[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
IMPLEMENTING THE AGRICULTURAL ACT OF 2014: COMMODITY POLICY AND CROP
INSURANCE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
GENERAL FARM COMMODITIES
AND RISK MANAGEMENT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MARCH 26, 2015
__________
Serial No. 114-9
Printed for the use of the Committee on Agriculture
agriculture.house.gov
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______
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COMMITTEE ON AGRICULTURE
K. MICHAEL CONAWAY, Texas, Chairman
RANDY NEUGEBAUER, Texas, COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
BOB GOODLATTE, Virginia DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma JIM COSTA, California
STEVE KING, Iowa TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan SEAN PATRICK MALONEY, New York
JEFF DENHAM, California ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California PETE AGUILAR, California
RODNEY DAVIS, Illinois STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
TOM EMMER, Minnesota
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington
______
Scott C. Graves, Staff Director
Robert L. Larew, Minority Staff Director
______
Subcommittee on General Farm Commodities and Risk Management
ERIC A. ``RICK'' CRAWFORD, Arkansas, Chairman
FRANK D. LUCAS, Oklahoma TIMOTHY J. WALZ, Minnesota,
RANDY NEUGEBAUER, Texas Ranking Minority Member
MIKE ROGERS, Alabama CHERI BUSTOS, Illinois
BOB GIBBS, Ohio GWEN GRAHAM, Florida
AUSTIN SCOTT, Georgia BRAD ASHFORD, Nebraska
JEFF DENHAM, California DAVID SCOTT, Georgia
DOUG LaMALFA, California JIM COSTA, California
JACKIE WALORSKI, Indiana SEAN PATRICK MALONEY, New York
RICK W. ALLEN, Georgia ANN KIRKPATRICK, Arizona
MIKE BOST, Illinois
RALPH LEE ABRAHAM, Louisiana
(ii)
C O N T E N T S
----------
Page
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 26
Prepared statement........................................... 5
Crawford, Hon. Eric A. ``Rick'', a Representative in Congress
from Arkansas, opening statement............................... 1
Prepared statement........................................... 3
Walz, Hon. Timothy J., a Representative in Congress from
Minnesota, opening statement................................... 4
Witnesses
Willis, Brandon, Administrator, Risk Management Agency, U.S.
Department of Agriculture, Washington, D.C..................... 6
Prepared statement........................................... 7
Dolcini, J.D., Val, Administrator, Farm Service Agency, U.S.
Department of Agriculture, Washington, D.C..................... 9
Prepared statement........................................... 11
IMPLEMENTING THE AGRICULTURAL ACT OF 2014: COMMODITY POLICY AND CROP
INSURANCE
----------
THURSDAY, MARCH 26, 2015
House of Representatives,
Subcommittee on General Farm Commodities and Risk
Management,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 9:02 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Eric A.
``Rick'' Crawford [Chairman of the Subcommittee] presiding.
Members present: Representatives Crawford, Lucas,
Neugebauer, Gibbs, Austin Scott of Georgia, Denham, LaMalfa,
Allen, Abraham, Conaway (ex officio), Walz, Graham, Ashford,
and Kirkpatrick.
Staff present: Bart Fischer, Callie McAdams, Jackie Barber,
Jessica Carter, Matt Schertz, Mollie Wilken, Skylar Sowder, Ted
Monoson, Faisal Siddiqui, John Konya, Anne Simmons, Mike
Stranz, and Nicole Scott.
OPENING STATEMENT OF HON. ERIC A. ``RICK'' CRAWFORD, A
REPRESENTATIVE IN CONGRESS FROM ARKANSAS
The Chairman. This hearing of the Subcommittee on General
Farm Commodities and Risk Management, regarding the
implementation of the Agricultural Act of 2014 as it relates to
commodity policy and crop insurance, will come to order.
I want to welcome our witnesses, Administrator Willis and
Administrator Dolcini. Thank you for being here, gentlemen, and
thank you for all of the good work that you have done so far in
implementing the farm bill.
By Tuesday of next week, most farmers across the country
will have made the choices that we offered them under the farm
bill. This will be the capstone on a long and challenging
process that began here in 2010 before I was even elected, and
did not wrap up until February 7, 2014, when the farm bill was
finally signed into law.
While the 2014 Farm Bill was drafted during a period of
record-high prices, producers are now experiencing a staggering
43 percent drop in net farm income. Current conditions are
going to test the farm bill and its ability to mitigate and
respond to growing financial stress in farm country. I firmly
believe that the situation calls for the farm bill to be
implemented in the most farmer-friendly manner possible within
the limits of the law.
The good news is that, despite some bumps along the way,
both of you and your agencies have worked overtime to ensure
that the provisions of the farm bill are implemented in the
best way possible for the farmers and ranchers it was intended
to serve. And we thank you for your hard work. However, some
serious issues remain that we hope can still be avoided, and we
believe you have the power to head them off.
Each Member around this dais probably has an example of
problems his or her constituents face that can be averted
through proper implementation, and I have three that I hope we
can solve together.
First, USDA has the authority to address an issue that is
impacting all cotton marketing, whether through cooperatives,
private merchants, or direct farmer marketing. The situation
threatens to seriously erode support for cotton farmers when
that support is already threadbare and chronically low prices
continue to pose an existential threat to farming cotton in the
United States. In Arkansas alone, cotton acreage is expected to
be down 40 percent this crop year after record low plantings in
previous years, due, in part, to communist China and other
countries propping up their own domestic production through
rich subsidies and protections, the worldwide market has become
artificially depressed, and this is harming American producers.
And that is why report language was added to the Fiscal Year
2015 appropriations bill directing USDA to fix the problem. A
legislative fix was unnecessary because the cost reduction
options in permanent law already provide authority to correct
the problem before it becomes even more serious. In this case,
an ounce of prevention truly is worth a pound of cure.
Second, is the proposed rule on actively engaged. The
rulemaking required under the farm bill authorized USDA to
consider establishing limits on the number of farm managers for
various kinds of farming operations. I didn't like the
provision in the farm bill in the first place, but I took some
comfort in the idea that the rule would be implemented in a
flexible way, fully recognizing the variety of farming
operations today, but limiting the number of managers on a farm
to one, two, or a maximum of three managers is truly arbitrary
and capricious, and ignores the remarkable diversity and
complexity in agriculture today.
Finally, I know that there is ongoing work to provide rice
producers and others a margin coverage insurance policy. As you
know, coverage levels and participation rates among rice
producers have been very low compared to other crops because
the irrigated nature of rice production prevents any yield
variability. Margin coverage is meant to help address this
problem. We also specifically listed rice in the crop insurance
title of the farm bill as an under-served commodity to focus
RMA's attention on the risk management needs of rice producers.
After years of low participation and recent news that basic
revenue protection will not be available this year to rice
producers, I hope you will do all you can to ensure that this
new margin product works for rice producers, in particular.
These three concerns that I register are not meant to take
away from my compliments to both of you on your overall
handling of implementation. I have been impressed by your work.
Rather, I bring these issues to your attention to highlight
their importance to me, my constituents, and many of my
colleagues. I hope we can work together to solve these problems
before they become a lot worse.
[The prepared statement of Mr. Crawford follows:]
Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative
in Congress from Arkansas
I want to welcome our witnesses, Administrator Willis and
Administrator Dolcini. Thank you for being here, gentlemen, and thank
you for all of the good work that you have done so far in implementing
the farm bill.
By Tuesday of next week, most farmers from across the country will
have made the choices that we offered them under the farm bill. This
will be the capstone on a long and challenging process that began here
in 2010 before I was even elected and did not wrap up until February 7,
2014, when the farm bill was finally signed into law.
While the 2014 Farm Bill was drafted during a period of record-high
prices, producers are now experiencing a staggering 43 percent drop in
net farm income. Current conditions are going to test the farm bill and
its ability to mitigate and respond to growing financial stress in farm
country.
I firmly believe that the situation calls for the farm bill to be
implemented in the most farmer-friendly manner possible within the
limits of the law.
The good news is that, despite some bumps along the way, both of
you have worked overtime to ensure that the provisions of the farm bill
are implemented in the best way possible for the farmers and ranchers
it was intended to serve. And we thank you for your hard work.
However, some serious issues remain that we hope can still be
avoided, and we believe you have the power to head them off.
Each Member around this dais probably has an example of problems
his or her constituent's face that can be averted through proper
implementation. And I have three that I hope we can solve together.
First, USDA has the authority to address an issue that is impacting
all cotton marketing, whether through cooperatives, private merchants,
or direct farmer marketing. The situation threatens to seriously erode
support for cotton farmers when that support is already threadbare and
chronically low prices continue to pose an existential threat to
farming cotton in the United States. In Arkansas alone, cotton acreage
is expected to be down 40 percent this crop year after record low
plantings in previous years. Due, in part, to communist China and other
countries that are propping up their own domestic production through
rich subsidies and protections, the worldwide market has become
artificially depressed and this is harming American producers.
And that is why report language was added to the Fiscal Year 2015
appropriations bill directing USDA to fix the problem. A legislative
fix was unnecessary because the cost reduction options in permanent law
already provide authority to correct the problem before it becomes even
more serious. An ounce of prevention is truly worth a pound of cure.
Second, is the proposed rule on actively engaged.
The rulemaking required under the farm bill authorized USDA to
consider establishing limits on the number of farm managers for various
kinds of farming operations. I did not like the provision in the farm
bill in the first place, but I took some comfort in the idea that the
rule would be implemented in a flexible way, fully recognizing the
variety of farming operations today. But limiting the number of
managers on a farm to one, two, or a maximum of three managers is truly
arbitrary and capricious and ignores the remarkable diversity and
complexity in agriculture today.
Finally, I know that there is ongoing work to provide rice
producers and others a margin coverage insurance policy. As you know,
coverage levels and participation rates among rice producers have been
very low compared to other crops because the irrigated nature of rice
production prevents any yield variability. Margin coverage is meant to
help address this problem. We also specifically listed rice in the crop
insurance title of the farm bill as an under-served commodity to focus
RMA's attention on the risk management needs of rice producers. After
years of low participation and recent news that basic revenue
protection will not be available this year to rice producers--I hope
you will do all you can to ensure that this new margin product works
for rice producers, in particular.
These three concerns that I register are not meant to take away
from my compliments to both of you on your overall handling of
implementation. I have been impressed by your work. Rather, I bring
these issues to your attention to highlight their importance to me, my
constituents, and many of my colleagues. I hope we can work together to
solve these problems before they become a lot worse.
I would now like to recognize my friend and Ranking Member for any
comments he would like to make.
The Chairman.I would now like to recognize my friend and
Ranking Member for any comments he would like to make.
OPENING STATEMENT OF HON. TIMOTHY J. WALZ, A REPRESENTATIVE IN
CONGRESS FROM MINNESOTA
Mr. Walz. Well, thank you, Chairman Crawford, and I would
like to congratulate you on your chairmanship. We are certainly
looking forward to working with you. You have a strong
reputation of bipartisan problem solvers, so I am grateful to
be working with you. I look forward to working with the rest of
the Subcommittee here.
I am very proud of the work we did on the farm bill. This
Committee scrambled through and found a way to put together a
farm bill that we are hearing in the early stages is working.
The farm programs are now more needs-based, there are stronger
links to conservation initiatives, and we found budget savings
in the process. The farm bill was well worth the effort we went
through, and it is these Members sitting here that worked with
their constituents to make it happen.
Now, it is our job to make sure we get it right.
Implementation is the main focus. Getting the bill done,
getting it through and getting it signed was one part. And the
two of you have a big part to play in that. I know you have a
lot on your plate, but I do want to say and echo the comments
of my Chairman that the producers in southern Minnesota have
very favorable comments, and I would like to pass along to both
of you, and especially those rank and file FSA employees who
have been out there working long hours. It is very much
appreciated, and we are hearing that.
There are just a few days left, and I am going to use this
as my public service announcement, we have a few days left on
ARC and PLC, so let us get those finalized. And mainly what I
am hearing is it is tracking down landowners, and it is making
sure people know that I am very grateful for a very complicated
and important choice for farmers. They have resources in you,
and in the truest sense, you have been partners, as it should
be, of helping producers do what they do best; feed, clothe,
and fuel the world.
