Commentary: Regulations: A Pesky Weed in Farmers’ Crops (Dave Ladd, President of RDL & Associates)

Throughout history the need for an abundant, reliable and affordable food supply has been at the heart of social and political stability as governments recognize food security as a national security priority.  By acknowledging that many nations lack the natural resources to grow enough food for their people, U.S. agriculture has a prominent role to play in ensuring that people around the world have access to safe and affordable food.

As U.S. farmers strive to produce food for a growing populace, they must do so within the context of enhanced technology and the role it plays in food security.  It is estimated that by 2050 the world population will need 100 percent more food, with 70 percent of this food coming from enhanced-efficiency technology.  These practices increase crop yields, help reduce the environmental impact of agricultural practices, and can create crops that are tolerant of poor environmental conditions (e.g. drought or excessive weeds).

Clearly, the challenges of feeding a growing world population on a fixed land base, as well as  increasing competition for water and other natural resources, have significant ramifications for food security both domestically and abroad.

Minnesota continues to play a prominent role in feeding a hungry world.  Over the past 10 years, Minnesota’s agricultural exports have nearly doubled.  This decade of bumper crops produced by the North Star State has helped America’s total exports in the sector reach a record $145 billion.

But all is not well “down on the farm”.  Right now, American agriculture is under attack from rapidly advancing weeds and the current generation of weed-control systems is no longer as effective as it once was. Weeds have adapted to the class of herbicide that’s been in use for the past 13 years. Consequently, they’re reducing soybean yields by as much as 50 percent.

The world can’t afford to lose this struggle with herbicide-resistant weeds. With the globe’s population reaching record levels, we need farming breakthroughs more than ever but Federal regulators, such as the Environmental Protection Agency (EPA)have been slow to review new technologies that promise to halt the weed outbreak and further improve farming efficiency.

It is time to break that regulatory impasse — and bring to market the advancements in farming technology that can keep America’s agricultural engine humming.

One such tool — the Enlist Weed Control system — would represent one of the first new weed-control systems to hit the market in more than a decade. Enlist combines an herbicide with genetically engineered seeds that can tolerate that herbicide.  The end result? The product can kill weeds without harming crops.

Yet Enlist has been bogged down in the federal regulatory process for nearly four years — even though it builds on proven approaches to weed control. The U.S. Department of Agriculture recently announced that it would conduct yet another regulatory review, thus delaying the weed-control system’s release for another year.

Meanwhile, America’s foreign competitors are bringing new weed-control systems to market. Canada has already approved Enlist for use. That puts our farmers at a significant disadvantage relative to their neighbors across the border.

The delay also has a deleterious impact on the environment. Effective weed-control systems allow farmers to cultivate crops without tilling their land. This prevents soil erosion and dramatically reduces carbon dioxide emissions. In fact, it is estimated that no-till farming enabled by effective weed control has already reduced carbon-dioxide emissions by nearly 15 million pounds.

To generate the same kind of an impact, we’d have to remove 6.5 million cars from the road.  If, however, weed-control systems don’t work as intended — and farmers have to deal with weeds through more labor-intensive tilling — then those significant environmental benefits cannot be realized.

There appears to be little disagreement that environmental regulations must be protective of public health or safety.  They must also be based on available scientific information that has been subject to peer review.  Regulations should be cost-effective, objective, and designed to balance the economic viability of farm operations with protection of natural resources and other community interests.

The regulatory review process must be transparent and regulations must be administered in a practical manner so as to prevent undue hardship for farmers – a principle that appears to be lost on the EPA as they continue to extend the review process for technological advancements such as the Enlist Weed Control system.

Excessive regulations and bureaucratic delay are threatening to strangle the agricultural sector.  Unfortunately, Federal regulators seem content to let them, by refusing to green-light the latest in farming technology. Such inaction is not in the best of interests of Minnesota’s – or the Nation’s – economy.

Dave Ladd is a frequent guest commentator regarding public policy and the political environment.  His company, RDL & Associates, assists clients in achieving their legislative and policy objectives via strategic communications, message development and interaction with elected officials.

House Agriculture: Searching for the Future of Food (via NationalJournal)

When House Agriculture Committee Chairman Frank Lucas, R-Okla., went to the podium in June to ask lawmakers to vote for a new farm bill, he was in a kind of trouble that no other Agriculture chairman in recent memory has experienced.

After spending two years developing the bill, pushing Republican leadership to let him bring it to the floor, and managing more than 100 amendments in just two days, Lucas still had to beg for passage.

“I plead to you. I implore you to put aside whatever the latest e-mail is or the latest flyer is or whatever comment or rumor you’ve heard from people near you or around you,” he said. “Assess the situation. Look at the bill. Vote with me to move this forward. If you care about the consumers, the producers, the citizens of this country, move this bill forward.”

The appeal didn’t work. The House voted against the farm bill 195-234, with six not voting. The defeat launched the legislation down a path that has wrought major changes on the process by which Congress addresses the farm bill every five years—changes that are still playing out this week.

In fact, the bill’s fate remains uncertain this year. But for the House Agriculture Committee, the question is whether its difficult path is just one more case of House members stomping their feet and saying “No, no, no,” or whether something fundamental has changed in the making of agricultural and nutrition policy. The answer may well be both.

As Rep. Collin Peterson, D-Minn., the ranking member on the panel and its former chairman, put it, “We are in a big mess, and I don’t know how we untangle this.”

