WASHINGTON -- Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, and House Agriculture Committee Chairman Collin Peterson, D-Minn., July 20 urged the Agriculture Department to use its regulatory powers over crop insurance to stop incentives for farmers to convert native grassland to crop land in North Dakota, South Dakota and other Midwestern states.
During the farm bill debate, conservation groups pushed for a provision to make converted land ineligible for federal crop insurance. Farm groups opposed that provision so strongly that it was softened to a program allowing governors in a seven-state Midwestern region, which supports more than half of all migratory waterfowl in North America, to exclude certain land in their states on which native sod was the principal cover from eligibility for federal crop insurance for five years.
In a letter to Agriculture Secretary Tom Vilsack, Harkin and Peterson noted that no governor chose to utilize this process before the deadline established by USDA to opt in and suggested that USDA still could use its authority to maintain actuarial and fiscal integrity of the crop insurance program to stop insurance companies from insuring crops on the converted land. The crop insurance program protects farmers from likely losses on this land, Harkin and Peterson said, and could raise the cost of the federal crop insurance program by as much as $299 million in additional crop insurance indemnities paid.
In the letter, Harkin and Peterson used South Dakota as an example.
The chairmen wrote, "The report found that the net crop insurance payout per acre in South Dakota counties that had high levels of conversion from grassland to cropland was nearly twice the state average payout per acre. This indicates that the risk of production in areas of previously unbroken sod is disproportionately large compared to the premiums paid. The crop insurance system -- including other producers paying in to the system -- is subsidizing the risk of breaking land for crop production, providing an incentive to producers to take unreasonable risks."