The farm bill paves the way for new crop insurance
policies, and this one I am really looking forward to because
we put an emphasis on some of our young and beginning farmers
and ranchers, and I would like to hear a little bit about that
today. I would also like to hear a little on conservation
compliance. Farmers want to do more to maintain healthy soil,
and if there is anything we can do, we should incentivize to do
that. And I want to hear about some things, I have always sat
up here and talked about things like cover crops and how we
encourage that, and see if there are some of those things that
are working.
So as we begin this first Subcommittee hearing, I am
hopeful we will hear about how the policies are working. Again,
Chairman Crawford summed it up right; it is our job to find
those things what we can do better on, and get some feedback,
and take that out and see if we can implement those.
So, Mr. Chairman, thank you for holding this hearing, and I
look forward to hearing from our witnesses.
The Chairman. Thank you, Ranking Member, and I appreciate
the opportunity to work with you again this year.
I have time to recognize that Chairman Conaway, Chairman of
the full Committee, rather, he is not here so I will defer and
move on, and we will recognize him when he arrives. I just want
to request that Members submit their opening statements for the
record so witnesses may begin their testimony, to ensure there
is ample time for questions. The chair would like to remind
Members they will be recognized for questioning in order of
seniority, for Members who were present at the start of the
hearing, after that, Members will be recognized in order of
their arrival. I appreciate Members' understanding.
[The prepared statement of Mr. Conaway follows:]
Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
Mr. Chairman, thank you for holding this important hearing.
As you know, I chaired this Subcommittee for a number of years, and
I cannot think of a better successor than you. I know you care deeply
about the policies under the jurisdiction of this Subcommittee and the
farmers and ranchers that these policies are designed to serve.
I mainly want to echo the Chairman's statement. Administrator
Willis and Administrator Dolcini deserve our thanks for all of the good
work that they have done so far.
Former Administrator Juan Garcia, a fellow Texan and a friend, is
also owed a debt of gratitude for all of his years of distinguished
service and for the heavy lifting he did early on to get farm bill
implementation off on the right track.
There are, as the Chairman said, some issues that still present
serious challenges as farm bill implementation moves forward.
Fortunately, there is still time to make sure that these little
challenges do not have time to become big ones.
I fully concur with the three issues the Chairman stressed in his
opening remarks and I add a couple of others to the list.
First, as Chairman Emeritus Frank D. Lucas remarked during an
earlier hearing, we need to address the cover crop issue. If you want
producers to plant a cover crop as good stewards of the land, this is
one of the most important ways of accomplishing that objective. It will
also help deal with some of the more difficult circumstances facing
producers in my part of the country.
I recognize that this may involve the agency changing course from
some of its past decisions. But those past decisions were based on a
completely decoupled commodity title. The circumstances have changed
some. The farm bill gave you discretion here and I would hope that you
would use that discretion to make this happen. It is the right thing to
do.
Second, just as encouraging the use of cover crops is a smart move
if you want to promote conservation, so is not sending artificial
signals to producers to plant one crop over another, especially when
agronomic and market conditions would send the opposite signals. We
face that possibility right now where USDA could assign yields for
crops in counties that are, frankly, totally out of whack with reality.
I have discussed this issue at length with USDA and believe you want to
do the right thing here. I just want to offer some extra encouragement.
Thanks again to our witnesses for their good work so far. I hope
you will work with us on these and other issues. With that, Mr.
Chairman, I look forward to a productive hearing.
The Chairman. Witnesses are reminded to limit their oral
presentations to 5 minutes. All written statements will be
included in the record.
With that, I am pleased to recognize Mr. Brandon Willis,
Administrator of the Risk Management Agency, United States
Department of Agriculture in Washington, D.C. Mr. Willis, you
are recognized for 5 minutes.
STATEMENT OF BRANDON WILLIS, ADMINISTRATOR, RISK MANAGEMENT
AGENCY, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.
Mr. Willis. Thank you very much. Chairman Crawford, Ranking
Member Walz, and Members of the Subcommittee, I am pleased to
discuss the Risk Management Agency's implementation of the 2014
Farm Bill.
I am pleased to report we have accomplished implementation
of almost every crop insurance provision. I would like to
express my gratitude for the hard work performed by the
employees of the Risk Management Agency. To have the vast
majority of this farm bill available to farmers less than a
year after passage speaks to the professionalism and dedication
of these employees. I would also like to thank our partners who
deliver the crop insurance program, the approved insurance
providers. They have provided valuable input throughout the
process that has led to an improved implementation, and their
efforts throughout the process are appreciated.
While there is work to be done, farmers and ranchers are
beginning to utilize some of these new crop insurance programs
and options. The Supplemental Coverage Option, SCO, and Stacked
Income Protection Plan for Cotton, STAX, were made available
for the 2015 crop year. SCO is available for corn, cotton,
cottonseed, grain sorghum, rice, soybeans, spring barley,
spring wheat, and winter wheat in selected counties for the
2015 crop year, representing over 80 percent of the acres
covered in the crop insurance program. RMA is looking to expand
SCO to additional crops and additional counties next year.
The new STAX program for cotton producers is currently
available for every county that had a crop insurance policy for
cotton, representing 98 percent of the cotton acres in the
United States. RMA released the APH yield exclusion insurance
product for 11 spring crops, nearly \3/4\ of all the acres and
liability within the crop insurance program. We expect to
expand the crops that are eligible for this provision next year
as well.
Coverage Level by Practice and Enterprise Unit by Practice
were available to farmers for the 2015 crop year, beginning
with spring-planted crops. These new programs provide a farmer
that produces a crop on both dryland and irrigated land the
option to elect a different coverage level for each production
practice or by enterprise unit. Coverage Level by Practice is
now available for 36 crops. Enterprise Unit by Practice is
available for 14 crops.
The Peanut Revenue Policy, which allows peanut farmers to
cover their revenue, is now available. This policy was approved
by the Federal Crop Insurance Corporation Board of Directors
less than a year after passage of the farm bill.
The beginning farmers and ranchers incentives were made
available to farmers and ranchers beginning last fall. These
provisions make crop insurance more affordable for beginning
farmers and ranchers by providing a ten percentage point
reduction in premium, as well as a waiver of the catastrophic
fees and additional administrative fees.
The farm bill required RMA to offer a product to cover
diversified farms. RMA developed the Whole Farm Revenue
Protection program, and the Federal Crop Insurance Board of
Directors approved that last year. As a result, the whole farm
program is now available in 45 states. To date, this option has
been generally well accepted around the country.
RMA is also making progress on offering organic price
selections for all crops as required in the 2014 Farm Bill. RMA
has eliminated the organic surcharge, added price selections
for over 20 crops, and created a contract price addendum, which
is available for 62 crops. Last year, nearly ten percent of the
organic policies utilized the contract price addendum in its
first year. Overall, these changes have resulted in nearly a
ten percent increase in the number of organic acres covered by
crop insurance.
In an effort to ensure that producers continue to receive
the crop insurance premium subsidy, RMA, with our sister
agencies NRCS and Farm Service Agency, have been working to
develop comprehensive guidelines for farmers so it will be
easier for them to comply with USDA conservation compliance
requirements. The three agencies work together to provide
information to respective field offices, and develop material
for all three agencies to inform customers of the new
guidelines. Outreach efforts will continue this spring.
Crop insurance benefits producers and rural economies. It
benefits those outside of rural economies by supporting a
reliable and dependable food supply system. It provides a
safety net that allows farmers access to credit, who may not be
able to obtain credit otherwise. It protects farmers' bottom
lines in a very volatile environment, but perhaps just as
important, it provides peace of mind to producers who entire
life's work, or perhaps the work of generations, will not be
undone by one unfortunate weather event.
While the Federal Crop Insurance Program was already
providing a strong safety net for producers, this farm bill
made significant improvements that have been well received by
America's farmers and ranchers.
I again thank you for inviting us here today, and I look
forward to working with you. Mr. Chairman, I will be pleased to
answer any questions that you or other Members of the
Subcommittee may have.
[The prepared statement of Mr. Willis follows:]
Prepared Statement of Brandon Willis, Administrator, Risk Management
Agency, U.S. Department of Agriculture, Washington, D.C.
Chairman Crawford, Ranking Member Walz, and Members of the
Subcommittee, I am pleased to discuss the Risk Management Agency's
implementation of the Agricultural Act of 2014 (the 2014 Farm Bill). As
the Agency moves forward with implementation of the 2014 Farm Bill
provisions, I am pleased to report to this Subcommittee that we have
accomplished implementation of almost every crop insurance provision in
the 2014 Farm Bill.
I would like to express my gratitude for the hard work performed by
the employees of the Risk Management Agency and their great efforts in
implementing the 2014 Farm Bill. Throughout all of the efforts of
implementation, the regular business of the RMA was conducted as
expected. Total program costs for the 2014 crop year, including premium
subsidy and delivery expense reimbursement, will be approximately $9
billion. Through the combined efforts of the agency and our private
industry partners, appraisals and claims adjustments were made in a
timely manner, indemnities were promptly paid, all while implementing
new provisions of the 2014 Farm Bill.
Implementation of the 2014 Farm Bill
After just over 1 year since the passage of the 2014 Farm Bill, RMA
has implemented almost all of the crop insurance provisions. From
implementing the Actual Production History (APH) Yield Exclusion ahead
of schedule to offering Whole Farm Revenue Protection for diversified
farms, I am proud of the accomplishments RMA has achieved over the past
year. While there is work to be completed, farmers and ranchers are now
beginning to take advantage of the new crop insurance options.
The Supplemental Coverage Option (SCO) and Stacked Income
Protection Plan for Upland Cotton (STAX) were made available for the
2015 crop year. SCO is available for corn, cotton, cottonseed, grain
sorghum, rice, soybeans, spring barley, spring wheat, and winter wheat
in selected counties for the 2015 crop year--representing over 80
percent of the acres covered in the Federal crop insurance program. RMA
is looking to expand SCO to additional crops and counties for the 2016
crop year.
STAX is currently available for every county that had a crop
insurance policy for cotton, representing 98 percent of cotton acres in
the United States. RMA is looking to expand STAX to remaining cotton
producing counties in the future.
One of the items we thought would not be accomplished for the 2015
crop year is the APH Yield Exclusion. However, RMA was able to develop
and release the Actual Production History Yield Exclusion insurance
product for 11 crops ahead of schedule. As a result, nearly \3/4\ of
all acres and liability in the Federal Crop Insurance Program will be
covered under this new option for the 2015 crop year. I am especially
grateful for the diligence of the employees of the Risk Management
Agency for their hard work in implementing this farm bill and
especially grateful that this program was partially implemented this
crop year. We expect to expand the crops eligible for the 2016 crop
year.
I am also pleased to report that Coverage Level by Practice and
Enterprise Unit by Practice were developed and made available to
farmers for the 2015 crop year, beginning with spring planted crops.
These new programs provide a farmer that produces a crop on both dry
land and irrigated land the option to elect a different coverage level
for each production practice or by enterprise unit. Coverage Level by
Practice is now available for 36 crops. Enterprise Unit by Practice is
now available for 14 crops. These options will provide producers more
options to tailor crop insurance for their specific needs.
Yet another program implementation is the Peanut Revenue Policy,
which allows peanut farmers to cover their revenue. This policy was
approved by the Federal Crop Insurance Corporation Board of Directors
less than a year after the 2014 Farm Bill became law. Peanut farmers
will now have the ability to manage risk for both yield and revenue
losses.
The beginning farmers and ranchers incentives authorized in the
2014 Farm Bill were made available to farmers and ranchers for fall
planted wheat in 2014. These provisions make crop insurance more
affordable for beginning farmers and ranchers by providing a ten
percent premium discount, as well as a waiver of the catastrophic and
additional coverage administrative fees. In addition, these changes
improve crop insurance for beginning farmers by allowing, in certain
instances, production history from previous operations to be used,
which provides beginning farmers and ranchers greater risk protection.