A LOT LESS FUN

Founded in 1820, the House Agriculture Committee is the oldest agriculture institution in Washington. As recently as 2008, the committee led the way for Congress to pass a farm bill that undergirded the most prosperous period in American agricultural history; paid out $17 billion to farmers last year during the worst drought in decades; and provided food stamps for 47 million Americans during the Great Recession.

Yet serving on the panel may be little fun these days, and even less politically rewarding.

The fight to renew the five-year farm bill—dominated by how much to cut from the food-stamp program—has been acrimonious in the House and could get more so as the bill goes to conference with the Senate. Meanwhile, the heavy involvement of House leadership in the Agriculture Committee’s core issues, differences over agriculture and nutrition policy, and the declining ability of individual members to influence legislation generally have made a seat on the panel less attractive.

The average length of time lawmakers stay on the committee has declined, from a high of 10 years two decades ago to less than six today. For those who sit furthest from the chairman in the committee’s impressive hearing room in the Longworth House Office Building, the rewards have been so few that one or two terms has seemed enough. Reps. Jeff Fortenberry, R-Neb., and Chellie Pingree, D-Maine, for example, both left this year to take seats on Appropriations, where they sit on the Agriculture Subcommittee.

For those who have stayed, such as Lucas and Peterson, leadership has been difficult. In the last Congress, Lucas frequently noted that half the members of his committee were new. This year, Lucas and Peterson had to struggle to fill the ranks. They eventually got up to 46, including 25 Republicans and 21 Democrats.

Lucas said the changes in committee membership “absolutely” concern him, although he noted that lawmakers have long preferred committees such as Ways and Means and Appropriations. “We may not be as sexy, we may not be as good at fundraising as other committees,” he said. He also said the “roller-coaster turnover in general membership in the House” has played a role.

Infographic

The biggest problem with turnover, Lucas said, is that it denies the committee the institutional memory that helps write good farm bills. “It really does help to understand the subject matter you are voting on,” he said.

Few new committee members come from farm families or agricultural backgrounds and they “are not quite as able to defend themselves from the pressure groups,” Lucas said. By pressure groups, he means not only the farm lobbies but also conservative organizations such as the Club for Growth and Heritage Action for America, which criticize farm subsidies.

On his side of the aisle, Peterson has faced at least as much turnover as Lucas but seems less worried about the future. “I was concerned, but I like this group of people we have now. We’ve got some very good members. They are new to Congress, but they’re not new to politics. They know a lot more about agriculture and the issues that we deal with than people realize.”

Another result is that the Senate has gained ground on the House in agricultural policymaking. The House has traditionally passed a farm bill first, but in 2012 the Senate, whose Agriculture Committee includes several former chairmen and a former Agriculture secretary, was first to act. The House Agriculture Committee did pass a bill in 2012 by a large bipartisan majority, but with the controversy swirling around both farm subsidies and food stamps (formally known as the Supplemental Nutrition Assistance Program, or SNAP), the House Republican leadership refused to bring it to the floor.

When Congress passed a yearlong extension at New Year’s, it was a deal negotiated between Vice President Joe Biden, who didn’t want a cut in SNAP benefits, and Senate Minority Leader Mitch McConnell, R-Ky., who wanted to continue the direct payments that crop farmers get whether prices are low or high. The House was largely left out of the negotiation.

A QUESTION OF RELEVANCE

Agriculture had to battle for attention in Congress even in the early days of the republic, when most people made a living growing food and fiber. In 1795, the House set up the Commerce Committee, but it took another 25 years before the Committee on Agriculture was established. The Senate did not set up its Agriculture Committee until 1825, and the Agriculture Department was not established until 1862. In sponsoring the 1820 resolution to set up the House committee, Rep. Lewis Williams of North Carolina called agriculture “the great leading and substantial interest in this country” but complained, “[W]hen agriculture is oppressed and makes complaint, what tribunal is this House to hear and determine on the grievances?”

Infographic

The committee’s greatest period of power came in the 1930s. With rural America suffering from the Great Depression, Congress passed President Roosevelt’s New Deal farm programs, which attempted to equalize supply and demand, restore soil degraded by questionable farm practices, and bring electricity to rural populations. In the 1950s, Congress began passing short-term farm bills, usually for five-year periods, by suspending the 1938 and 1949 farm bills that have become known as “permanent law.” The New Deal programs also included distribution of surplus commodities to the hungry; in the 1960s, the committee began to take hunger seriously with the creation of the food-stamp program, which had the added benefit of assuring votes from urban and suburban House members for the farm bill.

Today, the House Agriculture Committee’s core problem appears to be a lack of relevance to many voters, even though the number of people who benefit from food stamps and commodity-distribution programs has swollen during the recession.

As the U.S. population continues to grow increasingly urban and suburban, the number of people who depend directly on agriculture—and the committee’s programs—for a living declines while the food supply remains so plentiful and cheap that consumers can take it for granted. Food safety, organic and local food production, and the impact of obesity are hot topics, but the committee still focuses most of its attention on commodity programs and the regulation of the futures industry.

Perhaps the committee leadership’s oddest decision over the years has been its lack of attention to food stamps, which represent more than 70 percent of USDA spending. For example, the panel’s Department Operations, Oversight, and Nutrition Subcommittee, which has jurisdiction, has held no hearings on the issue this year.

But from a political standpoint, it’s not hard to see why food stamps have not been a primary focus. Antihunger advocates have resisted anything that would increase scrutiny of the program, while farm-minded members have traditionally viewed food stamps as the price they had to pay to get urban members of Congress to vote for the farm bill.

