, there is really no guarantee
that what we are going to get is actually a salable product.
And so, again, it is a challenge that we are basically trying
to resolve with technology at this point.
Mr. Carbajal. Mr. Talley, just to continue on that point,
in your testimony you mentioned how scientists are looking to
establish new protocols to treat smoke tainted wine, and I
think you touched on that briefly. Can you further explain why
efforts to treat smoke tainted wine have been unsuccessful?
Mr. Talley. Well, because, again, the only solution that we
have now is this filtration process, and unfortunately it
strips the wine of more of the character that we want than the
deleterious effects.
Mr. Carbajal. Thank you very much, Mr. Talley. I am out of
time, and I will now recognize Ranking Member of our larger
Committee, Mr. G.T. Thompson.
OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA
Mr. Thompson. Well, Mr. Carbajal, thank you so much. I
appreciate it. I want to say thank you to Chair Bustos, and
Ranking Member Scott, and thank you to all of the witnesses
that are here to offer their unique perspectives on the farm
safety net. When I was selected to be Republican leader on the
Agriculture Committee, I made it clear that my number one
priority was to rebuild a robust rural economy, that starts at
the farm gate. If farmers and ranchers can be profitable in the
good years, then our rural communities will thrive.
Unfortunately, the good years seem to be few and far between,
and our producers face risks and challenges that are
unfathomable to most Americans.
Farming has always been a risky enterprise, but it sure
seems to be even more volatile than ever before, whether it be
a natural disaster that can wipe out a crop at a moment's
notice, a foreign government that interferes with a market, or
a pandemic that disrupts the entire supply chain, producers are
in for a constant battle to remain viable. And that is why a
strong safety net is a critical piece of rebuilding a robust
rural economy. Chairman Scott has made several comments about
needing to work on disaster assistance for our producers, and I
agree with him. The past several years have shown us how costly
and inefficient ad hoc assistance can be. Rather than wait for
an Act of Congress, farmers need reliable assistance that only
a standing program can provide, and there is no better example
of a program that responds quickly when needed than crop
insurance. And above all else, we must first do no harm to the
existing safety net.
I have three guiding principles for any potential standing
disaster program. Number one, it must complement, not compete,
with crop insurance. Number two, it should be easy to
implement. And number three, it should be reliable, and respond
quickly, to disaster events. If Chairman Scott is willing to
work within those three principles, I really very much look
forward to working with him to craft the best policy possible.
No Member or single party has ever had a monopoly on good ideas
here in Washington, and working together to achieve a common
goal will undoubtedly render a better outcome.
So while we are on that subject, I was hoping that those of
you that have experience with participating in the WHIP
Disaster Program could provide your brief thoughts on the
effectiveness of that program, and, if continued, how it should
be modified to better meet the needs of your operation? I leave
that open to whatever the witnesses would--might like to weigh
in on that first.
Mr. Tate. If I could speak to that, Ranking Member
Thompson, my personal experience with it on my farm, and even
seeing with some of my insureds, all the data is there on the
WHIP Program to be able to implement that through the crop
insurance industry, maybe a little bit quicker than the folks
at the Farm Service Agency. They have been inundated with a lot
of programs, and have done exceptionally good with that, don't
get me wrong, but they have a lot of other work to be done, and
maybe the crop insurance industry could implement that a little
quicker.
Mr. Thompson. Very good. Thank you. Would any other
witnesses like to weigh in on that? Any experience with the
WHIP Program?
Mr. Shannon. WHIP was pretty important to south Georgia,
especially after Hurricane Michael, but that was the third of
the hurricanes in a row that we had dealt with. And, like some
of the panelists had mentioned, we waited quite a while, months
into years, before we got some of that WHIP money. If we could
get something that is set in stone, that you have a disaster
and you could get some money moving quicker, that would be
wonderful. To the three things you mentioned, yes, yes, yes, we
would love something like that. Hermine in 2016, Irma in 2017,
and Michael in 2018, and after Hurricane Michael in 2018, I
have to say thank you to Congressman Scott and Congressman
Bishop for coming to the table and working on that together in
the bipartisan way that got some money to Georgia that was
definitely needed. If it hadn't been, it would have been
devastating to the rural economy. Thank you all.