The 2014 Farm Bill required RMA to offer a product to cover
diversified farms. Prior to the passage of the 2014 Farm Bill, RMA had
already begun development of the Whole Farm Revenue Protection policy
and the Federal Crop Insurance Corporation Board of Directors approved
the policy shortly after the 2014 Farm Bill became law. As a result,
Whole Farm Revenue Protection is available for purchase for the 2015
crop year. To date, this option has been generally well received when
presented to specialty crop and organic growers around the country.
Whole Farm is well-suited for highly diverse farms and farms with
specialty or organic commodities and provides for all farm revenue to
be covered under one policy. It also allows for other Federal crop
insurance policies to be purchased covering individual commodities of
significant importance to the operation. Premium subsidy is available
and depending on farm diversification, farms with two or more
commodities, may receive a whole farm premium subsidy similar to other
revenue plans of insurance.
RMA is also making progress on offering organic price election for
all crops, as required in the 2014 Farm Bill. Since 2010, RMA has
eliminated the organic surcharge, added price elections for over 20
crops, and created the contract price addendum, which is available for
62 crops. Last year nearly ten percent of the organic policies utilized
the price addendum in its first year. Overall, these changes resulted
in nearly a ten percent increase in organic acreage covered by crop
insurance. RMA staff and I have attended numerous farmer meetings and
conferences to highlight the increased options for organic and
specialty crop growers. In 2016 we will continue to aggressively
increase the number of organic crops with price elections.
The 2014 Farm Bill linked the ability of a producer to receive a
crop insurance premium subsidy to USDA highly erodible land (HEL) and
wetland conservation (WC) compliance. For FSA and NRCS program
participants, the rules regarding filing form AD-1026 have not changed.
Producers who are participants in FSA's programs or NRCS's conservation
programs, who already have an AD-1026 on file do not need to file a new
form unless there are changes to the operation or new activities that
occur that affect the person's certification.
In an effort to ensure that producers continue to receive the crop
insurance premium subsidy, RMA worked with our sister agencies, the
Natural Resource Conservation Service (NRCS) and the Farm Service
Agency (FSA), to develop comprehensive guidelines for farmers so it
will be easier for them to comply with USDA conservation requirements.
The three agencies worked together to get information out to the
respective field offices and develop material for all three agencies to
inform our customers of the new guidelines. Outreach efforts will
continue well into this spring.
Every one of the aforementioned farm bill items was completed less
than 1 year after the passage of the 2014 Farm Bill and in time for
each respective planting season because of the outstanding farm bill
implementation work performed by employees of RMA.
Conclusion
I am pleased to report the progress RMA has made in implementing
the 2014 Farm Bill. These farm bill changes have been well received by
America's agricultural producers. Once the bill was signed into law,
the Agency was determined to implement the provisions as promptly as
possible to ensure that America's farmers and ranchers could benefit
from the new risk management options. Crop insurance benefits producers
and the surrounding rural economies to maintain their local economic
infrastructure and helps to provide a reliable and abundant food
supply.
Including the 2014 Farm Bill changes to safety net programs, the
Federal Crop Insurance Program provides a $9 billion safety net to
producers through taxpayer supported investments. Again, thank you for
inviting us here today and I look forward to working with you.
Mr. Chairman, I would be pleased to answer any questions that you
and other Members of the Subcommittee may have. Thank you.
The Chairman. Thank you, Administrator Willis.
I am pleased to recognize our second witness today, Mr. Val
Dolcini, Administrator, Farm Service Agency, U.S. Department of
Agriculture. Mr. Dolcini, you are recognized for 5 minutes.
STATEMENT OF VAL DOLCINI, J.D., ADMINISTRATOR, FARM
SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON,
D.C.
Mr. Dolcini. Thank you, Mr. Chairman, and Members of the
Subcommittee. I appreciate this opportunity to provide
information on the Farm Service Agency's implementation of the
2014 Farm Bill.
We have implemented the farm bill programs in record time,
providing safety net assistance to producers in every state
within just a few months of the bill's passage. FSA's 10,000+
employees, pardon me, and over 2,000 local offices are working
long hours to provide the most effective customer service
possible to producers as we finalize the push to enroll
producers in the new title I crop safety net programs.
FSA focused its efforts early last spring on implementing
the Livestock and Tree Disaster Assistance Programs. These
programs, which had been expired for nearly 3 years, were
resumed approximately 60 days following enactment of the farm
bill; 80 percent faster than in 2008. This assistance benefited
a diverse array of producers who were hit hard by natural
disasters, ranging from wildfire to drought. And FSA continues
to process payments for 2012 through 2014 disaster programs,
including the Livestock Forage Program, the Livestock Indemnity
Program, the Emergency Assistance for Livestock, Honeybees and
Farm-raised Fish, and Tree Assistance Programs. So far, FSA has
issued approximately 600,000 payments to producers since last
spring, totaling nearly $5 billion.
The LFP program has accounted for the bulk of these
payments, particularly to producers in the Plains States, but
also for producers across the country who have suffered from
extreme weather conditions. LIP payments are helping producers
who incurred livestock deaths, such as those affected by the
Atlas Blizzard that hit the Northern Plains in 2013. TAP
payments are helping producers in Florida who are suffering
from citrus greening, as well as orchard producers in other
states across the country. And ELAP payments are helping many
producers who do not benefit from other livestock disaster
programs, including beekeepers suffering from colony collapse
disorder.
The 2014 Farm Bill made significant changes to FSA's safety
net programs. The DCP and acre programs were repealed and
replaced by two new programs, the Price Loss Coverage and
Agricultural Risk Coverage programs. Participation in the base
reallocation, yield updating, and election processes is rapidly
progressing. The rate at which producers have made their
elections at local county offices has jumped by eight to ten
percent per week, and as of March 19, about 94 percent of farms
likely to enroll in ARC and PLC, that is, those farms that
enrolled in the DCP program, have made their base reallocation
decisions, and about 77 percent of farms likely to enroll have
made their election. We expect that these numbers will continue
to increase significantly by the end of the month, and all
producers who have contacted their local offices to file their
ARC and PLC paperwork by the deadline will be allowed to enroll
for ARC/PLC for the 2014 crop year.
Implementing a farm bill requires an all-hands-on-deck
approach to reach producers, and much of this success is the
result of close collaboration between our university and
extension partners, and of course, the dedicated men and women
of the Farm Service Agency. We worked closely with the
university partners at Texas A&M, the Food and Agricultural
Policy Research Institute, the University of Illinois, and
others who developed online, web-based decision tools so that
farmers could input their data and explore various scenarios
associated with adopting either ARC or PLC for their individual
operations. Furthermore, we worked, and are continuing to work,
with extension specialists in virtually every state on
extensive ARC and PLC education and outreach efforts. As of
mid-March, over 400,000 attendees have participated in
approximately 5,700 local events, providing producers with an
opportunity to think about how to best manage risk on their
farms. The ARC and PLC webtools were demonstrated at over 2,500
of these events, and the tool developers are hosting helpdesk
hotlines for producers who are in need of additional help.
In addition to collaboration with these partners, we have
had extensive interaction with the media, and appreciate our
partners in the ag media. FSA is making a final push to reach
all landowners and producers who have a stake in these
decisions. Early in this calendar year, we mailed nearly three
million postcards to landowners and producers as a reminder
about the upcoming deadlines, and stated that for those who
didn't elect between ARC or PLC, they would default into PLC
and would lose 2014 program benefits. We mailed another two
million postcards in mid-March to owners, operators and other
producers who had linked at least one farm that had not made an
election. And our county office staff, as you well know, is
geared up and ready to greet these producers and help make
their decisions in the final days.
Under the 2014 Farm Bill, upland cotton is no longer a
covered commodity and is not eligible to participate in ARC and
PLC, rather, it is eligible for the new STAX program offered by
my sister agency, RMA. FSA has also implemented the new Margin
Protection Program for Dairy, and over 23,000 dairy producers,
that is \1/2\ of all U.S. dairy operations, have enrolled for
calendar year 2015 coverage. MPP offers dairy producers
catastrophic coverage at no cost, with a $100 administrative
fee and then various levels of buy-up coverage. The Noninsured
Crop Disaster Assistance Program, NAP, was also expanded in the
2014 Farm Bill to include protection at higher coverage levels
similar to provisions offered under the Federal Crop Insurance
Program. NAP continues to offer coverage at the catastrophic
level based on 50 percent of expected production, at 55 percent
of the average market price. Now though, producers can buy up
to 65 percent of the expected production in five percent
increments at 100 percent of the average market price. The
majority of 2015 NAP-eligible spring seeded crops had an
application period that closed earlier this month.
The Chairman. Administrator Dolcini, forgive me, but we are
up against a hard vote, and I want to make sure we give our
Members an opportunity to ask some questions, so I appreciate
your indulgence here and we will submit the balance of your
testimony for the record.
Mr. Dolcini. Thank you, Mr. Chairman.
[The prepared statement of Mr. Dolcini follows:]
Prepared Statement of Val Dolcini, J.D., Administrator, Farm Service
Agency, U.S. Department of Agriculture, Washington, D.C.
Mr. Chairman and Members of the Subcommittee, I appreciate this
opportunity to provide information on the Farm Service Agency's (FSA's)
implementation of the Agricultural Act of 2014 (the 2014 Farm Bill). We
have implemented the farm bill programs in record time, providing
safety net assistance to producers in every state within just a few
months of bill passage. FSA's 10,000+ employees at over 2,000 local
offices are working long hours to provide the most effective customer
service possible to producers as we finalize the push to enroll
producers in the new Title I crop safety net programs.
Disaster Assistance
FSA focused early last spring on implementing the livestock and
tree disaster assistance programs. These programs, which had been
expired for nearly 3 years, were resumed in approximately 60 days
following enactment of the 2014 Farm Bill--80 percent faster than in
2008. This assistance benefited a diverse array of producers who were
hit hard by natural disasters, ranging from wildfire to drought. FSA
continues to process payments for 2012 through 2014 disaster programs--
including the Livestock Forage Disaster Program (LFP); the Livestock
Indemnity Program (LIP); the Emergency Assistance for Livestock, Honey
Bees, and Farm-Raised Fish Program (ELAP); and the Tree Assistance
Program (TAP). So far, FSA has issued approximately 600,000 payments to
producers since last spring, totaling nearly $5 billion.
The LFP program has accounted for the bulk of these payments,
particularly to producers in the Plains States, but also across the
country, who have suffered from extreme weather conditions. LIP
payments are helping producers who incurred livestock deaths, such as
those affected by the Atlas Blizzard that hit the northern Plains in
2013. TAP payments are helping producers in Florida who are suffering
from citrus greening disease, as well as orchard producers in other
states across the country. ELAP payments are helping many producers who
do not benefit from the other livestock disaster programs, including
bee keepers who are suffering from colony collapse disorder.
ARC/PLC
The 2014 Farm Bill made significant changes to FSA's safety net
programs. The 2008 Farm Bill's Direct and Counter-Cyclical Program
(DCP) and the Average Crop Revenue Election (ACRE) program were
repealed and replaced by two new programs: Price Loss Coverage (PLC)
and Agricultural Risk Coverage (ARC). The window for farmers to take
advantage of the one-time opportunity to reallocate a farm's base acres
and to update payment yields will close on March 31. March 31 also is
the deadline to elect ARC or PLC coverage for their farms.
Participation in the base reallocation, yield updating, and ARC/PLC
election processes is rapidly progressing. The rate at which producers
have made their election at their local county offices has jumped by 8-
10 percent (or more) per week. As of March 19, about 94 percent of
farms likely to enroll in ARC/PLC (e.g., those who had a DCP/ACRE
contract) have made their base reallocation and yield updating
decisions, and about 77 percent of farms likely to enroll have made
their election. We expect these numbers to continue to increase
significantly by the end of the month. All producers who have contacted
their local offices to file their ARC/PLC paperwork by March 31 will be
allowed to enroll for ARC/PLC for the 2014 crop year.
Implementing a farm bill requires an ``all hands on deck'' approach
to reach producers, and much of this success is the result of close
collaboration between our university and extension partners and, of
course, our dedicated FSA staff. We worked closely with our university
partners at Texas A&M, the Food and Agricultural Policy Research
Institute, the University of Illinois, and others, who developed on-
line web-based decision tools so that farmers can input data and
explore various scenarios associated with adopting ARC or PLC for their
individual operations.