BITING INTO FOOD STAMPS

Things have changed. The fight over food stamps has dominated the current farm bill. The debate has been going on since 2010, when Peterson was chairman and began holding hearings. Lucas, after he became chairman, held another round of hearings in Washington and around the country before writing the bill.

But this year, even though the panel had many new members, Lucas allowed only a subcommittee hearing on horticulture before holding a markup session. Even though Republicans insisted, over Democrats’ objections, on increasing the cut in food stamps from $16.5 billion in the 2012 farm bill to roughly $20.5 billion in 2013, the measure still passed the committee on a bipartisan vote of 36-10.

The committee vote was not enough to persuade enough Republicans or Democrats to support the bill on the floor, however, leading to the defeat in June. Only 24 Democrats voted for the legislation. But even if the hoped-for 40 Democrats would have supported it, the farm bill still would have failed, because 62 Republicans voted against it.

Past leaders, including Minority Leader Nancy Pelosi, D-Calif., who was House speaker in 2008 when the last farm bill was passed, deferred to the committee most of the time. “What we do in the farm bill is really complicated stuff,” Peterson said. “I would argue it is more complicated than what we do with the IRS. I think members understand that.”

Two people who did not defer to the committee this year were House Speaker John Boehner, R-Ohio, who wanted a change in dairy policy, and Majority Leader Eric Cantor, R-Va., who gave a floor speech urging members to vote for a food-stamp amendment that Democrats found odious. Boehner and Cantor won their floor votes and voted for final passage, but at the urging of Heritage Action and other conservative groups, many tea-party Republicans voted against final passage.

The response by Republican leadership to the defeat was unprecedented in recent decades: They split the farm bill in two. One bill, which passed in the House, contained agricultural programs. A separate measure contained the food-stamp program. The refusal by Cantor and tea-party Republicans to accept the committee bill’s nutrition title and the leadership’s unprecedented decision to split the farm bill in two fractured a decades-old marriage that traditionally helped get the legislation through Congress.

The cost of the agriculture-only bill is about $196 billion; the top-line number would have been roughly $1 trillion with food stamps included. Overall, the nutrition title would be over 70 percent of the farm bill’s costs, and most of that is the food-stamp program.

But Republicans were not yet finished shaking things up. As part of the new strategy, Cantor prepared a nutrition bill with about $39 billion in food-stamp cuts over 10 years, roughly doubling the reduction in the previous bill.

The conservatives’ argument is that the program is abused by recipients who don’t meet eligibility requirements. These critics want to tighten loopholes that they say allow able-bodied adults to gain benefits. “Currently, working middle-class families struggling to make ends meet themselves are footing a bill for a program that has gone well beyond the safety net for children, seniors, the disabled, and families who desperately need the assistance,” Cantor spokesman Rory Cooper recently told National Journal Daily.

Antihunger advocates have complained, but Cantor argued as late as last week that any reduction in benefits will not erode the safety net for the neediest Americans. “No law-abiding beneficiary who meets the income and asset test of the current program and is willing to comply with applicable work requirements will lose their benefits under the bill,” he said.

The food-stamp bill is scheduled to hit the House floor this week. Pelosi said she expects Democrats to reject it, given that most opposed the previous bill that had only $20.5 billion in cuts. So Republicans will have to rally much of their conference to pass the bill.

Yet even if it does pass, there are still miles to go. A conference with the Senate, which passed its own comprehensive farm bill, is likely to be tumultuous because of the stark differences in the way the Democratic-controlled Senate and the Republican-controlled House have treated food stamps. The Senate bill cuts only $4 billion from the program over 10 years.

Moreover, the clock is ticking. If a two-chamber deal is not reached by Sept. 30, farm-bill programs will revert back to the 1938 and 1949 laws. However, even if the two chambers don’t reach an agreement, crop insurance and the food-stamp program will continue. Crop insurance has its own permanent law, and food stamps are an entitlement that can continue to operate even without reauthorization, provided the funding is approved through appropriations bills or a continuing resolution.

“Part of the problem” in persuading Congress to pass the bill, Peterson said, “is that crop insurance will continue whether there’s a bill or not, and food stamps will continue.”

DEMOGRAPHIC SHIFT

Bipartisanship has not extended to the committee’s other power center, either: regulating the futures industry and the Commodity Futures Trading Commission. Under Peterson’s leadership, the panel played a role in the passage of the Dodd-Frank Act, which regulated the financial industry after the financial collapse in 2008. Under Republican leadership, the committee has passed bills that would reduce the new regulations, although these stand little chance of becoming law. This year, Republicans also held three subcommittee hearings on the reauthorization of the CFTC, which takes place every five years. Those hearings have been chaired by Rep. Michael Conaway, R-Texas, whose General Farm Commodities and Risk Management Subcommittee is also in charge of commodity policy and crop insurance, making him by far the most powerful subcommittee chairman.

If Republicans retain the House, it may be Conaway who takes over the committee’s gavel. The fact that a Texas Republican could chair the Agriculture Committee underlines how political changes in the country have resulted in dramatic changes in the committee’s membership.

Infographic

Rural Democrats from the Plains and the South dominated the panel through most of the 20th century and stayed on it for years. Those Democrats were usually conservative on social and fiscal matters, but they came from districts whose constituents tended to believe that wealth and power were elsewhere in the country and that the role of government—and the committee—was to improve their lives and get them a fairer shake.

In the 1970s, the rural South began to elect Republicans, but they too supported farm programs and food stamps. The GOP trend culminated in the 2010 elections, when the committee makeup changed to mostly rural Republicans, who are interested in commodities such as corn, cotton, rice, soybeans, and wheat; Democrats from California and New England, who are interested mostly in dairy, fruits, vegetables, and organic and local production; and urban representatives, who care mostly about nutrition programs, particularly food stamps.

