Direct Payments Attacked (Again) By EWG

(Commentary by Rick Gibson, NAU Country)

Yesterday, I focused on Sequester and as a result, I received a number of emails. I hope I adequately answered all of your questions. Today, I ask you to click on the link below and read the article “Taking the First Step toward  Reform of Outdated Policies”, penned by Craig Cox. If the name is not familiar, he is the director of Environmental Working Group (EWG). This group identified Direct Payments as an issue over 5 years ago and they continually publish negative editorials using an Ag Economist located in Iowa as a source of information. You will notice that this source is again quoted in this article.

National Crop Insurance Services (NCIS) has placed an ad located directly below the article NCIS Advertisement . What I would like to bring to your attention is that crop insurance will continue without major harm through the sequester process, if it happens. However, we do not have a farm bill that has passed Congress yet and these attacks from EWG and other political action groups will continue to take aim at crop insurance companies and agents.Farmers do not escape their attacks based on high commodity prices and farm income that exceeds U.S. household incomes; however, there is no mention of the expense involved with production agriculture. Farming is a business with very high investment to enter or maintain - tractors, combines, sprayers, etc. that a normal household income does not have to buy. They also contend that producers do not need the subsidy or the protection of crop insurance. They state, “They are making so much money, they can take care of their own Risk Management.”

This article also includes an unsubstantiated statement that if losses for the year reach $17 billion as estimated, the government and taxpayers will pay $15.8 billion. I do not know where they get their numbers but they obviously have no idea how an insurance company operates.

http://thehill.com/special-reports/agriculture-february-2013-/285117-taking-the-first-step-toward-reform-of-outdated-policies

Yesterday, I commented that the proposed legislation would eliminate the Direct Payments. However, both Chairwoman Stabenow and Chairman Lucas have indicated that sign up at the FSA was a contract and that payments would be made in 2013. However, one of my good agent friends south of the NE border sent me a copy of a form, APPENDIX TO FORM CCC-509, DIRECT AND COUNTER-CYCLICAL PROGRAM [DCP] CONTRACT OR AVERAGE CROP REVENUE ELECTION [ACRE] PROGRAM CONTRACT. All producers who sign up for benefits are required to sign this form as well. The important language is as follows: “IT IS UNDERSTOOD AND AGREED BY THE PARTICIPANTS THAT BENEFITS UNDER THIS CONTRACT AND THE PROGRAMS WHICH ARE ADDRESSED IN THIS CONTRACT AND APPENDIX ARE SUBJECT TO CHANGES IN LAW AND TO CHANGES IN APPLICABLE GUIDELINES.“  I THINK IT IS IMPORTANT TO READ THE FORM AND MAKE YOUR OWN INTERPRETATION. Mine would be that the law could be changed and these programs eliminated. However, I also believe that both Stabenow and Lucas will lobby long and hard that direct payments, etc. are earned and should be paid. I would appreciate any of your comments on this. SENATOR MAX BAUCUS, at the Senate Finance Committee hearing yesterday, commented on the Democrat Senate Sequester replacement proposal, “This proposal is not perfect. I have concerns about cuts to programs family farmers rely on. That is why I secured a compromise that will extend the SURE PROGRAM and give farmers a bridge between direct payments and the next farm bill.”

You may remember that Senator Baucus, Chair of the Finance Committee, and Senator Conrad developed and funded SURE outside of the Ag Bill. It was expensive and most would agree, was a disaster within a disaster to administer and the cost was excessive. So why try to take money from a crop insurance program where farmers have some skin in the game to a no cost disaster supplemental program that is not needed or wanted?

Fraud, Waste, Abuse:  COURTS CRACK DOWN ON MULTI MILLION DOLLAR CROP INSURANCE SCHEMES

Two recent cases involving agents and adjusters were recently tried and resulted in imprisonment and restitution. An adjuster was sentenced to 48 months in prison, 3 years supervised release and Restitution of $21,045.917 for helping farmers and agents file false claims. An agent was also involved and had previously pled guilty. 

In another case, an agent conspired with others that would allow farmers to market their products through a marketing outlet that allowed the farmers to hide some or all of their production. Additionally, this agent helped his farmers pay bribes to loss adjusters, who in turn inflated the extent of damage resulting in fraudulent claims that were submitted to the companies. We don’t hear or see much of this. I believe farmers, agents and adjusters are honest hard working people, but once in awhile we do see situations as described. Take this as a warning - big brother is out there. Do the job to the best of your ability. 

Thank you,

Rick


Rick Gibson

Rick.Gibson@naucountry.com