Mr. Thompson. Well, I know after working with the Ranking
Member for a number of years, I understand and share his
frustration with relief not being timely. And sometimes, with
the reliability and the delay of it, people, unfortunately, are
out of their farming practices until help arrives. With the few
seconds I have left, any comments or any input from any of the
other witnesses?
Mr. Kirwan. Yes. I would just concur with the fellow from
Minnesota, the fact that the timeliness of it could have been
better, and it was a fairly complex formula, so something
easier and more of a design program would be better.
Mr. Thompson. All right, very good. And, Mr. Chairman, my
time has expired. Thank you so much.
The Chair [presiding.] Thank you, 5 minutes to
Congresswoman Angie Craig from Minnesota.
Ms. Craig. Thank you much, Chair Bustos and Ranking Member
Scott, and thank you, Representative Carbajal, for doing such a
great job in her stead. Thanks so much for calling this hearing
to focus on the farm safety net. It really couldn't come at a
better time as we transition out of the COVID pandemic response
and into what we all hope will be a period of more
predictability for our farmers and producers. Thank you to all
of the testifiers today. It is clear, based on your testimony,
and the conversations I have been having with folks in
southeastern Minnesota, that the farm safety net and specific
risk management tools, like crop insurance, are more important
than ever.
Federal crop insurance has been a success story because it
is actuarially sound, and consistently works for farmers. Its
timelines and parameters are predictable, and it enables
farmers to plan risk management strategies that best suit their
operations. As Mr. Tate mentioned, it has been a vital tool for
him as he helps Minnesota farmers in my district navigate the
intense volatility of these past few years. From beginning
farmers planting their first crop, to farmers like Mr. Tate,
who is planting his 30th, crop insurance is a vital tool.
With that focus in mind, I would like to follow up with
you, Mr. Tate, on a few points I am hoping you can expand on.
First of all, I am hoping you can speak more about revenue
protection. In your testimony you mention that revenue
protection policies had become the most popular crop insurance
policy type, and can offer protection from market price
decreases. However, in years where there are low spring and
fall prices for a commodity, a revenue policy would not trigger
a loss based on price declines. Are there crop insurance
products out there that protect against long periods of low
prices? Would it be helpful if USDA looked into new insurance
products to address this risk?
Mr. Tate. Thank you, Congresswoman Craig. Yes, so the
revenue protection policy is very common in our area. In fact,
I would say, probably, almost, if not 100 percent, probably 95+
percent of my customers have a revenue type protection
insurance product. With that being said, are there some
limitations to that product in the years where the spring price
is low and the fall price is low? Yes, there is. And I think
that is part of the reason where Congress, in the farm bill,
had developed the ARC and PLC Program to deal with the systemic
losses that may happen over multiple years. It would be
beneficial if we could develop something on the Federal crop
side that would deal with those issues as well, and maybe top
up those payments.
The one thing I guess--and I don't mean to jump ahead or
jump around on your question too much, but when we are dealing
with the volatility of the markets, and what has been going on
here, and then also in our area, as you know, we have also
experienced a fair amount of dryness, having the Harvest Price
Option, where we get that protection when prices are higher, is
very important to us as well. So I hope that answers your
question?
Ms. Craig. Rob, thank you so much, that answered my
question, and it also took my second question for you, so maybe
I will just ask you, are there any other--given uncertainty
over weather events, dry season, commodity prices, trade
uncertainty, all of these things, how do you help farmers
navigate the various options they have for managing risk, and
how does crop insurance typically fall within that list?