The committee’s membership is now skewed to the South, California, and New York, with less representation from the middle of the country than might be expected. Arizona, Idaho, Kentucky, Louisiana, Kansas, Maine, Mississippi, Montana, Nebraska, North Dakota, Utah, West Virginia, and Wyoming—all states with key agricultural constituencies—have no representation on the committee at all.

Moreover, the panel now has a handful of long-termers at the top, with a changing cast of characters down the line, prompting serious questions about the future and leadership.

Under House Republican rules, Lucas is scheduled to end his term as chairman when this Congress concludes in 2014. Lucas said last week he will run for reelection in 2014, and if the farm bill does not pass during this Congress, he will ask for a waiver from House rules so he can continue as chairman. If farm-bill opponents “use House Republican rules as a weapon, I will fight on every stage,” he said.

Absent the waiver, Conaway is most likely to take over as chairman if the Republicans retain control of the House and follow regular order. Several other committee members have more seniority, but there are reasons they may not assume the leadership. They are former House Agriculture Committee Chairman Bob Goodlatte, R-Va., and Reps. Steve King, R-Iowa, Randy Neugebauer, R-Texas, and Mike Rogers, R-Ala. Conaway, like Peterson, is a certified public accountant. If Conaway becomes the highest-ranking Republican and Peterson stays as the highest-ranking Democrat, the committee would be run by two certified public accountants.

Still, even if Lucas does not keep the gavel, he will stay on the committee to make sure Congress does not repeat mistakes that have hurt farmers in the past.

As Lucas put it, “I am not here to benefit from the political chaos of the day.”

This article can be accessed by visiting http://www.nationaljournal.com/house-agriculture-committee/house-agriculture-searching-for-the-future-of-food-20130918

Our View: Time for Critics to Trade Pencils for Plows (via Farm Policy Facts)

During a meeting with reporters this week, Agriculture Secretary Tom Vilsack noted crop insurance “has come under unfair criticism,” adding, “Those who report on it don’t understand it and its importance to the food supply.”

Vilsack was undoubtedly referencing a series of articles published by Bloomberg this week, which, according to the news outlet, thoroughly examined crop insurance.
Of course, that “examination” read more like talking points from the Environmental Working Group than a true in-depth analysis.
Absent from the coverage were crop insurance champions like Secretary Vilsack, or the bipartisan leaders of congressional agriculture committees, or the country’s banking community, or visible academics, or farm leaders who have called crop insurance one of their top priorities.
The series didn’t even bother to quote House Speaker John Boehner, who has noted:
“Over the last 15 years, crop insurance is where we have been trying to help move farmers in terms of taking advantage of risk management tools for their crops … It is still the central focus of where we think farmers ought to be able to have easy access to insure their crops and insure some type of revenue out of it. It makes the most sense to me and always has.”
No, Bloomberg’s hatchet job relied almost solely on professional agriculture critics whose analysis has proven unreliable time and time again.
The “experts” Bloomberg turned to are the same people who last year predicted that drought related crop insurance costs would hit taxpayers to the tune of $40 billion.  They were off by about $26 billion.
These are the same critics who notoriously hide behind academic tenure to compare farmers to cheap drunks at an open bar or crop insurers to money launderers.  Claims that are as indefensible as they are offensive.
And these are the same groups that have worked for Brazil to attack U.S. agriculture and our domestic food supply – never mind Brazil’s massive run-up in subsidies or environmental degradations.
In its shockingly one-sided coverage, which ran an eye-popping 6,800 words in length, Bloomberg conveniently omitted these key data points, among others:
  • Farmers pay about $4 billion a year out of their own pockets for crop insurance coverage.
  • Farmers must shoulder significant losses through deductibles before crop insurance kicks in – about $13 billion in losses last year alone.
  • Crop insurance companies help cover losses and actually lose money in bad years to help shield taxpayers. When’s the last time you heard of an insurance company losing money?
  • In good years, the government actually makes underwriting gains on farmers’ premiums, which helps offset the bad years.
  • U.S. farm policy spending is in steady decline and has been since crop insurance’s rise to prominence.
  • Crop insurance spending has been cut $12 billion since 2008, making agriculture one of the few industries to help curb deficit spending.
  • While U.S. farm spending is declining, our foreign competitors are rapidly increasing their subsidies and trade barriers.
  • Crop insurance has been fine-tuned for decades to help protect taxpayers and replace costly ad-hoc disaster bills.
Perhaps it is time for these professional critics to find a new profession.  If farming is as easy and profitable as they make it out to be, there is absolutely nothing stopping them from putting down their pencils and picking up a plow.

With the world’s population exploding and just a thin green line of 210,000 full-time U.S. farms to feed the hungry, America needs more farmers than ever.  And it needs a strong farm policy now more than ever.

Of course, critics would probably be hesitant to take out millions in loans or put their family’s future at risk for a profession that is constantly at the mercy of the weather and steep market fluctuations.

So, maybe they could start with a small garden in their backyard or windowsill.  After countless hours of working the soil, nurturing seedlings, and fending off insects, critters, and wild weather, they will have a much better appreciation of what farmers do on a much, much larger scale.

Democrat’s latest farm bill strategy: Threaten to double the price of milk (via The Hill)

The top Democrat on the House Agriculture Committee has launched a new  strategy for passing a farm bill this year: threaten to send milk prices skyrocketing.