Further, we worked--and are continuing to work--with extension
specialists in virtually every state on an extensive ARC/PLC education
and outreach effort. As of mid-March, over 400,000 attendees have
participated in approximately 5,700 local ARC/PLC informational events
that provide producers with the substance to think about how to best
manage risk on their farms. The ARC/PLC webtools were demonstrated at
over 2,500 of these events and the tool developers are hosting help
desk ``hotlines'' for producers who are in need of additional help.
In addition to collaboration with our partners, we have had
extensive interaction through the media. FSA has issued eight national
news releases informing producers and the general public about ARC/PLC
resources and deadlines, and I have personally conducted over 100 media
interviews regarding these new programs. Over 700 ARC/PLC news stories
have appeared in the media as of Friday, March 20.
FSA is making a final push to reach all landowners and producers
who have a stake in the ARC/PLC decision. Early in the calendar year,
we mailed 2.9 million postcards to landowners and producers as a
reminder about base reallocation and yield updating deadlines, and
stated that producers who do not elect ARC or PLC are not eligible for
2014 crop year ARC or PLC payments. The only option for producers who
do not elect is to be enrolled in PLC for the 2015-18 crop years.
Another 2.2 million postcards were mailed starting on March 16 to
owners, operators, and other producers linked to at least one farm that
had not yet made an election. Our county office staff is geared up and
ready to greet these producers and help them to make their decisions in
the final days of March.
Under the 2014 Farm Bill, upland cotton is no longer a covered
commodity and is not eligible to participate in ARC or PLC, but rather,
is eligible for the new Stacked Income Protection Plan (STAX) offered
by the Risk Management Agency (RMA). Until STAX becomes available in a
county, upland cotton is eligible for the Cotton Transition Assistance
Payments program (CTAP) for 2014 and 2015 crops. FSA has paid about
$540 million to over 184,000 farms for 2014 CTAP payments; 2015 CTAP
payments will drop off dramatically in 2015 as STAX becomes available.
Dairy, NAP, CRP
FSA has implemented the new Margin Protection Program for Dairy
(MPP-Dairy) and over 23,000 producers--over \1/2\ of all U.S. dairy
operations--have enrolled for calendar year 2015 coverage. The new MPP-
Dairy offers dairy producers: (1) catastrophic coverage, at no cost to
the producer after an annual $100 administrative fee; and (2) various
levels of higher coverage. Catastrophic coverage provides payments to
participating producers when the national dairy production margin is
less than $4 per hundredweight (cwt). Producers may purchase higher
coverage, for a premium, that provides payments when margins are
between $4 and $8 per cwt. During the 3 months of enrollment, FSA held
more than 500 public meetings, sent out nearly 60,000 direct mailings,
and conducted more than 400 demonstrations of the web-based MPP-Dairy
tool designed to help applicants calculate their specific coverage
needs.
The Noninsured Crop Disaster Assistance Program (NAP) was also
expanded in the 2014 Farm Bill to include protection at higher coverage
levels, similar to provisions offered under the Federal crop insurance
program. NAP continues to offer coverage at the catastrophic level
based on 50 percent of expected production at 55 percent of the average
market price for the crop. Now, producers can obtain additional
coverage levels ranging from 50 to 65 percent of expected production,
in five percent increments, at 100 percent of the average market price
for the 2014-18 crops years. The majority of 2015 NAP-eligible spring-
seeded crops had an application closing date of March 15, 2015.
The 2014 Farm Bill also included retroactive NAP assistance for
losses to 2012 fruit crops grown on trees and bushes that had
Secretarial disaster designations for frost or freeze. To date, FSA has
made 635 payments totaling over $13.3 million for NAP frost/freeze.
In addition to the ARC/PLC tools noted earlier, the University of
Illinois and their partners developed decision tools for both MPP-Dairy
and NAP. These tools help producers make decisions about the optimal
level of coverage for their operations, and have been widely accessed
by producers. Further, nearly 14,000 producers have participated in
MPP-dairy educational meetings and nearly 17,000 producers have
participated in NAP meetings.
Currently, 24.3 million acres are enrolled in Conservation Reserve
Program (CRP) contracts, including 18.2 million acres in general
enrollment authority and 6.1 million acres in continuous enrollment
authority. CRP contracts on 1.9 million acres are set to expire
September 30, 2015. With the enactment of the 2014 Farm Bill, the
number of acres available nationwide for enrollment was reduced to 24
million acres starting in 2017; as a result, we expect general
enrollments to become much more competitive in the future, increasing
the environmental benefits per acre. We will also continue to pursue
continuous enrollments to target the most environmentally-sensitive
acreage.
Credit
Almost all farm loan programs are authorized permanently through
the Consolidated Farm and Rural Development Act. However, the 2014 Farm
Bill makes several program changes and enhancements, provides some
additional authorities, and reauthorizes the Mediation Program and the
Individual Development Account (IDA) grant pilot program, which
supports a savings incentive program for low-income beginning farmers.
Several of the changes are mandatory and were implemented by FSA in
March of 2014. These changes provide more favorable interest rates for
joint financing arrangements, provide a larger percent guarantee on
guaranteed conservation loans, increase the loan limits for the down
payment loan program from $225,000 to $300,000, make youth loans
available in urban areas, and eliminate the term limits for guaranteed
operating loans.
On November 7, 2014, FSA implemented additional mandatory changes
for farm loans, including raising the borrowing limit of its popular
microloan program from $35,000 to $50,000, and updating the ``farming
experience'' loan eligibility requirement to include military
leadership positions, advanced agricultural education, or other non-
farm management experience. This has already assisted 1,600 farmers by
expanding the credit available for their family farming businesses. FSA
also received authority to implement a relending program to help Native
American producers purchase fractionated interests of land; this
program is under development.
Improving Efficiency
The ability to meet FSA's program delivery goals depends on
information technology systems and services critical to our daily
operations. To improve customer service, FSA is moving forward with
improvements such as simplifying the printing of farm maps and
customized reports, and continuing the integration of systems through
common eligibility, payment, and obligation frameworks. These efforts
will reduce the need for FSA staff to use multiple systems or perform
redundant data entry, helping customers to make fewer--or significantly
shorter--visits to their local offices.
With continued attention to business processes and IT integration,
FSA can focus on improving customer application processes; streamlining
program delivery; providing additional customer technical assistance;
sharing data needed for eligibility determination; improving the
timeliness and accuracy of loans, payments, and program compliance;
and, providing new customer self-service options. FSA's continued
efforts to streamline, modernize, and automate the delivery of farm
programs and agricultural systems met two significant milestones this
year with the releases of MIDAS Farm Records and Business Partner.
MIDAS now combines producer and land information with Geographic
Information System (GIS) data, reducing duplicative data when farmers
and ranchers conduct business at any FSA County office. The newest
business process improvement includes automatic validation of address
and tax information at the time of entry, which further reduces
improper payments and improves record accuracy.
For FY 2016 and beyond, FSA has placed additional emphasis and
resources on ensuring that IT investments, decisions, and operational
plans are driven by business needs across the agency and are manageable
in size. We look forward to enabling new customer models that support
FSA as it becomes the gateway for farmers and ranchers to access rural
and agricultural support services.
Reaching Beginning and Under-Served Producers
One of the most important facets of our Agency's implementation of
the farm bill is service to beginning and under-served farmers and
ranchers. FSA is often ``the lender of first opportunity'' for many new
and beginning producers. In addition, we have successfully implemented
new provisions of the farm bill such as the NAP 50 percent premium
discount and waiver of the NAP application fee for beginning, limited
resource, and traditionally under-served farmers. We are working in
unique new ways to help these producers automatically sign up for the
basic NAP coverage and telling them about the 50 percent premium
discount through a coordinated approach between Farm Loan Programs and
Farm Programs staff.
FSA's microloan program is also an important access point to credit
for some new farmers and ranchers. The 2014 Farm Bill expanded lending
opportunities for thousands of farmers and ranchers to begin and
continue operations, including greater flexibility in determining
eligibility, raising loan limits, and emphasizing beginning and
socially disadvantaged producers. Since implementation of the popular
microloan program, FSA has helped over 11,000 small, under-served, and
beginning farmers obtain operating credit. Producers can use microloan
funds to pay for initial start-up expenses such as land rent, essential
tools, livestock and farm equipment, and annual expenses such as seed,
fertilizer, utilities, marketing, and distribution expenses.
We are implementing other provisions of the farm bill that help
these producers, including reinstating the Reimbursement Transportation
Cost Payment Program for Geographically Disadvantaged Farmers and
Ranchers (RTCP) and the Transitions Incentive Program, which provides
funding to encourage the transition of CRP land from a retired or
retiring owner or operator to a beginning or socially disadvantaged
farmer or rancher to return land to production for sustainable grazing
or crop production.
These important policy advancements are part of a larger effort at
the Department to enhance assistance to new and beginning farmers and
ranchers. In our FY 2016 budget request, FSA has proposed the creation
of new and beginning farmer and rancher field positions and additional
cooperative agreement funding to help support enhanced financial
literacy technical assistance and partnerships. These staff would
facilitate and guide beginning farmer outreach, provide support and
cross-cutting customer service training for USDA employees in the
field, and enhance partnerships within regional, state, and local
communities--and additional cooperative agreement funding to help
support enhanced financial literacy technical assistance and
partnerships.
Our participation in complementary initiatives such as Know Your
Farmer, Know Your Food and Bridges to Opportunity further enhances our
service to beginning and under-served producers, by helping us
coordinate programs across the Department. In the process, we also find
new opportunities for needed program enhancements such as expansion of
cold storage funding under the Farm Storage Facility Loan Program.
Serving beginning and under-served farmers and ranchers well is
core to our Agency mission and the future of agriculture.
Mr. Chairman, this concludes my statement. I will be happy to
answer your questions and those of the other Subcommittee Members.
The Chairman. I apologize for cutting you off there, but we
want to get going so we can get this done before we are called
to vote.
Administrators, thank you so much for being here, and
again, I appreciate your indulgence on your time constraint.
Administrator Dolcini, as I said in my opening statement, I
believe the limit you placed on managers in the actively
engaged rule is arbitrary. In fact, it seems like the
rulemaking might have been hijacked away from people like you
who understand this country's diversity of ag production, and
written by folks who really don't know anything about it. In my
opinion, the rule should allow for as many managers as
justified by the operation's needs.
Can you tell me if there was input on this rule from people
outside of USDA, and how that input might have changed its
course?
Mr. Dolcini. Well, Mr. Chairman, thank you for the
opportunity to answer that question. As you know, obviously, we
proposed a rule earlier this week that addresses, for the first
time since 1987, a definition of actively engaged within the
confines of the statute, the 2014 Farm Bill. We believe that it
is a good start, and over the next 60 days look forward to a
lot of interaction from the public and others who are going to
be impacted by this rule.
It addresses for the first time the actively engaged
definition, and we have included for the first time hours
associated with being actively involved in the farming
operation. It is either 500 hours or 25 percent of the time
that it would take to manage that farming operation. We have
allowed an additional pay limit if the operation is large or
complex. And we have defined large as 2,500 acres or more.
Complexity decisions will be made by the state committee in
conjunction with the FSA headquarters staff here. We have
allowed a third pay limit for operations that are both large
and complex. So the default limit is one pay limit, and then
there are two additional pay limits.
We think this is a good start. It is a strong rule. We
operated within the confines of what the 2014 Farm Bill gave
us, and we look forward to receiving comments over the next
couple of months.
The Chairman. Thank you, sir.
Administrator Willis, I also made reference to this in my
opening statement, the farm bill provided RMA with additional
flexibility to develop products for crops that traditionally
faced low coverage levels, particularly rice. My constituents
are eager for margin coverage to become available for the next
crop year, but I have some concerns regarding how RMA is
pursuing these policies.
I believe you should be developing a rice-specific policy,
as rice inputs are much different than other commodities
because it requires higher levels of fertilizer and diesel
fuel, however, we have heard you have been pursuing a one-size-
fits-all margin product. Can you tell me what you are doing to
ensure that rice will get the adequate coverage it needs and
deserves?
