Trouble with prevented-planting insurance
With perhaps 2 million acres unplanted in North Dakota in 2013, and similar conditions in northwest Minnesota, some farmers are wondering if the U.S. Department of Agriculture's Risk Management Agency will disqualify them from prevented-planting ...
With perhaps 2 million acres unplanted in North Dakota in 2013, and similar conditions in northwest Minnesota, some farmers are wondering if the U.S. Department of Agriculture's Risk Management Agency will disqualify them from prevented-planting payments.
The RMA had announced a "one-in-four" rule that seemed to indicate that if farmers could plant in any one of the previous four years, they would be eligible for prevented-planting insurance. But RMA now emphasizes that the one-in-four rule is only part of the test, and that 2012 plantings shouldn't be counted because the year was "abnormally dry."
The RMA says that to make 2012 eligible for the rule, the crop insurance company must demonstrate to the agency that the abnormally dry conditions weren't the reason the farmer was able to plant, but some producers and their lawyers are concerned about how this will go, as well as the stakes.
Aaron Krauter, North Dakota state director for the federal Farm Service Agency, says his agency has so far simply guessed that the unplanted acreage in the state might be 2 million of the state's 22 million cropped acres -- one of the biggest years for the coverage.
"The calls we're getting from the northern counties is that, 'we quit planting" before finishing this year's crop, Krauter says. He says farmers all over the state are saying that on acres they did plant, they're "starting out with the sprayer and they're getting stuck with that."
Sen. Heidi Heitkamp, D-N.D., on June 26 was in the process of preparing a request to the Farm Service Agency to accelerate the study of prevented- planting and the emergency situation in North Dakota. Otherwise, the FSA wouldn't do it until after its July 15 final acreage reporting deadline.
Heitkamp, Sen. John Hoeven, R-N.D., and Rep. Kevin Cramer, R-N.D., also have been putting the heat on the RMA to clarify its rules. On May 6, the legislators held a roundtable in Fargo, N.D., with RMA Administrator Brandon Willis and Doug Hagel, RMA regional director in Billings, Mont.
On June 24, Heitkamp hosted USDA Acting Deputy Secretary Michael Scuse in Bismarck, N.D., to explain prevented-planting policies. Sources at the meeting say it didn't clarify much, but that it again underscored what North Dakota growers are worried about.
The RMA has given some guidance by saying that an abnormally dry classification must be applied on sub-county units, rather than an entire state, but Heitkamp says that's not enough.
"Missing a planting window can be as devastating to a family's bottom line as drought or midseason flooding and every farmer that is eligible for prevented-plant coverage needs to be compensated for their losses," Heitkamp says. "These growers purchased risk protection at the beginning of the season that must be honored. In order for this to happen, USDA needs to clearly communicate what 'normal precipitation' means so that crop insurance companies can process the claims. Going forward, to avoid further confusion in the coming crop years, USDA needs to implement a simpler policy. There's way too much gray in the application of 'normal precipitation.'"
Lowell Bottrell, Fargo, an attorney whose firm specializes in representing farmers with prevented-planting coverage disputes, is curious about how the decisions are being made.
Bottrell says that after the Hoeven roundtable, his firm filed a Freedom of Information request with the RMA to acquire records and communications within the agency to learn who was deciding the policies and why. Bottrell says he was surprised that within a day he got a response back that the RMA could provide the detail if the filer paid a $2,000 FOIA fee.
Instead, Bottrell filed another request to see how the agency came up with the fee so quickly. He says he's gotten no response on that request.
Bottrell also is upset about how disputes are handled between farmers and their insurance companies.
He says that if there is a dispute, the producer can pick a list of three individuals to arbitrate the case, and the so-called Approved Insurance Provider (company) does the same. If they can agree on one of the arbitrators, arbitration could begin within a year of the date the claim is filed.
Bottrell says the RMA recently published a decision saying if the farmers and the insurance company couldn't agree on a name, the two parties would have to go directly to a list from the American Arbitration Association. The AAA members charge a percentage fee, based on the value of the case.
"In a $200,000 to $300,000 claim -- and that's not unusual, with the price of commodities -- the fee could run $20,000 to $30,000, easily," Bottrell says. He says crop insurance companies have deeper pockets than farmers, and can more easily afford the fees.