Rep.  Collin Peterson (D-Minn.) said he called Secretary of Agriculture Tom Vilsack  this week suggesting that the agency begin the process of implementing the  1949-era dairy policies that would take effect Oct. 1 if Congress fails to act  on a farm bill before then.

“Clearly this is not going to get done by  the 1st of October, so my suggestion to the secretary is that they should  start now putting  the framework together to implement the permanent law on dairy Jan. 1,” Peterson  said Wednesday in the Capitol. “And it sounds to me like they’re going to take a  very serious look at that.”

The 1949 law requires the Agriculture  Department to manipulate the dairy market in such a way that milk is priced at a  floor of roughly $39 per 100 pounds – a figure that would lead milk prices to  roughly double at today’s rates.

Peterson’s strategy is not to see that  happen, but to rouse the affected industry groups – particularly the powerful  International Dairy Foods Association (IDFA) – into pressuring  Speaker  John Boehner (R-Ohio) and other GOP leaders to enact a bill preventing the cost  hike.

“IDFA is really going to hate this,” Peterson said. “And once  Vilsack’s calling them and setting up the mechanism to get $39 milk, IDFA’s  going to call Boehner. So, it might actually work.”

Peterson said his  strategy has the backing of House Minority Leader Nancy Pelosi  (D-Calif.).
Congress has struggled for years to pass a long-term  reauthorization of the farm bill, relying instead on short-term extensions to  existing policy that have prevented the permanent law of 1949 from taking  effect.

In June, the Senate passed a five-year reauthorization bill with  a bipartisan vote of 66-27, but House GOP leaders declined to consider it,  arguing that the $4.1 billion cut in food stamps was not large enough to satisfy  their conservative conference.

Instead, House Republicans carved their  version of the bill into two pieces: The farm policy portion passed in July with  no Democratic support, and GOP leaders are planning this month to bring up a  food stamp bill  expected to cut roughly $40 billion from the program.

Democratic leaders  are warning that a cut of that size – designed to appeal to House conservatives  – has no chance of passing in the Democratically controlled Senate, leaving farm  bill stakeholders to wonder where there’s room for a compromise.

Peterson  thinks his milk strategy can compel the deal that’s so far eluded the  sides.
“The first thing that happens of any consequence is Jan. 1 on  dairy. So if he [Vilsack] starts the process [Oct. 1] then we can be ready to  have $39 milk Jan. 1,” he said. “And then I think, within two or three weeks,  we’ll probably have a farm bill.

“We’re not getting any place with what  we’re doing,” Peterson added. “There’s no reason to not have this done.”

Committee Chairman Frank Lucas (R-Okla.) said Wednesday that Vilsack should start to prepare for the milk spike.

Lucas said he didn’t know exactly why the prices would rise but told a  reporter he’d have to save his beer money to afford milk.

Lucas said leaders have not yet started whipping the food stamp cutting bill they plan to  bring to the floor next week. He said even if House Majority Leader Eric Cantor  (R-Va.) cannot get 217 votes for the measure cutting $40 billion, a farm bill  conference committee would proceed.

Disagreements on food stamp cuts have  been the main obstacle to a farm bill, he said.
“Addressing that  bill, disposing of that bill…up or down…enables us to move forward with the  conference committee process,” Lucas said.

Developing a Government Relations Game Plan

Traditionally, companies and trade associations begin considering their government relations planning for the upcoming year during the 4th quarter of the current year.  The organizations that do so want to be well-organized, with a solid government relations game plan that can be activated as the situation warrants.

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If your company or organization has been giving serious thought as to the management of your political capital in 2014, RDL & Associates would welcome the opportunity to assist you in the development of your government relations plan for the upcoming year.   We specialize in government relations, policy development and analysis, strategic communications, message development and delivery, coalition development and online outreach.

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National Crop Insurance Services Response to Bloomberg Crop Insurance Article

The following statement should be attributed to Tom Zacharias, president, National Crop Insurance Services and is in response to the Bloomberg News story “Taxpayers turn U.S. farmers into fat cats with subsidies”:

“The primary reason behind the growth and success of crop insurance over the last decade is that farmers, farm groups, banks and other lenders, elected officials and those who live and work in rural America understand that it is the best, most cost-effective risk management tool farmers have.   That is why the lack of balance and clear agenda behind the first in this series of articles is so troubling.

“For example, the article claims that the government “pays farmers to buy coverage,” which is absolutely false.  Farmers purchase crop insurance policies with money out of their own pockets.  If a loss does not occur, which is the case for most farmers in most years, then purchasing crop insurance is a net loss, not a gain, for farmers.

“In truth, crop insurance is a win-win scenario for all stakeholders in agriculture and the public in general.  For farmers and the rural economies they support, it is a critical risk management tool that helps farmers who purchase policies recover from natural disasters.   For financial institutions, a crop insurance policy serves as collateral for a farmer’s production loan that might otherwise not be feasible.  For taxpayers, crop insurance has all but eliminated large-scale emergency disaster bills, which fell fully on their laps every time and cost more than $70 billion since 1989.

“It should be noted that overall farm safety net spending has fallen dramatically since the rise of crop insurance. Unfortunately, this series is providing a platform to the critics of crop insurance, who for various reasons want to implode any farm safety net and return America to the past days of costly, cumbersome agriculture disaster bills and financial disruption for America’s farmers.

“Crop insurance is a modern-day farm policy for today’s unique weather and market challenges and it, and the farmers who raise our feed, food and fuel, deserve praise, not condemnation.”