Mr. Willis. Certainly. One of the positive things about the
Crop Insurance Act is it allows private groups to submit
products that addresses their needs. If we look in the last 4
years, the amount of buy-up coverage for rice has gone from 28
percent to 70 percent. That is just since 2008. A lot of that
is because of these products that offer and hit the needs that
rice farmers have.
We are working with the private submitter who submitted the
margin program, and right now, trying to come up with the
details of that. My understanding is that as it stands,
actually, there is a flexibility to make sure that the margins
of rice are reflected in how the policy operates, and you have
my commitment to work with them to make sure that whatever
policy comes out works for the producers it is meant to provide
a safety net for. I think we all have the same goal on that
front.
The Chairman. Thank you. Let me switch gears. I want to
talk about your work in implementing the Supplemental Coverage
Option that was authorized in the farm bill. Could you let us
know what you are doing specifically to ensure that all the
rice-producing counties have SCO available to them, so that
producers could get the full benefit of what was pledged under
the farm bill?
Mr. Willis. Yes. The farm bill also contained language that
allowed RMA to use our own information instead of simply
relying upon the NASS information, which is very good
information, but sometimes we have some counties where we could
offer SCO if we use our own information that NASS doesn't have
that county-level information. Moving forward, we will start to
utilize that information. That will allow us to expand both
crops and additional counties next year. Rice will obviously be
a beneficiary of us using our own data, and our intent is to
dramatically increase the number of counties that have SCO
coverage for all crops, rice specifically as well.
The Chairman. Thank you, Administrator Willis.
I now recognize Ranking Member Walz, for 5 minutes.
Mr. Walz. Thank you, Chairman. I am going to have the
gentlelady from Arizona start with the questioning on our side.
Mrs. Kirkpatrick.
Mrs. Kirkpatrick. Thank you, Ranking Member Walz, and thank
you, Mr. Chairman. This is my first appearance on this
Committee, and I am really pleased to be here, so thank you.
And, Administrators, thank you very much. I am new to the
Committee but agriculture is not new to my district. I
represent roughly the eastern half of Arizona. It is a very
large, rural district. It ranks twenty-eighth out of the 435
Congressional districts in terms of the importance of
agriculture. As we have 13,500 farms, including very large
cotton growers, and a new industry in vineyards as we start to
become a winery state, who would have guessed, and in my
district. I have a special interest in emerging farmers,
especially veterans and Native Americans. So my district has 12
tribes, 25 percent Native American, and they would like to get
back into the farming business.
So my question to both of you is what are you doing
specifically to get that information to veterans, to Native
Americans? How can I assist you in doing that? I have set up a
veterans' working group in my district, and also a Native
American working group. And if I--if there are specific things
that I can take back to them to help these emerging farmers, I
would really like to know about that.
Mr. Dolcini. Well, I appreciate the opportunity to answer
that question, Congresswoman, and welcome to the Subcommittee.
Mrs. Kirkpatrick. Thank you.
Mr. Dolcini. As you may know, USDA has recently appointed a
liaison to the veterans' community. He is the Deputy Under
Secretary for the Farm and Foreign Agricultural Services. His
name is Karis Gutter. He is a Marine Reserve veteran. So Karis
is leading an effort at the Department to focus on veterans'
issues.
With regard to the broader issue about pulling Native
Americans as well as veterans into our programs, at the Farm
Service Agency, we spend a lot of time targeting our loan
programs in particular on new and beginning farmers, and those
who have been traditionally under-served or poorly served by
FSA programs historically, and that would include Native
American populations around the country.
I sit on something called the Council on Native American
Farming and Ranching. It is actually meeting in Oklahoma this
week so I couldn't be at the meeting, but we spend a lot of
time at USDA, and particularly at the Farm Service Agency,
working with our colleagues in the Department and across
government to better serve all of our customers, including
Native Americans and now the emerging veteran population that
we have in this country. I would be happy to work with your
office to tell you a little bit more about what we are doing
specifically in Arizona.
Mrs. Kirkpatrick. Let us do that. I would be happy to meet
with you and take some specific things back to my working
groups.
Administrator Willis?
Mr. Willis. Two things I would like to mention. First of
all, we have what we call risk management education that allows
us to work with private partners, partners who are in the
region. They provide education, oftentimes they are schools,
but many different groups will apply for this funding. And they
are the ones who know a lot of the individuals, and we are
targeting individuals who are under-served, just like Val
talked about. So the education is one area. We want them to
know what crop insurance options are available to them.
Mrs. Kirkpatrick. How affordable is crop insurance for
emerging farmers?
Mr. Willis. Well, that was the next thing. One of the great
things that was included in the farm bill is an incentive for
beginning farmers and ranchers. Essentially, it reduces the
amount they have to pay for crop insurance by ten percentage
points. That is a very big deal. That was one of the first
parts of the farm bill that we were able to make available. It
should be available for all farmers now. It is for their first
5 years of farming. Obviously, when you are in your first few
years, you might not have the equity built up that a more
established farmer does. We have the education to let them know
about it, but because of the farm bill changes you made, there
are also some very real incentives for them.
Mrs. Kirkpatrick. Great. Thank you very much. I look
forward to working with you.
I yield back.
The Chairman. Would you like to use the balance of your
time?
Mr. Walz. No.
The Chairman. Okay. I thank the gentlelady.
I recognize the gentleman from Ohio, for 5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman.
Administrator Dolcini, can you clarify for me, I think
there is some confusion, FSA county offices that have been
closed, beginning with the farmers records were moved to
administrative counties, but then also their yield base for the
ARC program, which county is it, the administrative county they
are in or could it be the county that they are physically--
where their farm is located? Can you clarify that? There is
some confusion on that, I think.
Mr. Dolcini. Sure, I would be happy to, sir. In fact, this
issue was raised to me at the Commodity Classic in Phoenix
several weeks ago, and we have worked on a solution that allows
a farmer who farms in a specific county to use the physical
location as their county of choice. FSA has closed some offices
over the last several years, and that has created the situation
that you have described and other Members may have in their
districts. I think the solution that we have, which is to allow
a farmer to choose essentially the county based on the physical
location of his or her farm, is the best way to go.
Mr. Gibbs. I would concur. Now, is there a deadline to make
that selection if they are in a county that the offices were
closed, and they have been moved to an administrative county to
do administrative work----
Mr. Dolcini. Right.
Mr. Gibbs.--and let us say for previously the yields and
everything has been moved from that--based on that
administrative county, they can select to have it in their
county----
Mr. Dolcini. That is right.
Mr. Gibbs.--you just said that. Now, is there a deadline or
a timetable to make that selection, or how does that mechanism
work?
Mr. Dolcini. Sir, I will have to get back to you if there
is a specific deadline associated with that decision. It will
be available for the 2015 crop year, and perhaps my staff can
pass me a note here while you are in the room and I can give
you a more fulsome answer to that, but what we will want to do
is make sure that a farmer who is interested in having his or
her FSA paperwork in a given county, and farms in that county,
should have the opportunity to utilize that local FSA office.
Mr. Gibbs. I agree, and I thank you.
And I yield back, Mr. Chairman.
Mr. Dolcini. Thank you, sir.
The Chairman. Thank you.
I now recognize Ranking Member Walz, for 5 minutes.
Mr. Walz. Thank you, Chairman. And thank you again both for
helping us understand what is going on.
Mr. Dolcini, I wanted to start out. I know there has been
some angst about relinking crop insurance to conservation
compliance against some growers who didn't participate in other
FSA programs. Have you reached out to those folks, and what are
you hearing?
Mr. Dolcini. Sir, we have reached out to those folks who
may not have what we call an AD-1026, which is our form
indicating compliance with conservation rules and regulations
on file. This has been a joint effort on the part of the two
agencies in front of you, as well as our sister agency, the
Natural Resources Conservation Service, to make sure that we
are reaching out to specialty crop producers, whether they are
in Minnesota or central California, or elsewhere in the
country, that they have as much information as they need to
understand the conservation compliance requirement, and
understand what it takes to come into an FSA office and attest
to that.
We are on the right track. We are going to continue to do
additional outreach in the weeks to come, and look forward to
continuing to work----
Mr. Walz. Mr. Willis, are you hearing that on the specialty
crop folks?
Mr. Willis. Yes. Yes, we are, and we are working side-by-
side on compliance, trying to make sure everybody who needs to
know about it knows about it. From the Risk Management Agency's
perspective, we sent letters to a wide group of people who need
to come in and get that form filled out. One of my employees
just yesterday talked about his local Farm Service Agency
office had sent three notifications on this issue. We also
sent, about a month ago, information to the crop insurance
companies, so when they are sitting across the table from
producers who may not know about compliance, they can tell them
about it. We are trying to have a multi-pronged approach.
Our goal is that every single producer that has crop
insurance now, has crop insurance in the future because they
filled out the form. We want everybody to stay in.
Mr. Walz. And I appreciate that because I--this is one of
those--they care deeply about their soil health, and I want to
make sure that this compliance issue doesn't become a
distraction from our goals of reaching that together.
Mr. Willis. Yes.
Mr. Walz. Mr. Willis, another one, and I know you hear this
lots from Members. Every year things happen, like I had massive
rains and wind last year, that make planting conditions--and
the crops end up--it is difficult to get it in the ground, then
they bump up against the planting deadlines for crop insurance
policies, and then we end up having to ask for extensions and
things like that. Could you describe the process RMA uses to
evaluate those planting dates, and how we go about changing or
using them, because it ends up being a lot of angst for a lot
of people?
Mr. Willis. Yes, sir. In fact, I just had a meeting a few
days ago up here, actually, with some Members. I have a lot of
sympathy for Members from Texas, farmers from Texas, who have
been in a drought for a few years, desperately want water, and
unfortunately, they got too much water at one point in time.
They were struggling to plant before the end of the planting
period.
Mr. Walz. Yes.
Mr. Willis. So I have a lot of sympathy for that. How those
timelines are set, we set using local information. We have
regional offices, we have ten of them around the nation. They
will work with the local producer groups, the local land-grant
extension, the experts in the area, and they try to set the
time period to be flexible, but essentially, we want it to
start when it is reasonable to plant a crop, and we want it to
end when you shouldn't plant a crop after a certain point in
time. The reason is, if we plant in those periods of time, you
have the highest likelihood of success, and with that,
obviously, crop insurance premiums can be lower because that is
when you are supposed to plant a crop.
Every year, there are anomalous conditions somewhere in the
nation, and it is very difficult and we understand. It does
provide a little flexibility inasmuch as you can plant after
the final plant date, but your guarantee, how much you are
insuring, goes down about one percent a day. So if people feel
like the dates need to be reevaluated, we encourage them to
work with our local folks. Every year, we do change some of
these just to reflect changing conditions in each area.
Mr. Walz. I appreciate that. And I would just like, maybe
for both of you, Mr. Dolcini, maybe you can speak to this. You
have been traveling a lot. Each of us see our FSA offices, and
the gentleman's question was right, consolidation and things,
there are issues that came up in that. My concern though is how
is the morale of those workers as this happened, as we have
basically a smaller number of people in offices doing more work
at this point in time, how are they responding across the
country as you see it, with their partners at the universities?
Mr. Dolcini. That is a great question, Congressman, and you
are right, I do a lot of traveling since I came to this
position. I have been to about 25 states, and I always go out
to county offices and talk with PTs who have been there for 2
years in some cases, 30 years in other. I think morale is, by
and large, good. We provided more resources to the field in
terms of temporary employees, we have eased up on a hiring
freeze that we were operating under, and we have provided more
tools to them to get the job done. Obviously, the farm bill is
a big job, and I wanted to make sure that my county offices
weren't broken by the workload.
There are offices that need a little bit more attention,
that is for sure, but, by and large, staff is feeling good
because the relationships they have across the counter is
really our competitive edge at the Farm Service Agency.
Mr. Walz. Very good.
I yield back. Thank you, Mr. Chairman.
The Chairman. I thank the Ranking Member.
I now recognize the gentleman from Georgia, Mr. Scott, for
5 minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
Mr. Willis, I actually majored in risk management and
insurance, so while terms like loss ratio and adverse selection
put most people to sleep, they actually wake me up. So I do
look forward to working with you as we go forward in making
sure that we have a crop insurance program that keeps good
farmers in business in bad years. Our goal is certainly not to
guarantee everybody a profit, or anybody a profit, I should
say.