Mr. Tate. Well, as we have been talking about, crop
insurance provides a predictability to what the income stream
is for the farmers. Having that initial base price--spring
price to set the floor for the minimum amount of coverage is
great, and then when--a lot of the farmers I work with will
sell against that guarantee to help manage the price risk as
well. And so that program has done very well to manage that
risk, and the one area you are pointing out in your first
question is, if we get multiple years of that, can that be
problematic? And yes, it can be, but right now this year, as I
talk to many of my clients, I mean, yes, we know we have some
challenging production issues, but given the backdrop of crop
insurance, and the predictability it provides, most of my
clients feel pretty good about things right now.
Ms. Craig. Well, thank you so much for your work, thank you
all for our testimony, and, with that, Madam Chair, I yield
back.
The Chair. Thank you, Congresswoman. I now recognize the
gentleman from Georgia, Ranking Member Austin Scott.
Mr. Austin Scott of Georgia. I want to ask Mr. Shannon a
question, but I want to first follow up with Mr. Tate, since he
is a crop insurance agent. And my question, Mr. Tate, gets to
production and the average yields. Any suggestions on how we
can do more to help beginning and young farmers, those who are
starting out? And then in years where we have these natural
disasters, like we had with Hurricane Michael, where we have
widespread total losses, suggestions on how we handle that
yield of zero that goes in there? I guess you can put the
county average in there, but if you are a good farmer your
yield is historically significantly higher than the county
average in many cases. Any suggestions on how we deal with
production yields for beginning and young farmers, and in the
cases of the disasters where we have total losses?
Mr. Tate. Yes, actually. We do have ways of dealing with
that, not just on young beginning farmers, but on all
producers, where they can substitute in a T-yield for that
county in those years where you have a widespread loss, and
maybe you have to take a zero in your APH database. That helps
support that coverage. In terms of helping out the young
beginning farmers, we have an additional premium subsidy that
is there, and I have several young farmers that I work with
that have taken advantage of that, and that is been very
helpful to them as well.
Mr. Austin Scott of Georgia. Well, thank you for that. I
guess it is just being insured for the average yield simply
won't, in most cases, cover your cost. Mr. Shannon, you
mentioned the disaster. Ranking Member Thompson took my
question for the most part, but I am glad that you recognized
my colleagues Congressman Bishop, and David Scott, and I. As
you know, the original estimate from USDA was $1 billion. The
estimates that we had from the extension agencies in the state
significantly exceeded what we were able to end up with, with
the $3 billion. Could you speak again to the shortcomings that
you noticed in the WHIP Program, and what we developed in what
we call the WHIP+ Program, and how we could improve it if we
were to make it a permanent program? And do you have any
thoughts--I know that that particular year, especially on our
dryland cotton, our yields were significantly higher than the
averages--on whether or not we should allow a farmer to step up
their coverage based on the crop that is actually above the
ground before it is harvested?
Mr. Shannon. Yes, sir. Starting out with that, timeliness
was the real problem with the WHIP Program. Most folks had made
some other arrangements by the time they got WHIP money. Others
didn't get WHIP money. Maybe had gotten some other assistance
and didn't qualify for it, or they qualified for money that got
factored down and was not there to help. State of Georgia came
through with some loans that helped a lot of folks. That
happened in a very short period of time. Hadn't been for that,
there probably would have been a lot of other guys, farmers,
men and women, families, went out of the farming business, and
it would have terribly affected businesses all over southwest
Georgia.
Anything new? Certainly would be something that--we have
the disaster, and within a short period of time the money is
already moving. We saw some things last year that moved real
well with the market assistance money. It didn't take long to
get out. It got done, it was simple. I think something along
some of those lines would work well. You seem to continue to
burden our FSA offices--or our people working there with more
and more programs that just are complicated. The simpler we can
make it to get the money moving is a good thing.
Mr. Austin Scott of Georgia. So, for people who aren't from
the Southeast, what happened in Georgia with Hurricane Michael,
our state legislature--and correct me on this if I am wrong,
Mr. Shannon--our state legislature actually went into a special
session and created a loan program that actually helped some of
our farmers get through until the payments from the disaster
relief were made available. Is that correct?