Tom Zacharias, President of National Crop Insurance Services

Taxpayers Turn U.S. Farmers Into Fat Cats With Subsidies (via Bloomberg)

A Depression-era program intended to save American farmers from ruin has grown into a 21st-century crutch enabling affluent growers and financial institutions to thrive at taxpayer expense.

Federal crop insurance encourages farmers to gamble on risky plantings in a program that has been marred by fraud and that illustrates why government spending is so difficult to control.

And the cost is increasing. The U.S. Department of Agriculture last year spent about $14 billion insuring farmers against the loss of crop or income, almost seven times more than in fiscal 2000, according to the Congressional Research Service.

The arrangement is a good deal for everyone but taxpayers. The government pays 18 approved insurance companies to run the program, pays farmers to buy coverage and pays the bills if losses exceed predetermined limits.

With a showdown over the nation’s finances — and a possible government shutdown — looming this fall, the growing insurance tab is a bipartisan target. President Barack Obama sought this year to cut almost $12 billion from the program over the next decade while his ideological opposite, Republican House Budget Committee Chairman Paul Ryan, has called subsidized insurance “crony capitalism.”

Lobbyists Win

Yet the president and Republicans’ chief budget expert are no match for the farm and insurance lobbies, which spent at least $52 million influencing lawmakers in the 2012 election cycle. Rather than thin the most expensive strand in the nation’s farm safety net, Congress is poised to funnel billions of dollars more to individuals who already are more prosperous than the typical American.

“We have been subsidizing some of the farmers who least need it in a way that is really costing taxpayers a lot of money,” said Senator Jeanne Shaheen, a Democrat of New Hampshire. “We’re never going to solve our budget challenges if that’s what we’re doing.”

Crop insurers and the USDA say that the subsidized insurance helps stabilize food prices for consumers while protecting farmers from weather-related losses. The program insured $117 billion worth of crops last year, including almost all the corn, soybeans, cotton and wheat grown in the U.S.

Capping Subsidies

Unlike direct farm aid payments, which are capped at $40,000 per farm, there is no limit on crop insurance subsidies. The names of those receiving payouts from the program are kept secret. There’s little chance the program will be restructured, since a permanent insurance mechanism spares politicians from approving ad-hoc farm bailouts that CRS says have cost taxpayers more than $50 billion since 2000.

The heavily-discounted insurance incentivizes farmers to cultivate marginal acres that may or may not be fertile. And the program’s been vulnerable to fraud, notably in North Carolina where a network of insurance agents, claims adjusters and farmers bilked the government of close to $100 million over more than a decade.

“The crop insurance program is terrible budget policy,” says William Frenzel, a 10-term Republican representative from Minnesota who served on the House Budget Committee and now analyzes fiscal issues at the Brookings Institution. “It’s the kind of congressional back-scratching that got us into our debt and deficit situation.”

Risk Factor

This is the first in a series of articles examining the U.S. crop insurance program, which advocates say is essential to the nation’s food supply and critics assail as wasteful corporate welfare. Other installments will examine how private insurance companies benefit from public assistance, the record North Carolina fraud and the program’s impact on the environment.

Crop insurance, intended to safeguard farmers from natural disasters, has mutated into an income support mechanism that almost eliminates risk from agriculture, say critics such as Vincent Smith, a professor of agricultural economics at Montana State University.

When last year’s drought drove corn prices to record highs, farmers with “harvest price option” policies were paid those inflated prices for what they didn’t grow — contributing to a record bill for taxpayers and record income for farmers. “There is no social justification for these subsidies,” says Smith. “This is a program that’s fundamentally designed to give money to farmers.”

Dustbowl Legacy

Federal crop insurance began in the shadow of the 1930s Dust Bowl, which scorched the soil and left farmers impoverished. Until 1980, when the government began paying about one-third of farmers’ premiums, few farmers participated.

In 2000, Congress made the subsidies more generous, so that farmers now pay only about 38 percent of their insurance bills or more than $4 billion in 2012. By last year, almost 1.2 million policies covering 282 million acres of farmland were in force.

Each year, farmers choose from a menu of insurance options — and by law, insurers are obligated to cover all who apply. More than seven in 10 policies guarantee income rather than yield.

The Washington-based Environmental Working Group, which supports more federal aid for conservation, says subsidies give farmers an incentive to buy “Cadillac” policies that over-insure their holdings and drive up costs. Some policies protect as much as 85 percent of a farm’s average yield.

Record Income

Taxpayers are helping farmers pay their bills even as farm income this year is expected to top $120 billion, its highest inflation-adjusted mark since 1973, according to the USDA’s Economic Research Service. Farm income has doubled over the past four years thanks to rising land values and surging exports.

In 2011, the median income of commercial farm households — those deriving more than half their income from farming — was $84,649, almost 70 percent higher than that of the typical American household.

Even as manufacturers and retailers struggle to rebound from the recession that ended four years ago, farm equity ended 2012 at $2.5 trillion, up 37 percent since the start of the recession in December 2007 — compared with a less than 1 percent gain in net worth for all U.S. households over the same period.

Citing “the record-breaking prosperity of American farmers,” Ryan, a Wisconsin Republican, said in March that “taxpayers should not finance payments for a business sector that is more than capable of thriving on its own.”

Policy Shift

The planned expansion of crop insurance reflects a decisive move in the nation’s farm policy away from direct payments to farmers.

The Congressional Budget Office says crop insurance will cost taxpayers about $90 billion over the next decade. If droughts like last year’s become more frequent, that could prove a conservative estimate: A February USDA report warned that even if greenhouse gases tied to climate change stabilize, “land surface temperatures will continue to rise for decades,” permanently altering planting zones.