I do want to speak briefly to the concern of actively
engaged. And just going back through my life, my two
grandfathers who both farmed, towards the end of their life, it
was their land, it was their seed, it was their tractors, but
the fact of the matter is they were no longer physically able
to do the majority of the work. And my fear is that when we get
into the definition of actively engaged, that we actually end
up working contrary to what we should be doing, which would be
to encourage more people to get into agriculture. And so I
would also encourage you to take a look at the overall loss
ratio and what that may do with regard to the crop insurance
system because those, in the end, may very well be the best
risks that we have in the system; those who may not meet that
definition of actively engaged, because being a good farmer is
more than just being able to drive a tractor; it is growing a
good crop. But I would suggest to you that being a good
business person is probably more important than growing the
good crop in today's global economy.
So I look forward to working with you on those issues, and
again, I would ask that you work with this Committee and be
very careful with that definition of actively engaged. If you
look at our farm population, a lot of them are, unfortunately,
older today and not capable physically of doing some of the
workload that you may be asking them to do.
Mr. Dolcini, one of the things that I am concerned about is
counting crops that aren't harvested against a farmer's generic
base. I have people in my great State of Georgia who plant
wheat for grazing. They graze their cows on it, they never
harvest the wheat, and then that is counted against their
generic base. It makes no sense to me to count a crop that is
not harvested against the generic base. Would you speak to this
issue, and what do you anticipate the actions of Farm Service
to be with regard to this?
Mr. Dolcini. Congressman, thanks for the opportunity. And
I, just on the actively engaged issue, share with you a real
concern about bringing a new generation of farmers and ranchers
into the agricultural economy of this great country. And one of
the things that we are doing every day at the Farm Service
Agency is looking for new ways to make sure that we build that
important resource.
On the question of cover on generic base, I think that we
are in agreement that cover crops are a great option for many
producers around the nation, and our sister agency, the Natural
Resources Conservation Service, has a variety of programs that
can help in that regard. I think that the Secretary was asked
this question, or one similar to it, several weeks ago, and in
that interim period we have consulted with the Office of
General Counsel and just don't believe that there is a lot of
room for us to maneuver on this particular question here, but I
look forward to continuing to work with the staff and your
office on it.
Mr. Austin Scott of Georgia. I think the majority of the
Members of the Committee would disagree with the lawyers on
this, and that I don't think we ever intended in the drafting
of the farm bill for a crop that was not harvested to be
counted against a farmer's generic base. If your attorneys are
telling us that we need to have legislation to fix that, then I
would think that there would be broad agreement among the
Committee to do that. But this is having a tremendous impact on
a lot of people, and quite honestly, it--a lot of these people
are the best farmers in America. I look forward to further
discussions on that.
I am almost out of time, Mr. Chairman, so I will yield the
remaining 20 seconds of my time. But I look forward to working
with you to resolve that issue. It needs to be resolved sooner
rather than later.
Mr. Dolcini. Thank you, sir.
The Chairman. I thank the gentleman.
I now recognize the gentlelady from Florida, for 5 minutes.
Ms. Graham. Thank you very much, and I apologize for being
late. Mr. Scott, do I get your 20 seconds? Is that how it--
thank you, Congressman.
First, thank you very much. I appreciate it. My family has
deep roots in agriculture in Florida, so it is such an honor to
be on this Committee and serve on this Subcommittee. I
apologize if this question has already been asked, following my
election, I made a tour around the district, and I met with
quite a few farmers, and there is still confusion about the
implementation of the farm bill. And my question goes to that.
I mean how are your offices working in helping managing the
transition and implementation of the new farm bill in districts
such as mine, which is very rural, and they need some help in
understanding what they are expected to do to meet the
requirements of the new farm bill.
Mr. Dolcini. Thank you for the opportunity, Congresswoman.
In the entire country, and certainly in the State of Florida,
we have had a robust outreach effort beginning last spring when
we rolled out the first farm bill program. Since then, we have
rolled out successive programs and have incorporated similar
outreach efforts which involve relationships with local land-
grant universities, with cooperative extension offices, with
Farm Bureau chapters, with commodity organizations, with
Congressional offices in some cases, and with others, to ensure
that producers understand these new and complicated programs.
They are significantly different from the programs that the
2008 Farm Bill included, in some cases, they are brand new, and
so we really wanted to make sure that there was enough
understanding out there that folks could make well-informed and
thoughtful decisions.
To that end, the farm bill contained $100 million, we
appreciate that, for the development of web-based decision
tools and other software that would help farmers, in the
comfort of their own home office or at the kitchen table, plug
in their numbers and make a determination as to which program
might be better. We have included a robust direct mail program.
So, for example, ARC and PLC programs, we have mailed close to
five million postcards to ensure that folks know about public
meetings, they know about program deadlines, and they know
about other important issues associated with these decisions.
We have really done an unprecedented job at the Farm
Service Agency in making sure that everybody who wants to know
about these programs does indeed know about these programs.
I would just close by saying the 5,000 public meetings that
we have done have ranged from large, several hundred member
meetings in Montana, I did five meetings in 2 days a few weeks
ago, to small county office-based meetings where a county
director might be talking to two or three producers and
answering essentially the same questions that we would do in
those large forums.
So we are doing a lot of good things around the country. I
think the response on our producers has been excellent, and it
has really engaged our staff as well. I have the hardest
working public employees in the United States, I would venture
to say, and they have really put their shoulder to the wheel on
this effort for the last 9 months, and we are in the
homestretch now, and I think that things have gone pretty well.
Ms. Graham. That is really great to hear. I have some of
the hardest working constituency service providers in Florida's
second Congressional district. Maybe we could put your hard
workers together with my hard workers, so if there are still
any questions for the farmers in my district, they can get
answered. I appreciate it.
My next question is about citrus greening in Florida and
our citrus crops. Do you think there is enough being done to
provide a safety net for these specialty crops?
Mr. Dolcini. On citrus greening, we have used our Tree
Assistance Program to provide assistance to those impacted by
that horrible disease. I don't know, Congresswoman, that it is
going to make them whole necessarily, but it provides important
relief where relief previously didn't exist. As you probably
know, we have an energetic State Director down there named Rick
Dantzler who has really been up and down the state to ensure
that folks know about the TAP program for citrus greening, and
that Rick and his team have done a battery of public meetings
as well on that topic.
I would certainly be interested in working with your office
if there is more that we can do, but I think that this is a
good first start.
Ms. Graham. I appreciate that. Citrus greening has
decimated our citrus crop in Florida, and it is sadly now
making its way West. They are starting to see it some in
California, so----
Mr. Dolcini. Yes.
Ms. Graham.--we need to find a solution to this quickly,
not only for Florida but for the rest of our citrus crops
across the country. So thank you. I appreciate that.
Last question, on peanuts. And my district is the largest
peanut producer in the State of Florida--am I out of time? I
see that my red light went off. Can I finish my question, Mr.
Chairman?
The Chairman. Go ahead, yes.
Ms. Graham. When are you going to approve the insurance
options for peanuts? If you could just provide an update, I
would really appreciate it, and I appreciate your willingness
to allow me more time, Mr. Chairman.
Mr. Willis. Sure.
Ms. Graham. Thank you very much.
Mr. Willis. Certainly. Two things to comment on. First of
all, the farm bill required a peanut revenue program.
Historically, they had only had a yield-based policy. We got
that out this year. Peanut producers are signing up for that,
have been signing up for that. So far we have heard positive
comments on that. That is a very important thing for those
producers.
Second of all, we are looking to expand the Supplemental
Coverage Option to many crops. Peanuts is one of those we are
looking at. That would provide another option for those
producers. So we are aggressively trying to expand the safety
net for peanut producers.
Ms. Graham. Anything else to add? No? Okay, thank you.
And so I yield back the time I no longer have, Mr.
Chairman. Thank you.
The Chairman. I thank the gentlelady.
I now recognize the gentleman from California, Mr. LaMalfa,
for 5 minutes.
Mr. LaMalfa. I like how Ms. Graham deftly used that 20
seconds of Mr. Scott there though. Okay.
Let us see, I will be coming to Mr. Willis after I ask Mr.
Dolcini about California's drought situation. We have had
ranchers up there suffering from needing the drought relief. We
did have some delay on implementing the drought relief in
California, and a couple of our ranchers were really having
difficulties obtaining the funding, so it was being handled at
the local level. Would you just comment though please on the
status of the disaster program and how it is being sped up
there?
Mr. Dolcini. I think the program that you are referencing,
sir, is the Emergency Conservation Program that is administered
by FSA, and we have had some challenges in California because
we need to do cultural resource background work for all of the
various ECP applications. We have since contracted that work
out, so that it is moving more rapidly than it had, and we are
able to provide emergency hauling monies, monies for drilling
in some cases, and we had ECP contracts in your district
certainly, and all over the State of California.
Mr. LaMalfa. Okay, thank you.
Mr. Willis, coming back to Mr. Crawford's line of
questioning on rice. It is a very significant crop in Arkansas,
1.3 million acres there, \1/2\ million acres in California,
several other southern states growing significant amounts. So
for it to be completely dismissed as lightly traded, which
Chicago may be the basis for price discovery, isn't really
accurate because it is not heavily handled on those particular
marketing situations there. So it was disturbing to me, as well
as Mr. Crawford, on 2015 being a year where there won't be the
revenue policy coverage for that commodity. Again, it is very
significant in my district to many of my neighbors, and I am a
producer myself, so we pay attention to a lot of these issues.
What can be put in place for 2015 in what is volatile price
market, as we see the price already compressing for rice this
year as the market year plays out for 2014 crop, and what the
effect will be on 2015. Even with the drought it is doing that.
What can we do to--or how can you elaborate on what we can be
doing to have a revenue policy available for 2015 for a very
significant crop in this country?
Mr. Willis. Yes. Certainly. As we talked about earlier,
obviously, we have come a long way with rice. Those changes
have resulted in producers participating in the program.
Unfortunately, this year, as you talked about, the revenue
option was not available. We are already trying to find a
solution for that----
Mr. LaMalfa. Excuse me. Was not available. I mean the farm
bill passed with that intention. I supported it. I supported
removing direct payments, and so there is an implied promise
there, I guess, with direct payments, again, happily being
gone. My growers are supportive of that, and many of the others
around the country, but this was supposed to be that basement,
that safety net on low prices and now hearing that they are not
available in 2015, I am going to have to answer to a lot of
folks around the state and the country on why that safety net
is not there.
Mr. Willis. The rice policy was not a result of the farm
bill. It has been around for many years before that.
Mr. LaMalfa. But the--again, with the direct payment----
Mr. Willis. Yes.
Mr. LaMalfa.--being eliminated.
Mr. Willis. Yes. Yes. The the crop insurance contract that
was set had specific parameters as far as number of trades, et
cetera. That is used to set a price and also to set how much to
charge for the policy. Unfortunately, those weren't met. There
was kind of a fallback option. Unfortunately, that wasn't met.
So what we need to do is find a solution long-term because I
agree 100 percent, sir. Our producers have come to count on
crop insurance as a dependable safety net that provides timely
assistance. They went in this year to buy a revenue policy, and
unfortunately, it wasn't there. We are going to work to fix
that in the future. I recognize the issue. I am happy to have
further discussion on that because we share the same goal,
which is a revenue policy every year for rice producers.
Mr. LaMalfa. What are growers to tell their bankers and
their lenders this crop year when they see perhaps that is not
a tool to ensure a basement for 2015?
Mr. Willis. This year it is not available. Yield coverage
is available for them. I have talked quite a bit----
Mr. LaMalfa. Yield coverage is quite a different animal
than----
Mr. Willis. Yes.
Mr. LaMalfa.--than revenue, and so----
Mr. Willis. It is, and your point is very valid inasmuch as
every producer has a different risk they are trying to protect.
Yield coverage for rice is not as valuable as revenue.
