Northey visits Big Iron, discusses RMA data
WEST FARGO, N.D. — Bill Northey, the U.S. Department of Agriculture undersecretary of agriculture for farm production and conservation, on Tuesday, Sept. 11, at the Big Iron farm show here described federal payments to compensate for trade war damage as a "blunt instrument."
He said the Trump administration hopes it is a "one-time deal."
Significantly, Northey clarified and reiterated statements that the administration will use Risk Management Agency data — crop insurance reports — will become the "gold standard" of data for qualifying farmers for tariff compensation through the Market Facilitation Program.
Northey said Congress in the new farm bill is also looking at being able to use RMA data for other programs, such as the Agricultural Risk Coverage program, which provides protection for yield times price losses.
"I think that's going to happen because it was on both sides of the farm bill proposals," Northey said.
The government has calculated how the first half of the MFP payments will be calculated. They'll figure out in November or December whether a second stage is needed and what commodities are involved. He acknowledged that growers of canola,, for example, have seen their crop values decline "in sympathy" with the price of soybeans, which are targeted for Chinese tariffs.
By this winter, he said, the U.S. should have completed talks with Mexico and Canada over changes in the North American Free Trade Agreement Agreement.
The RMA data source issue is important to farmers who provide specific data on crop insurance and because those data sometimes don't match with National Agricultural Statistics Service survey data, which historically has been used for the purpose.
Actual '18 production
Northey said the use of 2018 actual production was the best basis for the compensation, except for dairy. Even if a farmer has reduced production due to weather condition, that loss is partly compensated for by crop insurance indemnities. USDA officials chose the method both for ease of implementation and for the best approach, even though it's "not perfect for everybody," he said.
"We certainly want to, wherever possible, be able to use those (RMA) standards," Northey said. If a producer has a loss, there is an audit done around RMA numbers. The RMA calculation provides the right data even in situations where a farmer has chopped silage rather than market corn as grain, Northey said.
"We're just asking producers to validate their information, certify a number, just like they do for their crop insurance ... and be able to produce that if we ask for an audit or if somebody gets spot-checked," he said.
He said the authority for the MFP payment is under the Commodity Credit Corp., which didn't require "offsets," or corresponding cost reductions, as would new programs from Congress.
Northey is presiding over a reorganized U.S. Department of Agriculture, which includes the oversight of the Farm Service Agency, the Risk Management Agency and the Natural Resources Conservation Service. He said the three agencies have more than 22,000 employees are now trying to work on unifying their approaches toward farmers.
In an issues forum at the annual farm show, Northey heard from farmers who felt the NRCS is needlessly adversarial, especially regarding mitigating small wetlands. Improper drainage can jeopardize farm program benefits, including crop insurance.
Northey said the NRCS is trying to improve its analysis of so-called Swampbuster provisions, designed to punish farmers for converting wetlands to farm production. Other provisions to prevent conversion of grasslands to crop production are called Sodbuster provisions.
Northey praised the NRCS staff for cutting the number of pending "wetland determinations" from thousands to fewer than 100 in North Dakota.
He also said the agency is seeing fewer farmer appeals of adverse NRCS decisions, but he said the agency must adjust its programs for wetlands mitigation, or replacing wetlands that are drained for farming.
"If it was considered cropland through a CRP program, you're able to break that out and put it back into cropland," he said. "If it was a true Sodbuster situation, you don't qualify for crop insurance there, but you don't go into violation and lose your other program benefits and you have to make sure you maintain a conservation practice if it's in a highly-erodible area."