Advocates say that with direct payments ending, crop insurance is all that stands between farmers and the unpredictable forces of nature. In the event of ruinous drought or disease, the program automatically disburses aid, often within 30 days, much faster than ad hoc bailouts, which can take more than a year.

Without government-subsidized insurance, financially-hobbled farmers might take land in and out of production, causing food prices to gyrate, according to Tom Zacharias, president of the National Crop Insurance Services, an industry group, who says the insurance costs about two cents per meal.

Farmer’s Tool

In an interview, Brandon Willis, administrator of the USDA’s Risk Management Agency, cited a University of Nebraska study that said crop insurance payments last year supported 20,900 jobs in four farm states. “More and more, crop insurance is the tool farmers rely on,” he said.

With new farm legislation stalled on Capitol Hill, largely over Republican demands for deeper cuts in food stamp spending, the cost of crop insurance is drawing fire from both ends of the political spectrum.

The Environmental Working Group says the insurance encourages farmers to make riskier plantings, secure in the knowledge they will be paid even if the crops fail. The free-market Club for Growth, meanwhile, derides the program as a government handout for millionaire farmers.

Wells Fargo, Ace

Even some beneficiaries are uneasy. “I like to think of myself as an independent who’s willing to take risk,” says farmer Jim Handsaker, 65, of Story City, Iowa. “With insurance, it takes the risk out of it.”

The USDA’s Risk Management Agency determines the policies’ costs and terms, while leaving marketing and claims payment to private companies. That means there’s no real price competition among the 18 approved insurers. The government doled out $1.4 billion last year to cover the administrative costs incurred by the companies, including a unit of Wells Fargo & Co (WFC), the nation’s fourth largest bank, Ace Ltd. (ACE) of Switzerland, which reported a $2.7 billion profit last year, and privately-held Great American Insurance of Ohio.

Handsaker, a genial fan of the broadcaster Rush Limbaugh, farms about 3,400 acres of corn and soybeans with his brothers and sons. He says he paid about $70,000 to $80,000 in crop insurance premiums last year. The taxpayers paid even more — since an average of almost two-thirds of premium costs are paid by the government.

No Competition

“I have a lot of problems with the federal crop program,” Handsaker said as he sat in the kitchen of his one-story home, a Cadillac sedan parked outside. “It doesn’t matter who you purchase it from, it’s the same.”

Subsidized insurance also gives farmers an incentive to plant on land where crops may or may not flourish, he said, adding that he knew individuals in South Dakota who are “farming the program” with the intent of making an insurance claim rather than harvesting a crop.

The program’s formula for determining insurance premiums also “has created brittle farming operations that lack resilience and a spiral of ever-increasing taxpayer-subsidized” losses, according to an August report from the Natural Resources Defense Council, a Washington, D.C.-based environmental group.

Democratic Representative Ron Kind of Wisconsin expects that trend to worsen.

“You’re going to see a lot of unproductive land brought into production because the taxpayer will cover the losses from all these riskless decisions,” said Kind, whose proposal to limit program subsidies fell 10 votes short of passage in June. “My concern is that this is eliminating all risk.”

Big Subsidies

In 2011, the latest year for which data is available, 26 farmers each got annual subsidies of more than $1 million; more than 10,000 received $100,000 or more. One grower of tomatoes and peppers in Florida enjoyed a subsidy of $1.9 million, according to the Environmental Working Group. Congress has barred the USDA from revealing the identities of payout recipients.

In April, Obama’s fiscal year 2014 budget recommended slicing $11.7 billion from the program over the next decade by raising out-of-pocket costs for farmers and cutting administrative subsidies for insurers. Ryan, too, has called for trimming program spending.

Instead, the House-approved farm measure would expand crop insurance to guarantee as much as 90 percent of a farm’s income and extend coverage to peanut farms while the Senate bill covers farmers against even the modest losses they currently pay out of pocket.

Shaheen, the Democratic senator from New Hampshire, failed to persuade her colleagues to cap premium subsidies at $50,000, which she says could save $3.4 billion over 10 years.

Bullet-Proof

A glimpse at lobbying filings explains why the program is bullet-proof in Congress.

The 43 groups that wrote a joint letter to members of the Senate in March defending crop insurance collectively spent more than $52 million on lobbying during the 2012 election cycle, according to the Washington-based nonprofit Sunlight Foundation.

One signatory, the Independent Insurance Agents and Brokers of America, reported spending $1.6 million on lobbying last year and identified five registered lobbyists working on the program.

Individual companies including Ace, with $2.2 million, and Deere & Co. (DE), with $1.4 million, cited crop insurance in their lobbying reports.

Funding Lawmakers

Agribusiness employees also have been generous in funding political campaigns, contributing $91 million to candidates in the 2012 elections, up from $70 million four years earlier, according to the Center for Responsive Politics, a Washington-based research group.

In Nevada, Iowa, Mark Kenney, 33, raises corn, soybeans and oats on about 3,000 acres as yellow Union Pacific locomotives rumble west through the nearby fields. He defends crop insurance as the best response to the vicissitudes of farming.

“Would you rather pay a dime now or a dollar later?” Kenney asks. “Of all the industries to be involved in, the security of our food, fuel and fiber is of the greatest importance.”

Kenney, whose $150,000 premium represents roughly 10 percent of his total costs, says he doesn’t have much faith in alternative tools for managing risk, including financial contracts such as futures and options.

