Environmental Working Group Continues Attacks on Crop Insurance
By Stephen Frerichs
The Environmental Working Group (EWG) released “analysis” on the crop insurance program last week. EWG was given access to crop insurance data by policyholder for 2011 under a Freedom of Information Act request (without policyholder names). Using that data, EWG describes the level of premium subsidy received by policyholder to make the case that large farms benefit more from the crop insurance program than small farms. You can find a copy of the report here: http://static.ewg.org/pdf/2012cropinsurance.pdf
The crop insurance industry pointed out several misconceptions with the EWG report, namely:
• EWG said, “…farming operations have received federal crop insurance premium subsidies…” The fact is farmers do not “receive” subsidies. There are no premium subsidy payments to farmers. There are no government checks cut and made payable to farmers.
• EWG said, “Some 26 farming operations received subsidies of $1 million or more last year.” Again, the fact is no policyholder “received” any dollars in premium subsidies.
• EWG said, “U.S. taxpayers pick up … crop insurance premiums…” Once again, the fact is there are no premium subsidies “paid” by taxpayers.
• EWG said, “…the industry’s powerful lobbyists prevailed on Congress to bar the U.S. Department of Agriculture from disclosing identities of individual policyholders…” The fact is the industry has never lobbied for non-disclosure.
Toward the objective of helping establish program facts, the following is a list of key operational characteristics that all policymakers should be keenly aware of:
• Premium support (subsidy) is not like commodity program subsidies. Producers do not receive a premium subsidy check.
• Premium support is made available to producers in the form of an adjusted or discounted premium amount. Premium is a required annual payment by producers.
• Premium support is not a budget outlay. Premium support is accounted for in the federal budget as an accounting transaction. The premium support accounting transaction becomes part of the calculation of program underwriting gains.
• Premium support is partially offset by any resulting program underwriting gains because the government receives a contracted share of any program underwriting gains.
• Producers annually pay the premium expense whether they suffer a loss or not and receive a benefit only when they suffer a loss. The benefit is less than the loss.
Senate to Start Considering Farm Bill this Week
By Stephen Frerichs
The Senate will begin consideration of the Senate Agriculture Committee passed farm bill this week. The bill, S3240 the Agriculture Reform, Food and Jobs Act, was officially filed last week. You can find a copy of the 1,009 page bill at http://www.ag.senate.gov/issues/farm-bill
The Senate needed 6 weeks to consider and ultimately pass the farm bill in 2008. While it is not expected to take as long this time around, it will take probably at least 2 weeks if not longer for the Senate to dispose of this bill.
The Congressional Budget Office (CBO) released its official “scoring” of the Senate Agriculture Committee passed farm bill. CBO is Congress’ budget office and its role is to let Congress know how much legislative changes cost or save versus current law. Chairwoman Stabenow’s goal was to develop a farm bill that “saved” $23 billion over ten years. The CBO said that the Committee bill saves $23.6 billion over 10 years.
The changes to the commodity title, the replacement of direct, counter-cyclical and ACRE with ARC (Average Revenue Coverage) save $19.8 billion over 10 years according to CBO. The conservation title and nutrition title changes save $6.4 billion and $3.9 billion respectively. The crop insurance title changes increase crop insurance spending by $5.1 billion over 10 years. The bulk of these increases are in the two new coverage options: Supplemental Coverage Option or SCO ($3 billion) and Stacked Income Protection or STAX for cotton ($3.2 billion). The CBO also estimates that the ARC program will reduce crop insurance participation by some $2.5 billion over 10 years.
For a copy of the CBO document go to http://www.cbo.gov/publication/43273?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=812526&utm_campaign=0
USDA Announces CRP Sign-up Results
By Stephen Frerichs
USDA will accept 3.9 million acres offered under the 43rd Conservation Reserve Program (CRP) general sign-up. During the extended five-week signup early this year, USDA received nearly 48,000 offers on more than 4.5 million acres of land. USDA selected offers for enrollment based on an Environmental Benefits Index (EBI) comprised of five environmental factors plus cost. The five environmental factors are: (1) wildlife enhancement, (2) water quality, (3) soil erosion, (4) enduring benefits, and (5) air quality. The minimal acceptable EBI level for this sign-up was 209. The average rental rate per acre for this sign-up is $51.24.