Mr. Shannon. That is correct. They went into session, and
within just a few days they had something hammered out. Within
a month or so people were qualifying for it, but now let us
remember this was any of the loan--I have one of those too--
that is being paid back, and has to be paid back.
Mr. Austin Scott of Georgia. My time is about to expire,
but the key aspect of this that I want to make sure people
understand is that farmers have to pay off their notes, their
operating notes, before they are able to borrow the money again
for the next crop year, and so one of the reasons that I
advocate, as Chairman Scott does, for some type of disaster
program, or better crop insurance program, for our farmers is
when these things like Hurricane Michael happen, we need to get
the payments to the farmers significantly, significantly faster
than what happened after Hurricane Michael. And, with that,
Madam Chair, I appreciate you indulging me for the 25 seconds
that I ran over.
The Chair. Thank you, Mr. Scott. I now recognize the
gentleman from Florida, Mr. Lawson.
Mr. Lawson. Thank you, so much, Madam Chair, and to you
Ranking Member Scott for holding this very important hearing.
And I can tell you that there is no doubt, I guess, all of us
know that climate change is threatening our industry for
farmers and ranchers. Sadly, it has--Congressional district
that voters--Congressman Scott. From hurricane and floods, the
challenge that we have had from Hurricane Michael and Irma. I
heard--and I won't try to bring it back again, all of the
situation about the WHIP Program, and how critical it has been
to farmers, but there seemed to be some recommendation that
need to be made--how slow the process is, and hearing about the
state legislature.
Sometimes we think that government has too much
interference on programs and stuff, but I would hate to think,
like, up in Georgia, if it hadn't been for the government
meeting, as Mr. Tate said, to iron out some problem so just
some of the disaster relief money could actually set in. And
this question would be to everyone. The Farm Service Agency,
FSA is essential to agricultural community, especially in the
aftermath of natural disaster. Can you all discuss the ways
that you believe the FSA can improve its response to the
communities that have been affected by natural disaster? And
that is to the whole panel. Mr. Shannon, I think we can start
off with you.
Mr. Shannon. Yes. One thing probably my local office would
like to have was some more help--ladies and gentlemen have been
working overtime as much as possible to get these programs
done, this Quality Loss Assistance Program that they were
working on when they were not supposed to be working maybe, so
to speak. They were not even in the office, but they were still
working.
Some help to some of those offices would be great.
Mr. Lawson. Well, that is a good recommendation. Anyone
else?
Mr. Kirwan. Yes, I definitely would agree. I know our
office was short-staffed through a lot of this, and we have had
a lot of turnover, so anything that we can do to add more staff
to help. And then I would also encourage relationships within
the other agencies in that office at USDA, NRCS and FSA to work
together better to implement these programs.
Mr. Lawson. Anyone else want to respond? That is great.
Mr. Tate. I will make a couple more comments on it. First
off, the FSA office is an area I guess we are all looking
forward to when they can open up and we can physically go into
them again. That will be a good day, when we get the pandemic
behind us. But probably more importantly, when you are talking
about the WHIP Program, I have to think that there is a way to
implement that through the crop insurance program. Most of that
data that is used to calculate it is there. The insurance
industry could certainly help out with that, and take some of
the workload off of FSA.
Mr. Lawson. Okay. That is great. Mr. Tate, I know you are
involved in--you had mentioned in 1938 when we established--
Congress as having the crop insurance program, and the WHIP
Program came in about--maybe 2017. As long as you have been
involved--and I am involved in the insurance business myself,
have you seen any significant improvement in the crop insurance
program, or will you recommend any other significant
improvement?
Mr. Tate. To me, and, of course, it is a little bit because
of my age, but the biggest improvement was the revenue products
that we have. And, I mean, my area is primarily corn and
soybean production, but to me that was a big jump up in terms
of participation, and then also the increased subsidies. Those
two things have really helped out a lot. Obviously, if there
were ways to get higher levels of coverage, I think that would
be great. I think that would be very welcome from the industry,
as well as from the farmers' perspective. So that may be some
areas that could be improved upon.
Mr. Lawson. Okay. Thank you. Madam Chair, I yield back.