Premiums last year accounted for no more than 10 percent of corn growers’ average production costs of $349 per acre, said Bruce Babcock, an agricultural economist at Iowa State University. Farmers spent far more on seed, fertilizer, fuel and electricity.

Dropping Coverage?

If premium subsidies were reduced, many farmers would consider canceling their policies.

“If we had to pay what they say they subsidize, most of us wouldn’t have crop insurance because we couldn’t afford it,” says Mike Brown, 63, who along with his son Tanner farms 7,300 acres in Colby, Kansas. “Crop insurance is costing you $15 to $20 an acre. If they took all the subsidies out, it would be $50 to $60 an acre.”

Crop insurance funding will be determined when lawmakers reconcile competing House and Senate versions of the farm law. Congress faces a deadline of Sept. 30 to make a deal or extend a current stopgap funding measure.

Off the table: whether federally backed crop insurance should exist at all.

“We shouldn’t look at crop insurance as the least evil policy,” says Josh Sewell, senior policy analyst with Washington-based research group Taxpayers for Common Sense. “It’s not like our choice is to send checks one way or send checks another way. We could just not send checks.”

To contact the reporters on this story: David J. Lynch in Washington at dlynch27@bloomberg.net; Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editors responsible for this story: David Ellis at Dellis5@bloomberg.net Jon Morgan in Washington at jmorgan97@bloomberg.net

Commentary: Seeking Practical Solutions to Immigration Reform (Dave Ladd, President of RDL & Associates)

When members of Congress return to Capitol Hill from their August recess, they will be met with an agenda comprised of high profile items – including comprehensive immigration reform.

Our current legal immigration system is a broken relic of the past.  As a nation of immigrants and a nation predicated on the Rule of Law, it is imperative that the American public and our policymakers tackle this issue in a serious and thoughtful fashion.  Although viewed by some through the prism of politics, the need for sound immigration reform is more so an economic and national security issue.

Any fix to the immigration system should focus on the key issues of enforcement, worker verification, a temporary worker program, an overhaul of the visa system, and earned legal status.

This past June the United States Senate passed a comprehensive immigration reform that includes new visa programs for foreign works, additional employer verification requirements for verification of a workers legal status, funding for additional border security, and a 10-year path to United States citizenship for undocumented workers.  But much work remains.

The next act in fixing our broken immigration system will play out in the United States House of Representatives, where Republicans are expected to advance a series of bills that would address the issue.  I remain hopeful that a methodical and logical debate in the House will produce legislation that can be reconciled with the Senate legislation and help lead us to a bipartisan long-term solution.

Effective immigration reform must begin with securing our borders, including increased efforts to prevent the entry of illegal non-residents.  The implementation and utilization of viable technology is critically important so that Customs and Boarder Protection (CBP) facilitating legitimate trade and travel without sacrificing the critical need for true border security.

Next, we must be able to clearly and definitively identify who is in our country and for what purpose.  Determining the legal status of prospective employees can be extremely difficult – if not impossible.  Employers are strictly limited in what they may ask prospective employees in determining their authorization to work and could be subject to a Justice Department investigation or lawsuit for unlawful discrimination if they request more or different documents than those allowed by law.

Another key component of substantive immigration reform is the need to encourage the flow of labor in and out of the country, especially in sectors where there is no domestic labor force and we explore options that will allow for the recruitment and hiring of workers when there is a demonstrated need.

Fourth is the need for an overhaul of our visa system.  Current immigration system is slow to respond to requests, fails to follow visa holders through expiration, and turns away both high and low skilled workers.  We cannot afford to continue losing brilliant students educated at our universities to other countries, which will reap the benefits of their innovations.

For example, agricultural employers may recruit and hire temporary foreign workers when no domestic workers can be found to work on farms.  They can do so under the H-2A temporary agricultural worker program but the process is bureaucratic, expensive and does not cover all parts of agriculture.  Case-in-point: the dairy sector is not included in the program – a glaring omission that must be rectified.

The program also requires employers to provide free housing and transportation from the worker’s home country, as well as pay a base wage rate that has historically been well above market levels.  We must reform and update the H-2A and H2-B visa programs so that they reflect the realities of today’s economy.

We must also address issues related to E-Verify – a computer system operated by the federal government to determine job applicants’ authorization to work in the United States.  Requiring agricultural employers to utilize E-Verify must be coupled with a workable guest worker program so as to mitigate significant and negative impacts on agricultural and business sectors.

Improvements need to be made to the current E-Verify system to eliminate error rates and protect against identity fraud.  A “safe harbor” should be provided for employers for good faith reliance on the system.

Last, but not least, for those workers that are here contributing to our society we must explore avenues to help them so that they can continue contributing to America’s economy.  It is not feasible to deport the 11 million undocumented immigrants who are currently in our country and earned legal status must be coupled with requirements that undocumented immigrants come forward, pass a background check, pay a fine, and learn English and civics.

Earned legalization must also be contingent upon border security and enforcement provisions being in place first and there must be strict anti-fraud provisions every step of the way, including the verification of each applicant’s presence in the country prior to a certain date.

Policymakers and stakeholders must be committed to finding practical solutions to the issue at-hand.  Doing nothing is a vote for the status quo, which is broken and is not in the best interests of our national security and our economy.

Dave Ladd, President of RDL & Associates, is a frequent guest commentator regarding public policy and the political environment and is a co-author of the book, “LIKE: Seven Rules and 10 Simple Steps for Social Media in Your Campaign”.  His company, RDL & Associates, assists clients in achieving their legislative and policy objectives via strategic communications, message development and interaction with elected officials and their staff.

 

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