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Published May 16, 2013, 02:31 PM

ND senators decry crop insurance, conservation compliance link

The Senate farm bill scheduled for debate May 21 would link crop insurance to conservation compliance, significantly affecting North Dakota farmers who drained wetlands to allow more room for valuable crops. The House bill does not link the two.

By: Mikkel Pates, Agweek

Will farmers who opted out of the farm program so they could drain wetlands to grow valuable crops now be forced to restore those wetlands if they want to keep vital premium subsidies on their crop insurance?

Sen. John Hoeven, R-N.D., hopes not. North Dakota’s senior senator tried in vain to pass a half-dozen amendments to the Senate Agriculture Nutrition and Forestry Committee version of the 2013 farm bill that would have kept crop insurance disconnected from conservation compliance, or at least reduce the regulatory burden of compliance.

That didn’t work in the Senate Ag Committee bill, passed May 14, but Hoeven says he’s still working to keep the insurance and conservation “decoupled.” He says an opportunity is in a conference committee with the House Ag Committee farm bill, also passed this week.

The House version, passed hours later on May 15, does not tie crop insurance to compliance with conservation programs. Additionally, the House bill saves $6 billion by consolidating duplicative conservation programs and streamlining the delivery of incentive funds to farmers, ranchers, and landowners.

“The voluntary, incentive-based method of encouraging conservation in the House bill is the right approach,” says U.S. Rep. Kevin Cramer, R-N.D. “Farmers in North Dakota do not need Washington instructing them on how to farm and care for their land. Ensuring crop insurance is decoupled from conservation programs is a top priority for our farmers and ranchers.”

The full Senate is expected to begin debate on the farm bill May 21.

ND overpowered

Hoeven and colleague Sen. Heidi Heitkamp, D-N.D., both oppose a “grand compromise” in the Senate farm bill, pushed by national commodity and farm groups. Even so, Hoeven says the compromise is better than a provision in the 2012 farm bill version passed in the Senate that was inserted by Sen. Saxby Chambliss, R-Ga. That provision not only would have linked crop insurance with conservation compliance, but also would have forced farmers to retroactively pay back benefits acquired in years they didn’t comply with conservation rules.

Heitkamp, who held a farm bill meeting on May 10 with ag leaders at the American Crystal Sugar Co. headquarters in Moorhead, Minn., warned farm leaders then that she and Hoeven might be politically overpowered on the decoupling issue, mainly because North Dakota is isolated on it from many of the Corn Belt states to the south, where wetlands were drained decades earlier.

“North Dakota, unlike other states south of us, didn’t drain our wetlands in the 1930s and 1940s,” Heitkamp says. “We maintained the flyway and those prairie potholes and now we’re stuck maintaining the flyway for the rest of the country.” She says states such as Indiana, Kansas and Nebraska might think differently of conservation compliance if they had to “look back 50 years.

“Now we’ve become the bird capital of the world, and nobody is compensating us for that and we’re getting penalized if we try to make a living on the farm,” she adds.

North Dakota gets hit particularly hard on conservation compliance, which up to this point has applied on farm price supports and other farm programs, but not crop insurance. “I have horror story upon horror story about what’s happened on conservation compliance for our producers,” she says. The stories would “shock people’s sense of fair play” on so-called Title I commodity programs and conservation compliance. One case involved “750,000 in uncertainty for a wetland that was less than an acre,” she says. “Do we want to darken crop insurance with the same problem?”

ND cropland must be insured

The issue put Heitkamp on the opposite side of political ally Sen. Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee. The Senate doesn’t have a lot of farm state senators, Heitkamp says, but adds there are many who represent hunting and fishing groups and others who are deeply concerned about conservation. Like Hoeven, Heitkamp says she’ll support the House provisions on that point.

Howard Olson, senior vice president of financial services for AgCountry Farm Credit in Fargo, N.D., says almost no farmer can afford to go without crop insurance in North Dakota, and it would be prohibitive without premium subsidies. A corn producer from Barnes County contacted Olson, asking what it would mean if the premium subsidy were gone for crop insurance. He says some calculations, based on an enterprise unit structure, indicated the farmer was currently paying about $19 an acre today and, without the subsidy, the farmer would pay $94 an acre.

“It would be cost-prohibitive,” Olson says. “In North Dakota, 99 percent of the acres are insured — every acre that can be is insured because they have to be.”

Aaron Krauter, state director of the North Dakota Farm Service Agency, says there is a “mitigation option” available to replace acres where a farmer has tiled, but details on how that works were not yet clear.

“Farmers have to let their farm organizations know this is important to them,” Hoeven said May 16.

As if on cue, North Dakota Farm Bureau President Doyle Johannes of Alexander, N.D., issued a press release May 16 opposing the American Farm Bureau Federation support of the compromise, saying getting a farm bill at this price is a bad idea. “It’s simply not worth it,” Johannes says, saying it gives the federal government “way too much power” and takes away “sound conservation decision-making by farmers and ranchers.”

Also on May 16, North Dakota Farmers Union President Woody Barth issued a press release, praising progress on the farm bill in both houses of Congress, underlining its support for its “protections to family farmers when disasters strike or prices collapse,” but not mentioning the crop insurance and conservation compliance issue.

Other amendments

In a related issue, Heitkamp says she will oppose amendments expected from Sen. Richard Durbin, D-Ill., and Sen. Tom Coburn, D-Okla., that would provide adjusted gross income (AGI) limits for crop insurance, on grounds that it will weaken the pool. Similarly, Wisconsin Reps. Ron Kind, a Democrat, and Tom Petri, a Republican, on May 15 proposed a bill that would cap the total value of crop insurance subsidies each farmer could receive at $40,000 per year and eliminate premium subsidies for farmers who earn more than $250,000 a year.

Olson says when farmers figure their insurance on so-called “enterprise units,” the subsidy can be as much as 80 percent of the gross premium for 70 percent coverage protection. An enterprise unit combines all of the acres of one crop. Subsidy levels are higher on enterprise units because the government thinks they provide better loss ratios.

Most of the soybeans, wheat and sugar beets in the region are insured under “optional units” that break down indemnities on a section-by-section level. Subsidies on those are about 59 percent of the premium to qualify for 70 percent coverage.

Either way, about 99 percent of farms buy crop insurance because they have to, Olson says. “We’re such a high-risk state with extremes in weather,” he says. “This year is a good example. We had a lot of snow and started seeding late. The crop planting is going nicely now, but farmers are talking about how it’s dry and we need rain.”