The Chair. All right. Thank you very much, Mr. Lawson. So
we are at a point where our Members have gone back to the House
floor to vote. Ranking Member Scott has to go vote right now. I
am going to go ahead and yield another 5 minutes back to myself
and ask some questions, since I am still here. I will have one
more vote back on the House floor, but we will try to manage
this with Members coming in and out. And if, for some reason,
we don't have any other Members come in, I will suspend until
they are back, but it will be no more than probably a few
minutes. But I am going to go ahead and turn back to Mr.
Kirwan, if I could, please.
Mr. Kirwan, you referenced in your testimony the heavy
winds and the flooding that impacted much of Illinois and much
of the Midwest in 2019. That year there was a significant
number of prevented planting acres and related crop insurance
indemnities. In addition to crop insurance, USDA also
implemented a top up payment to prevent plant through the WHIP+
Program. Could you please talk about how implementation of that
top up payment worked from your perspective as a farmer?
Mr. Kirwan. Yes. Basically, because it is at a 55 percent
level, I believe, this has been a couple years now, at about--
our revenue streams in the springtime weren't super high, so we
started looking at having all the inputs on our crop ground,
and all of a sudden the revenue streams that would be generated
through the crop insurance program weren't going to be enough
to cover that, let alone make any kind of money, so we lobbied
pretty hard for that, had conversations with you about the top
up programs, or anything that we could do to generate more
dollars because, at the time that we were making those
decisions in June, we were up against the deadlines. Crop
prices had increased because of the delayed planting, and we
looked at the revenue streams that had increased, and we
weren't able to participate in those because our crop wasn't in
the ground.
So we appreciated those top up payments, and it is probably
something, as you look forward into the crop insurance, how to
capture--whether it is adding--allowing them--that to
participate in the harvest price, to then kind of generate some
sort of an increase in the indemnity to the producer. But the
real conundrum, if you will, was we were sitting there with all
the inputs into the ground, and no crop planted. We are just
waiting to get in that, so I guess that is how it affected me.
The Chair. All right. Thank you for that important
perspective. Jeff, you also talked in your testimony about the
recent announcement from the USDA to provide crop insurance
premium discounts to farmers that planted cover crops for this
crop year, as well as about a program from the Illinois
Department of Agriculture that you identified as a pilot
program. Can you talk a little bit about the role of cover
crops in your operation, and how that pilot program has worked?
Mr. Kirwan. Yes. So we started I believe 2 years ago, and
have been building on that in the state. We offer a $5 an acre
rebate on crop insurance for anyone willing and--that can
actually get on our website and do that from the Department of
Agriculture. Usually that--those funds--we started out with
$300,000, so it doesn't include a lot of acres, but those funds
are usually disseminated within 2 hours at the opening of that
website. But, we are really appreciative, and what has came out
now through you folks is that--the $5 rebate as well on the
crop insurance, which I have signed up on.
And, implementation has been very easy at this point. We
have certified those acres, and hopefully that carries through.
But, we use those quite extensively on our farm, both from a
nutrient management and from a water quality standpoint, and
have really started to work with them.
The Chair. All right. Thank you very much, Jeff. Mr. Allen
from Georgia is back, so at this point I recognize the
gentleman from Georgia for 5 minutes.
Mr. Allen. Okay. Thank you, Madam Chair, for holding this
hearing, and thank you to the witnesses for your valuable
input. American farmers continue to face challenges as they
fight to feed the world. Volatile commodity prices, increased
market consolidation on both ends of the supply chain, unfair
and dishonest trade practices by partner countries, and
continued deficient access to high speed internet are some of
the most pressing issues that my constituent farmers face.
Today, I look forward to discussing the experiences each of our
witnesses have had over the past several years with the
implementation of the 2018 Farm Bill programs, and to getting
an update on the effectiveness of our farm safety net.