Mr. LaMalfa. So we are seeing no solution for 2015? It is
over with, or is that something----
Mr. Willis. Yes. Yes, they----
Mr. LaMalfa.--we can cobble together as--as we can move
swiftly around here once in a while?
Mr. Willis. We are looking for a solution for 2016, sir.
Mr. LaMalfa. I yield back, Mr. Chairman.
The Chairman. I thank the gentleman.
Votes have just been called, so we will suspend. I am going
to ask our witnesses, Administrators Willis and Dolcini, if you
would to stand fast momentarily. This is a single vote in this
series. We will go there and get back and resume. And Mr. Allen
will be the first recognized. We will briefly recess.
[Recess.]
The Chairman. To our witnesses, I want to thank you for
your patience as we resume. I appreciate your indulgence on
that brief recess.
It is my privilege to recognize our distinguished full
Committee Chairman, Mr. Conaway.
OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
IN CONGRESS FROM TEXAS
Mr. Conaway. Thank you, Mr. Chairman, I appreciate that,
and I apologize for getting here late, but I had a markup in
another committee this morning that I am not the chair of, so I
needed to be there for a quorum. As chair, you will appreciate
quorums as you move through this issue. I know the----
The Chairman. Absolutely.
Mr. Conaway.--the really distinguished Chairman beside you
is appreciative of that.
I am going to ask unanimous consent to enter my opening
statement into the record.
The Chairman. Without objection.
[The prepared statement of Mr. Conaway is located on p. 5.]
Mr. Conaway. Thank you. Again, it has been my intent to
join each of the subcommittees on their first hearing to let
folks know how much confidence I have in your leadership, and
Tim's as well on the Ranking Member's side. You guys have
terrific responsibility. It is pretty broad and very important,
and I have great confidence in you and your leadership, and
Tim's help, that we will get the proper oversight done over
implementation of the farm bill as we move forward in other
issues that come up. You are a great Member, and I appreciate
you agreeing to take on this responsibility. Thank you very
much.
If I could, I would like to ask just one quick question,
and then we can get back to your regular order.
The Chairman. Absolutely.
Mr. Conaway. Thank you.
Mr. Dolcini, thank you for being here today. If I had read
my opening statement, I would have mentioned assigning yields
on generic base acres. We don't need to go into a long back-
and-forth about irrigated, non-irrigated, all that kind of
stuff, but what I would appreciate getting from you is
confirmation that you will continue to work with the various
parties who are trying to avoid any unintended consequences
that could arise if we do not implement this program on generic
base acres correctly as we move forward. I know it is
difficult, but will you give me some sort of confirmation that
you understand the problem, and you are willing to work with
folks?
Mr. Dolcini. We do understand the problem, Mr. Chairman. I
appreciate the opportunity to continue to work with your staff
and with you on this.
Mr. Conaway. Okay. I mentioned both of you and Mr. Willis
earlier. Thank you for the hard work you and your teams have
done. You guys get the credit. A lot of your folks did a lot of
hard work. I know how that works. You have done a terrific job
in my view with some very difficult implementation processes.
There are a few things left to get done, and I hope that we
don't allow our conversation about that to taint all the hard
work that went into getting to this place. Many things did not
rise up to be a problem because you guys took care of them to
the satisfaction of the producers and everyone involved. Thank
you for the hard work. We have a few things left to fix, and I
appreciate you agreeing to continue to help and be open to the
comments from those who have concerns, particularly about the
yield assignments on generic base acres, we can get that worked
out. But again, thank you both. Please extend my thanks to your
teams as well for the hard work they have done in getting us to
this point.
With that, Mr. Chairman, I yield back and let you get back
to regular order. Thank you.
The Chairman. Thank you, Mr. Chairman. I appreciate you
being here.
I now recognize the gentleman from Louisiana, Mr. Abraham,
for 5 minutes.
Mr. Abraham. Thank you, Mr. Chairman. I will echo a lot of
the sentiments of my colleagues on the Committee here that both
our farmers and ranchers are probably the best stewards of the
land than any agency or conservationist or environmentalist.
They are going to take care of their own, their land and
family. And on the crop insurance thing, it is so important to
my district in LA-5, up in the northeast corner of Louisiana,
because we know what the crop insurance does is just hopefully,
if we have a bad year, makes us bankable for one more year. And
that is the way we look at the crop insurance program for us. I
still actively farm corn and soybeans on my property with my
son-in-law who is the manager, so we understand the family-
based farm deal.
Just a couple of questions on cotton because, up in my
district, we still actually have quite a bit of cotton in
northeast Louisiana.
Administrator Willis, are you planning to review the timing
of the STAX indemnities as cotton is harvested over several
months of the year. It starts first in south Texas, and then it
moves on into our region. And it seems to me to make logical
sense that these growers would receive an indemnity earlier
since the necessary county data is available sooner. Is that
something you would be willing to help us with?
Mr. Willis. Yes, we would be happy to have a discussion on
that matter. We actually have some plans to work with some
producer groups to see when the earliest we can. I don't know
exactly what flexibility we have, but we are happy to have a
discussion on that, sir.
Mr. Abraham. Okay, fair enough.
And just one more quick question on cotton. Between 60 and
70 percent of the cotton is marketed through the cooperatives
that utilize a marketing loan program, and this is important
for us to--regardless of the price of cotton which right now,
is fairly low. However, now that the marketing loan gains and
loan deficiency payments are included in the payment limit,
producers and marketers are concerned that this could adversely
affect the cotton marketing system. Why isn't the USDA using
its authority to remedy this?
Mr. Dolcini. Mr. Abraham, thank you for the opportunity to
answer that question.
We understand that the application of payment limits to
marketing loan gains and LDPs does represent a change,
especially for the cotton industry. We have been working with
the National Cotton Council for some time now to provide a
system that allows for an accurate recording of marketing loans
and LDPs in real-time----
Mr. Abraham. Yes.
Mr. Dolcini.--so cotton producers better appreciate the
ramifications of various financial decisions in front of them.
We began that process this month, in fact, and I was just
informed last night that we processed a variety of files from
cotton companies, and have begun the back-and-forth with
verified customer data, and are beginning to establish the
reporting process so that the companies better understand what
the situation is.
Again, I would be happy to come back to your office or the
Subcommittee and discuss this further.
Mr. Abraham. Okay, we will take you up on it. Thank you
very much.
Mr. Dolcini. Yes, sir.
Mr. Abraham. I yield back, Mr. Chairman.
The Chairman. I thank the gentleman.
I am pleased to recognize the former Committee Chairman,
and my de facto policy mentor, the gentleman from Oklahoma, Mr.
Lucas.
Mr. Lucas. Thank you, Mr. Chairman, and I appreciate those
kind comments and the kind efforts of both you and Mr. Walz
over an extended period as we put the wondrous, amazing thing
called the 2014 Farm Bill together.
With that, Mr. Dolcini, I would like to visit for a moment
about--and I know an issue that was touched on in the context
of grazing by my colleague, Mr. Scott, but I would like to
visit with you about an issue I brought up in February with
Secretary Vilsack about cover crops, when he appeared before
the Committee. And at the time, FSA had decided that crops
planted for cover on generic base would be ineligible for ARC
and PLC. My concern was that this would serve as a disincentive
to planting cover crops.
Could you walk me through the progress you have made in
addressing this yield quality issue, and making sure that
producers can choose whether or not to count cover crops as
acres towards their generic base?
Mr. Dolcini. Sir, I appreciate the opportunity to respond.
Let me first extend my sympathies to the people of Oklahoma on
yesterday's tornadoes. I have been in conversation this morning
with Francie Tolle who you know is our State Director over
here, and----
Mr. Lucas. Wonderful State Director.
Mr. Dolcini. She is a wonderful State Director. There were
no harm to FSA service centers or other offices, and we are
certainly ascertaining what the extent of the damage is out
there and we will be happy to help however we can.
Mr. Lucas. Of course.
Mr. Dolcini. Farmers and ranchers have been affected.
Mr. Lucas. I appreciate it very much.
Mr. Dolcini. With regard to the cover crop question, and I
addressed Mr. Scott's concerns a few moments ago on this as
well, we think that cover crops are wonderfully beneficial to
the American working landscape around the nation, and NRCS has
a number of good programs that support that. We just felt,
after the Secretary and you and other Members exchanged in that
conversation earlier this year, went back to the Office of
General Counsel and just don't feel as though there is a lot of
room for us to maneuver on that issue, sir.
Mr. Lucas. Well, I would like for you to continue to look
at it, and as the Chairman of the Subcommittee noted, I had
just a little bit of involvement in putting the language
together, and that was very much the intent when we put the
language together to make that possible, but I appreciate that
point, sir.
Mr. Dolcini. Thank you, sir.
Mr. Lucas. And a couple of other comments. On the point
about establishing yields for ARC and PLC on generic base, I
would like to simply reiterate the comments that some of my
colleagues have made earlier that we want the market to drive
the decisions producers make. So it is incredibly important
that the yields FSA establishes are appropriate and are
reflective of the significant differences between irrigated and
non-irrigated, because in areas where those are circumstances,
it really hugely makes a difference. And I just make that
point, and I know you are working on those issues.
And one other thing along that, I, in all fairness, would
like to thank you for your help in ensuring that the peanut
producers who were impacted by the Clint Williams bankruptcy
were able to remain in the marketing loan. It has been a very
bad situation for everyone involved, and I simply ask that you
continue to keep the well-being of the producers in mind as you
have so far, I must enthusiastically say, as you tie up all the
loose ends. Thank you again for that.
And with that, I would turn to Mr. Willis for a question
and a thought. And I can't thank you enough for your efforts to
get the APH adjustment, I know we now kind of like to refer to
that as the yield exclusion, out the door for the spring-
planted crops, and that in addition to all of the other new
provisions and all the things you have to do, but I noticed in
the first page of your written statement about implementing the
actual production history yield exclusion ahead of schedule.
And I, in all fairness, living on the east side of the Rockies
in the Southern Plains, representing the northern half of the
great State of Oklahoma, I note that some of my wheat growers
are very much sensitive about being left out last fall, and in
my town meetings, explained that to me with a bit more gusto
than perhaps we will discuss it here in this polite
environment. Was that well-worded, Mr. Chairman?
The Chairman. Well done.
Mr. Lucas. Thank you. Can you assure me that the yield
exclusion, and the coverage levels by practice, will be in
place for wheat planted this fall?
Mr. Willis. Yes, I can.
Mr. Lucas. Thank you. We can't be stepchildren twice in a
row. Thank you.
And with that, Mr. Chairman, I yield back.
The Chairman. I thank the gentleman from Oklahoma.
I now recognize the gentleman from Georgia, Mr. Allen, for
5 minutes.
Mr. Allen. Thank you, Mr. Chairman.
And I want to talk a little bit about the peanut hay here.
The Pasture, Rangeland and Forage Crop Insurance Program is
designed to assist livestock and hay producers during a time of
declining rainfall. The difference between this program and
other crop insurance programs is it does not require a disaster
to receive benefits. The program pays an indemnity when the
historic rainfall of an area falls below the average based on
the coverage selected by the farmer. Producers can select a
maximum of six intervals per year, or a minimum of two
intervals per year. And if you look at hay, Georgia's PRF
county base value is well below that of our surrounding states
in Florida, Alabama and South Carolina, with respect to those
states. With Georgia being the leading producer of peanuts
nationwide, many believe the high amount of peanut hay is
negatively impacting our values. While our state cannot
specifically point to peanut hay as being the culprit, EGA
forage specialists believe that this is the reason. And
determining their value as RMA gets their data from NASS field
surveys, and they are on page 8 of the NASS survey attached.
Many of my hay farmers believe peanut hay should be listed
as a byproduct and not included in regular forage. Peanut hay
is sometimes fed, but typically not so. It doesn't have the
quality of other high-quality hay produced.
I believe there have been some talks about this at RMA, and
are you familiar with this dilemma we have there in Georgia?
Mr. Willis. I have heard about the issue, but I certainly
am happy to look into it and get back to you on the specifics.
We certainly want to have all of our programs reflect the
accurate price and to reflect what farmers, ranchers have lost,
and if we need to make some changes we will certainly talk
about that and see what we can do to make sure it works for
them.