Currently, there are more than 29.6 million acres enrolled on more than 736,000 contracts. Download the CRP results by state.
The average size of accepted CRP offers in each region of the country was:
- Northeast – 18 acres
- East – 22 acres
- Midwest – 30 acres
- South – 50 acres
- Great Plains – 110 acres
- West – 215 acres
- U.S – 92.3 acres
USDA Announces FSA Office Closings
By Stephen Frerichs
The Farm Service Agency (FSA) will consolidate 125 offices nationwide with other USDA service centers. Two sets of criteria were used to identify FSA offices for consolidation. First, USDA identified FSA offices located less than 20 miles from another FSA office that had two or fewer permanent, full-time employees. Additionally, all FSA offices with zero permanent employees regardless of location are to be consolidated. 2,119 office locations remain. You can find a list of offices to be closed at
North Carolina Appraisal Board Denies Request to Expand Performance of BPOs
By Scott DiBiasio, Appraisal Institute
On May 15, 2012, the North Carolina Appraisal Board (NCAB) denied a Request for Declaratory Ruling filed by the Real Estate Valuation Advocacy Association (REVAA) regarding the permissibility of licensed real estate brokers performing broker price opinions (BPOs) or comparative market analyses (CMA) outside of the real estate brokerage context.
In its filing, REVAA requested that real estate brokers that are employed or engaged by lenders be permitted to perform BPOs or CMAs for “discretionary business reasons” without obtaining an appraiser credential. Such discretionary business reasons include portfolio valuation, loan modifications, foreclosure due diligence, appraisal verification, etc.
Currently, real estate brokers in North Carolina are only permitted to perform BPOs/CMAs “for prospective or actual brokerage clients”. Both the NCAB and the North Carolina Real Estate Commission have interpreted this to mean that a broker must have a reasonable expectation that a brokerage relationship may result from the performance of the BPOs/CMAs.
In its ruling denying the REVAA request, the NCAB stated that REVAA did not have standing upon which to request the Declaratory Ruling. In addition, the NCAB cited a provision of the law the prevents the NCAB from issuing a Declaratory Ruling on any issue that is under active investigation by the Board. The NCAB stated that “There is nothing in the Appraiser’s Act that gives the Board authority to discipline or sanction, or even seek injunctive relief against REVAA or its members.” The Board also stated that, “The proper place for REVAA to address its concerns with the statute is with the General Assembly, not the Appraisal Board”. Lastly, the NCAB cited an active case against a real estate broker for allegedly performing a BPO/CMA for a purpose that is not permitted by law.
Based upon the reasons for the denial of the Request for Declaratory Ruling, it is possible that REVAA could re-file its Request for Declaratory Ruling under the name of someone who believes that they have been specifically aggrieved by the North Carolina BPO/CMA statute, such as a licensed real estate broker. In addition, their petition could be refilled when the aforementioned case before the NCAB has been resolved. Further, it is certainly possible that legislation could be introduced in the General Assembly to modify the purposes for which BPOs and CMAs may be performed.
Food Prices Soaring Around the Globe
Kiplinger Agriculture Letter
With food prices soaring around the globe… costs of fuel, fertilizer, machines and shipping as well…
Note new efforts to boost farming worldwide.
The goal is to help poor nations grow more food and even export some of it to bolster their economies.
The U.S. government will play a key role, as will other top developed nations, the World Bank, private ag firms, foundations and scientific groups.
Copyright 2012. The Kiplinger Washington Editors, Inc. Login to Member Resources to download this issue.
Nominations for Professional Farm Manager of the Year Due June 8
Submit your nominations now for the 2012 Professional Farm Manager of the Year Award co-sponsored by Syngenta, ASFMRA and AgProfessional magazine.
This prestigious award recognizes professional farm managers whose dedication and commitment to agriculture have benefited their clients, the American consumer and our most precious commodity – the land. To be eligible, a professional farm manager or a farm management team must have at least five years farm management experience and hold membership in ASFMRA. To submit your nominations, visit www.farmmanageroftheyear.com. Nominations are due by June 8.