Food security is national security. Congress must continue
to support our farmers, remain attentive to our needs, not only
because they feed us as a nation, but because without them we
would become helpless and dependent on other nations, thereby
losing our sovereignty. Mr. Talley, in your comments you spoke
of California's wildfires, and the impact they are having on
California farmers. As I understand this, this is somewhat of a
battle between the environmental sector and proper management
of our forest. We have had this discussion over and over. There
has to be science to this. Obviously, I am from the timber
basket of the South, in my district, and we manage our forests.
Of course, most of ours are privately owned. Do you have any
suggestions on what we can do? In fact, Madam Chair, I would
request on the record that we have a hearing with those people,
on both sides, that we can help us come to some kind of
conclusion on how to move forward with preventing these
terrible fires, and the smoke, and everything else that goes
with it. So, Mr. Talley, could you comment on that?
Mr. Talley. Yes. I am in favor of more ongoing prescriptive
burning. That is what happens, as I understand it, for
thousands of years here in California before people got so
concerned about really stopping natural fire. And consequently
we have a lot of areas that haven't burned for a long time, and
that, coupled with the effects of, I would ascribe it to
climate change, and this drought that we are facing, we just
have ongoing drying vegetation. Again, I think that there are
management practices that could be implemented controlled burns
in the springtime that are much easier to control, that would
reduce the fuel load.
Mr. Allen. Thank you. Mr. Tate, thank you for your
testimony. Are there any specific crops or commodities that you
would like to identify which you feel the crop insurance
provisions of the 2018 Farm Bill are not serving adequately?
Are these issues that farmers might have with it on a more
regional nature?
Mr. Tate. I would have to say that would be more regional
in nature. I can only speak in terms of my area, and I believe
that most of our area is covered fairly well with options for
Federal crop insurance.
Mr. Allen. Dr. Schnitkey, one concern that I often hear
from my constituent farmers is that an increase in market
consolidation in the ag industry has led both to the companies
which they buy inputs from, and the companies which they sell
crops to, to have increased market power over our farmers
themselves who actually produce the product, and we don't feel
like they are getting an equal share. Could you speak to this
concern, and is there any validity to it?
Dr. Schnitkey. Obviously, there has been a great deal of
consolidation within the input industry in the Midwest
particularly, as you look at seed companies being whittled down
to basically three large companies. And, yes, there are
concerns, and they are legitimate concerns, about the market
power that those companies have. I would also mention that as
we have seen consolidation one of the longer-term concerns may
be that innovation slows down, and innovation and improved
genetics are one of the things that keep the agriculture
economy rolling, and so there are legitimate concerns in that
area.
Mr. Allen. Okay. Thank you very much. Madam Chair, I yield
back.
The Chair. Thank you, Mr. Allen. We still have three
Members who would like to ask questions, however, we are on our
third and last vote over on the House floor, so we are going to
suspend for--I am going to say 5 minutes or less, at which time
I am also going to run over and cast a vote. My apologies to
our witnesses for having to stand by, but count on about a 5
minute break, if we could. So we will recess for about 5
minutes. Thank you.
[Recess.]
Mr. Carbajal [presiding.] I would like to call us back to
order, and I would like to recognize Representative Mann.
Mr. Mann. Thank you, Mr. Carbajal.
Mr. Carbajal. Actually, Mr. Mann, just 1 second.
Mr. Mann. Yes.
Mr. Carbajal. I also would like to ask the witnesses to
unmute your microphones. Was that correct? And cameras back on.
Representative Mann, 5 minutes.
Mr. Mann. Great. Well, thank you, Representative Carbajal,
and thanks to all our witnesses for joining today. Thank you. I
know we just had a quick recess as we ran to vote, so thanks
for staying on with us as we finish this up. I have a handful
of questions. My first question would be for Mr. Tate on crop
insurance flexibility. You are a producer, an agent, and a crop
revenue consultant, so you have a unique perspective on the
program, and have probably seen a lot of changes during your
career. One of the advantages of the crop insurance program is
its flexibility to adjust to changes in agriculture and the
environment through the creation of new programs and policies,
as well as certain flexibilities within any given crop season.