Mr. Allen. That would be great, Mr. Willis, and if you
could submit that response to me in writing, I would really
appreciate it so that I we can take it further.
Also, USDA has previously commented that RMA will strongly
consider offering SCO for peanuts in 2016. Will peanut
producers have the option to purchase an SCO policy for 2016?
Mr. Willis. We are looking at nearly 40 additional crops
and running the analysis. If there is data, I would suspect for
peanuts, it is obviously a widely-grown crop, if there is that
information we need, yes, we will offer it.
Mr. Allen. Yes. And from everything we hear, we are going
to grow more peanuts in Georgia this year because of our cotton
issues. But while we are talking about cotton, I would like to
commend the Department for their implementation of the new STAX
income protection program, the yield exclusion provision in
enterprise units by practice for the 2015 crop. These are
tremendous important insurance products for cotton farmers, and
I appreciate the time and effort the Risk Management Agency put
into the timely implementation of these new insurance products.
As you look at ways to improve STAX ahead of the 2016 crop
contract change dates, one issue I believe needs to be
addressed is RMA's requirement that a producer must include all
county--all cotton, dryland or irrigated, in the STAX policy
being purchased. I believe eliminating or modifying this
requirement would be extremely beneficial for growers who farm
both dryland and irrigated cotton, thus giving producers
maximum flexibility in tailoring their insurance purchases to
their risk management needs. Is this something RMA will look at
in the future?
Mr. Willis. Yes, in the near future we intend to talk about
a few issues such as that one. While the vast majority of
people are happy with everything we do with implementation, if
there are outstanding issues that we need to discuss well ahead
of time for next year, we are happy to discuss those. The
reality is this program needs to work for producers, and we
want to have those discussions.
Mr. Allen. Okay, good. Well, thank you.
And I yield the remainder of my time. Thank you, Mr.
Willis. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman from Georgia.
I am now pleased to recognize the gentleman from Texas, Mr.
Neugebauer, for 5 minutes.
Mr. Neugebauer. Thank you, Mr. Chairman, and for holding
this important hearing. And I know that Chairman Conaway was by
here just a while ago, and I want to associate myself with his
conversation about the yields that are being applied on covered
commodities on the generic acres. We need to get that right so
that farmers are going to make decisions based on what is good
economics, and that our program is not steering them to one
particular area or not. I know that you are working on that,
and it is important work and so we would encourage you to
continue to do that.
Mr. Dolcini, Secretary Vilsack was back by here I guess
last month, and we were talking about the marketing loan issue,
and I know that has also been brought up, but that is extremely
important to the producers in my district and being able to
ascertain where they are in the process. And so I don't know
what your answer to that has been previously, but, I know that
it is certainly--when I was back in the district that a lot of
producers were concerned about that. And Secretary Vilsack
indicated that you all are working on that. Is there an update
on where you are on that?
Mr. Dolcini. Were you referring to cotton specifically,
sir?
Mr. Neugebauer. Yes. Yes.
Mr. Dolcini. Yes, we are working closely with the National
Cotton Council to provide better real-time data for them so
that they understand the ramifications of marketing loan gains
and related financial issues, and have begun, in fact, this
week to exchange information with them. We think that it is a
good first step solution, and we will continue to work closely
with them.
Mr. Neugebauer. If you could get that information out to
the producers.
Mr. Dolcini. Yes, sir.
Mr. Neugebauer. Yes. Yes. Mr. Willis, it was just mentioned
a little bit about enterprise units by, some of us were
disappointed is that it was the intent--when we were doing the
farm bill is that you would be able to choose and by practice,
but what we are hearing now is that the current policy is if I
put my irrigated in enterprise, I have to put my dryland--and
vice-versa. I think we have had previous conversations about
that and it was not our intent to do that. What we were trying
to do is give producers as many choices as they can. But can
you give me any update on what RMA is doing to address this
issue?
Mr. Willis. I think that would fit into the category of
some of the issues that we are looking at in the future. The
interim rule was implemented, as you just discussed. We have
not issued a final rule on that specific provision or any
others yet. So we can still have some discussion on that, but
there is nothing else at this point in time, that it is kind of
in the category of things we want to make sure that people are
happy with to the best that we can.
Mr. Neugebauer. Well, thank you, because that is extremely
important. And one of the things that the whole intent of the
farm bill was to give producers as much flexibility and choices
as they can so that they can tailor the various programs to
their particular operation. And so it is one of the things we
are hopeful that that will happen sooner rather than later.
I do want to commend both of you, you have done a good job
of taking the farm bill and trying to implement the changes,
and one of the things that has been very encouraging is that
the number of tools that you have tried to provide producers
because they were making some very important choices, and so
the outreach has been good. We do hear a little bit that the
FSA officers are a little bit swamped right now, and obviously
have important deadlines coming up on March 31, and I hopeful
that we can get everybody processed for that time, but if for
some reason you have a big waiting list on March 31, what is
the plan?
Mr. Dolcini. Well, the plan, sir, is to do what we have
done historically, and that is use registers in our county
offices. So a farmer needs to contact his or her local FSA
office prior to the deadline to say, ``Look, I just can't get
in by the deadline, but I want to come in and make my election
or do my reallocation,'' and I anticipate that we will use the
month of April to clear up the register.
In addition, there are other states, sir, that are a little
ahead of the process, and I am going to be looking to send jump
teams from some of the states that have completed most of their
work down to places like Oklahoma and Texas that are not only
looking at a lot of ARC and PLC-related work, but a lot of LFP
work from 2012 to 2014, and of course, 2015 LFP has triggered.
So your home state and certainly others have a fair bit of work
on that program alone.
Mr. Neugebauer. Yes. Well, it is good to hear you say that
because that was going to be one of my suggestions is if you
need to move some folks around to make sure that we get that
done because it is going to be planting season, and it is
getting close to time to having all of these issues resolved.
Mr. Dolcini. That is right. We have really used temporary
employees quite well around the nation, and appreciate the fact
that there was money in the farm bill last year for FSA to hire
temporary employees. But that only goes so far, and really what
I want to be able to do is move folks around the nation who can
help out in places like Texas and Oklahoma, and other states
looking at a pretty big workload.
Mr. Neugebauer. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman.
I now recognize the gentleman from Alabama, for 5 minutes.
Mr. Rogers. Thank you, Mr. Chairman.
Administrator Dolcini, as you know, USDA recently released
the actively engaged rule to determine which persons associated
with a farm are eligible for farm program payments. As you work
on the rule, I hope you will address the concerns of some of my
farmers who worry it may be written too narrowly to exclude
members of a farming entity who should, in fact, be eligible.
Can you address that concern and try to tell me the status of
where you are with that rule?
Mr. Dolcini. Absolutely, sir. As you know, the rule was
announced earlier this week. It is a proposed rule, and there
will be a 60 day comment period for folks to weigh-in on what
USDA has proposed. This is the first time since 1987 that we
have sought to better define the actively engaged rule. The
default limit is one payment per farm, with the opportunity for
two additional payments to be made to that farm depending on
its size and/or its complexity. What we have also required this
time around is that a person receiving a pay limit has to be
substantially involved in the active management of that farming
operation. They have to keep a log to demonstrate the work that
they are doing on labor issues, finance issues, marketing
issues, agronomics issues, and they have to show that they have
either 500 hours or 25 percent of their time associated with
the operation of that farm in order to receive a pay limit. But
we think it is a good strong rule, it is a good first step. You
know, it was crafted within the confines of what the 2014 Farm
Bill spoke to, and we look forward to a robust comment period,
sir.
Mr. Rogers. Great. Thank you.
Mr. Willis, when the Agriculture Act of 2014 was passed
last year, it was anticipated that crop insurance would account
for about nine percent of the total cost of all the farm
programs. The President's budget this year seeks to cut crop
insurance by nearly $16 billion over 10 years, which would
leave a lot of my farmers exposed to higher cost for crop
insurance, and many farmers would be forced to take out lower
levels of coverage to protect against the many hazards they
face year in, year out.
While it is not surprising to me to see crop insurance
attacked again in this budget, it is disturbing that it would
come about in the first year of implementation. Farm bill
programs work together to keep the Alabama farming community
viable and food prices affordable to consumers. Without
affordable crop insurance, east Alabama farmers, the rural
economy, and the consumer would all suffer. How can the
Administration support the cut to crop insurance of this
magnitude?
Mr. Willis. Certainly. The President's budget proposes two
major things. First of all, some changes to Prevented Plant
Program. Those actually--two of those three recommendations
came out of recent audits. Really what we are trying to do is
make some changes to strengthen the program in the long-term
with those. The other one is some reductions in the harvest
price option and policies that have that, essentially reducing
the subsidized portion from 62 percent to 52 percent. The
thought being that those policies, because they protect upward
price protection, they cost more, they have a higher risk, and
we are just asking the farmers to pay a little bit more of
that, but there is still over 50 percent subsidy for those.
Obviously, both those proposals, Congress will have time to
debate those. Those are legislative proposals, sir.
Mr. Rogers. Okay, thank you very much.
With that, I yield back, Mr. Chairman.
The Chairman. I thank the gentleman. Did you have anything
further? I actually will recognize Mr. LaMalfa. We are down to
our final question, and I wanted to extend a little bit of
latitude and recognize Mr. LaMalfa.
Mr. LaMalfa. Okay, thank you again, Mr. Chairman.
I just wanted to follow-up, Mr. Dolcini, on the drought
relief again, affecting California. What does the backlog look
like for California on catching up to what some of the ranchers
need there for what we spoke about earlier?
Mr. Dolcini. Sir, I am going to have to get back to you on
that. I don't know exactly what the backlog is today.
Mr. LaMalfa. Okay. Well, we do appreciate your efforts to
move the resources around and get that caught up. It is very
important to our folks up in my area, as well as in the Midwest
too.
Following up with Mr. Willis again. Thank you for your
previous answers on that. So we worked with you on designing a
plan for 2016 so that rice would not be caught in this price
discovery problem, and relying upon maybe what is seen as
traditional price data, since 2015 is out the window for us
here, that we can make that available so they have a revenue
policy for 2016.
Mr. Willis. Yes, sir. And one thing just to let you know
about. Immediately after this happened, we actually--some of
the work on the farm bill, some of the information--we have
some--a contract with some individuals who provide assistance
to us, and one of those happens to have some good knowledge of
this industry. We have reached out to them asking them for some
input as well. So we want to find a solution, and we are
already trying to take some steps that will lead to the
solution that we all want to have.
Mr. LaMalfa. Okay. We may need to be a little outside of
the box on price discovery, otherwise you can be at any coffee
shop in rice country and hear a lot about price and get
information there. That is kind of a joke, so anyway, thank
you. I appreciate it.
Mr. Chairman, I will yield back.
The Chairman. I thank the gentleman. I would request that
any further questions be submitted for the record.
To the Ranking Member, Mr. Walz, thank you, and if you have
any final thoughts.
Mr. Walz. Just thank you both for being here. And again, I
want to express my sincere appreciation to you and your team,
and to those folks out in those FSA offices in the country. I
know they are doing good work. And I did want to associate
myself with the gentleman from Alabama on the crop insurance
issue. We are appreciative of the Administration's suggestion
on crop insurance, and that it is our job to try and look those
things through. I think there are certainly things we will look
at, but I do think I associate with the gentleman, we are very
proud of the crop insurance program and it seems to be working
the way we kind of intended. So we appreciate that. But thank
you both. It has been very helpful. I think this working
relationship and the partnership, attitude that you obviously
have benefits our producers greatly, so thank you for that.
And with that, I yield back.
The Chairman. I thank the Ranking Member. I would like to
associate myself with his comments, and also add that
certainly, it is our intent to make sure that we have
established an ongoing dialogue, going forward, to address any
bumps in the road that we may encounter, but I also want to
commend both of you and the work that you and your agencies
have done to this point. Whatever we can do as a Committee, as
individual Members, we certainly want to make ourselves
available to you to make this implementation as smooth,
efficient, and productive as we possibly can. Once again, thank
you for being here. We appreciate your time.
With that, this Subcommittee on General Farm Commodities
and Risk Management hearing is adjourned.
[Whereupon, at 10:38 a.m., the Subcommittee was adjourned.]
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