Current Crop Insurance and Federal Policy Situation

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1 Current Crop Insurance and Federal Policy Situation Mil. acres Participation Growth mil Premium support, then 2000 Act 1 1

2 % Source: USDA/RMA Summary of Business Percent of Total Premium Coverage Level Wheat Rice Soybeans Corn Up Cotton 85% % % % Source: USDA/RMA Summary of Business 2

3 $ Liability Growth of Revenue Products 7 Disaster Assistance v. Crop Insurance Within Crop Insurance Grow Participation livestock, dairy, specialty crops Grow Participation with adequate risk protection declining APH from back to back disasters, separate coverage by practice (irrigated, dryland) Grow revenue protection ARC, RLC What level of federal investment is appropriate/ adequate? AGI test Conservation Compliance in return for premium assistance Premium subsidy caps Senate passed S. 954 on June 10 by a vote of Senate version includes nutrition title. House passed H.R on July 11 by a vote of House version does not include nutrition title. Full farm bill, H.R. 1947, did not pass the House on June 20 by a vote of Chairman Lucas has promised to bring nutrition bill forward as soon as practicable. Expect informal discussions to start at staff level in preparation for a conference on all titles except nutrition 3

4 Supplemental Nutrition Assistance Program fate is key Senate not likely to agree to partial bill House may not be able to pass a bill with SNAP included House will need bi partisan vote to pass farm bill with nutrition title Current bill expires September 30, 2013 There are 9 legislative days for Congress in the month of September Most likely the farm bill conference is not completed prior to September 30, 2013 but hopefully it is completed prior to the end of the calendar year. House Senate Commodity Title $18.7 billion $17.4 billion Conservation $4.8 billion $3.5 billion Nutrition N/A $3.9 billion Research $760 million $781million Energy $0 million $880 million Specialty Crops $619 million $304 million Crop Insurance $8.9 billion $5.0 billion Total $12.8 billion $17.9 billion 10 Year Savings, CBO Scoring Additional $$6.4 billion from sequestration savings 4

5 Senate Bill House Bill Eliminates direct, counter cyclical, ACRE programs Continues loan programs with change for cotton to make WTO compliant Continues Sugar Program, Reforms Dairy Program New Agricultural Risk Coverage (ARC) Price Loss Coverage (PLC) or Revenue Loss Coverage (RLC) AGI Test at $750,000 per entity AGI Test at $950,000 per entity $50,000 payment limit per person per year, plus peanuts, $75,000 for marketing loan $125,000 limit per person per year which includes $75,000 for marketing loan Changes Actively Engaged rules Conservation Compliance Applies Wheat, corn, grain sorghum, barley, oats, long grain rice, medium grain rice, pulse crops, soybeans, other oilseeds, and peanuts. Note cotton is not a covered commodity Senate Bill House Bill Creates new Supplemental Coverage Option (SCO) Creates new Stacked Income Protection for Cotton (STAX) Creates new Peanut Revenue Insurance Coverage Nationwide Sod saver provision Prairie Pothole Sod saver provision Plug 65% 2013 and subsequent Plug 65% anytime Conservation Compliance Attached No Conservation Compliance AGI test, 15% point less subsidy if AGI No AGI test exceeds 750,000 after 1 year study Separate irrigated non irrigated coverage at EU Separate irrigated non irrigated coverage at all unit levels House Senate SCO $3.850 billion $2.247 billion Yield Plug at 65% $936 billion $.406 billion STAX $3.693 billion $3.693 billion Interaction Effect $.574 billion $2.038 billion Coverage Level by Practice $.754 billion $.586 billion Specialty CropA&O $.205 billion $0 Total $8.914 billion $4.999 billion 10 Year Savings, CBO Scoring Note: Of the $4 billion difference, $3 billion is due to CBO assumptions about crop insurance participation under the commodity title higher SCO and lower interaction in House version than Senate 5

6 Commodity title shallow loss v. higher target prices How much of an interaction with existing crop insurance coverage? Paid on planted or base acres? Paid on actual or historical production/ revenue? SRA Sideboard language that eliminates ability of RMA to further cut crop insurance AGI and Conservation Compliance Collection of farmer data Who collects and controls acreage and production reports for crop insurance program? Agent Compensation Bulletin Possible Changes to Prevented Planting Provisions Additional rate changes by RMA Questions? 6