What are some of the policies, or what are some of the
adjustments to the program that you have seen over the last 16
years that you think have been the most helpful for farmers and
ranchers?
Mr. Tate. Well, I guess there are a number of things. Like
I had mentioned before, the introduction of the revenue
policies is a big one. Also the trend adjusted yield on the
APH, I had mentioned in my statement about how that is kind of
a hidden deductible, if you will, if your APH lags a little
bit, and so there have been changes to try to improve that.
That has helped out the program considerably. But as far as
what you are asking, what can be done to enhance this further.
Again, I would have to go back to, if we could look at maybe
potentially getting some higher coverage levels even, I think
that would be helpful to the program.
Mr. Mann. Okay. Well, thank you. And then my remaining
question would be for the three producers we have, Mr. Kirwan,
Mr. Talley, and Mr. Shannon, thank you for joining us. My
parents and brother still operate our fifth generation family
farm that I grew up on in Quinter, Kansas, which is western
Kansas. For our family's farm, one of the most important
changes to ag policy was the 1996 Freedom to Farm Act, which
changed our operation permanently for the better. As we
consider updates to the 2023 Farm Bill, what are the most
important parts of the farm safety net for your operation, and
what potential enhancements or improvements would you like to
see being made to our current programs? Maybe start with Mr.
Kirwan.
Mr. Kirwan. So I would say that some of the best
improvements would be the revisiting of the base acres, and
some of the acreages and the yields, and seeing if there is any
updating that can done with that. From the crop insurance side,
increasing coverage levels, and/or some of the things that we
have now, the ECO and SCO, and some of those accounting-based
things to top up on top of what our revenue protections are
would be things that--considerations continuing.
Mr. Mann. Great. How about you, Mr. Talley? What
improvements or enhancements would you like to see as we think
about the 2023 Farm Bill?
Mr. Talley. Well, one of the challenges that we face in
California is that the farm bill is really more structured for
producers in the Midwest, and California is very unique. We
farm a lot of niche type products, a lot of specialty products,
but it does add up to the biggest value agriculture in the
United States. So somehow I would like to see a little bit more
attention paid to the unique challenges that specialty crop
producers in California face.
Mr. Mann. Thank you. And, last, how about you, Mr. Shannon?
Improvements, enhancements you think about as we look at the
2023 Farm Bill?
Mr. Shannon. The seed cotton thing is important to me, and
I want to thank you all for getting that back in title I. That
and peanut program, keeping the separate payment limits on
peanuts, and if we could help the reference prices some.
Undoubtedly our cost of production had went up the last few
years, and appreciate that that could move up some.
Mr. Mann. Okay. Great. I have no further questions. Mr.
Carbajal, I yield back. Thank you.
Mr. Carbajal. Thank you, Mr. Mann. I will now recognize
Representative Bishop.
Mr. Bishop. Thank you very much, Mr. Chairman, and let me
give a special shout-out and welcome to Mr. Shannon of Georgia,
and, of course, a welcome to each of our panelists. So let me
just say that one of my most pressing concerns for the
Subcommittee is to establish a permanent solution for disaster
assistance. We have done ad hoc disaster assistance on the
Agriculture Appropriations Subcommittee for several years, and
the ins and outs of the legislative process, not to mention the
time it takes for implementation really often means delays in
getting assistance to the farmers. I believe that we need to
have a rainy day fund, or an interest-bearing account, set
aside so that if damage were to occur within a certain level,
that we could use that fund instead of having to do a
supplemental appropriations bill. My good friend, Ranking
Member Austin Scott, and I have worked together to bring much
needed assistance to middle and south Georgia in the wake of
Hurricane Michael, and can agree that creating a standing
disaster program is not only vital, but necessary, an ongoing
investment to ensure that rural America has timely relief and
access to resources to sustain our operations when, and not if,
but when the next disaster comes.
So, Mr. Shannon, can you give us your perspective of how
such a permanent solution for disaster systems might impact
your operation? And, Dr. Schnitkey, can you tell us whether or
not the University of Illinois, or other entities that you are
aware of, have conducted any analysis to evaluate the impact of
a permanent disaster relief fund?
Mr. Shannon. Well, my first comment would be amen. Thank
you. Yes, sir, we would love to have something that would be
quick to get, didn't take a lot of trouble and aggravation on
anybody's part. The other part of the question, I am not
familiar with what you are talking about there, with the folks
from Illinois.
Dr. Schnitkey. I think that one of those questions was
addressed to me, and specifically have we looked at a standing
disaster program? No, we haven't looked at that particular
issue here lately. We would also suggest that that program, as
much as possible, compliment crop insurance, and not take away
from crop insurance, because that has become, at least in the
Midwest, a very important part of the safety net for farmers,
and they would list that.
Mr. Bishop. Not suggesting, sir, that we eliminate crop
insurance. I am trying to make available whatever crop
insurance doesn't cover----
Dr. Schnitkey. Yes.
Mr. Bishop.--that we have something in place that will be
available on short-term, as opposed to having to wait months,
and months, and months to get some kind of relief through the
legislative process. That was what my suggestion was. And if
you guys could think about that, all of the panelists could
think about it, and give us some thoughts about it as we look
forward to the next farm bill, we might want to consider doing
that.
I have a little more time back, and I just wanted to ask,
as we look toward the new farm bill, we have to ensure that it
is flexible enough to include all of our agricultural programs
and commodities, as well as a variety of specialty crops from
many different geographical areas, which is why I am glad that
all of you are here today. Mr. Talley, as the wine grape
grower, Mr. Shannon, peanut producer, Mr. Kirwan, as a grain
farmer, how can Congress ensure that the next farm bill
accommodates all of your unique needs, and yet covers everybody
at the same time?
Mr. Kirwan. Again, my perspective, working with farm
organizations in our state and our universities, some of the
challenges that you guys have identified here today is a great
step forward in working with our Congressional people to offer
suggestions, and improving what we have in place.
Mr. Shannon. I would certainly agree. Improving what we
already have, if we can up the reference price on the seed
cotton and the peanuts, I think that would be good for our
area.
Mr. Bishop. I guess my suggestion was that we need to have
something that is broad enough to include everyone, but
flexible enough so that no particular commodity would be
overlooked, mistreated, or under-supported.
Mr. Talley. That is appreciated.
Mr. Bishop. My time has expired, Madam Chair, and I yield
back.
The Chair [presiding.] Thank you, Mr. Bishop. Before we
adjourn today, I invite the Ranking Member to share any closing
comments he may have. Mr. Scott?
Mr. Austin Scott of Georgia. Well, thank you, Madam Chair,
and, Mr. Talley, I heard you loud and clear on the specialty
crop issue. Our specialty crops are different than yours, but
they are still specialty crops, and that is where improvements
to the NAP Program can come in, and hopefully we can address
them in the next farm bill. I want to thank all of you for
being here. One of the things that I do want to mention as we
write the next farm bill is that it is important to me that any
additional things that are done with regard to the environment
currently being discussed not come out of the current safety
net for our ag producers, and that it be done in the form of
additional funds, not in lieu of what we are currently
providing in crop insurance and other things to our producers.
So thank you so much for your valuable testimony, and, with
that, Madam Chair, I yield to you.
The Chair. Thank you, Mr. Scott. I want to thank all of our
witnesses here today as well. The discussion was informative. I
learned from it, and I want to emphasize our commitment to
ensuring that the safety net and the risk management tools are
working well for our farmers in time of need. With the weather,
and the market conditions in recent years our witnesses have
described, and the worsening drought conditions affecting much
of the country, we will, together, be actively working to
understand and address the challenges that our family farmers
are facing. The input that you provided us today is essential
in our examination of existing programs, and as we start to
look ahead to the next farm bill.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member. This hearing
of the Subcommittee on General Farm Commodities and Risk
Management is adjourned.
[Whereupon, at 2:51 p.m., the subcommittee was adjourned.]
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