Ag Policy Blog

Politicos Weigh in on USDA APH Yield Exclusion

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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There was relatively limited reaction Tuesday from commodity groups and lawmakers about USDA's announcement to roll out the Actual Production History yield exclusion for crop insurance. Still, anyone who has some total crop collapses in their cropping history could see some benefits -- at the potential cost of higher premiums for that extra protection level.

Yields can be excluded from farm actual production history when the county average yield for that crop year is at least 50% below the average yield for the 10 previous years growing that crop.

USDA officials stressed that the yield exclusion couldn't get done in time for the winter wheat insurance enrollment. But the APH exclusion still can have an impact on a broad swath of producers who may have some disastrous yields lingering in their production history.

The provision goes into effect for a select number of spring crops nationwide, including corn, soybeans, spring wheat, cotton, grain sorghum, rice, barley, canola, sunflowers, peanuts, and popcorn. USDA said nearly three-fourths of all acres and liability insured in the crop insurance program. These crops fit under USDA's "combo" policies that deal with both yield and price risk. Because the ratings are all done the same way, it was quicker to offer the yield exclusion to those 11 crops.

RMA officials did tell DTN that they expect the APH yield exclusion would become available for winter wheat producers and other crops by next fall's insurance enrollment.

RMA also isn't saying right now what the APH decision will have on insurance rates. The agency is still working to make sure insurance will be rated accurately based on the risk involved.

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Farmers on a corn, soybean and spring wheat rotation could have yield data going back more than 20 years. A failed crop in, say, 1995, would require RMA to go back and review county data going back to 1985. In other words, a significant amount of data is involved in making this APH yield exclusion work.

The Supplemental Coverage Option insurance and the cotton program, STAX, also will provide better coverage benefits to producers with the yield exclusion in place as well. However, the rollout of the yield exclusion also could translate into higher rates for those products as well.

In reporting on the announcement Tuesday, the Capitol-Hill website Politico tied USDA's expedited work on the yield exclusion to swing-state elections. Politico cited that Colorado's two Democratic senators, Michael Bennet and Mark Udall, had written Vilsack about the issue just last week. Udall is in a tough reelection battle against Rep. Cory Gardner, a Republican. http://www.politico.com/…

Bennet and Udall issued a joint statement Tuesday praising Vilsack's announcement. “Colorado farmers and ranchers face unprecedented challenges with severe droughts, wildfires and other natural disasters," Udall said. "Our farmers need to have access to the best available science, research and risk management tools, in order to continue feeding our country, which is why I fought hard to pass a comprehensive, bipartisan Farm Bill. I am gratified to see this program moving forward and I will continue to push the USDA to swiftly implement the 2014 Farm Bill changes. Our farmers and ranchers have waited long enough."

House Ag Committee Chairman Frank Lucas, R-Okla., commended Vilsack and USDA for implementing the provision, which Lucas said "means everything to farmers" who have faced multiple years of drought. Lucas said he is hopeful USDA will make the yield exclusion available for winter wheat.

"It is the difference between having viable crop insurance for the coming year or not. It is for these reasons that I worked to include the APH adjustment in the farm bill and why I am pleased the Secretary redoubled his efforts to get it done this year," Lucas said.

Rep. Michael Conaway, R-Texas, chairs the General Farm Commodities and Risk Management Subcommittee. He's also seeking to replace Lucas as the chairman next January.

"I would like to have seen this drought relief made available starting with the winter wheat crop, but I commend Secretary Vilsack for breaking the bureaucratic logjam to ensure it is available for the 2015 spring crop," Conaway said. "Speeding up this relief is crucial, especially to farmers who are coming off of a string of crippling drought years and who now face sharply falling crop prices."

Conaway's statement noted that disasters occurring in a row of consecutive years like the drought in Texas can cause havoc to a farmer's APH. The depressed insurance coverage makes it difficult for producers to cash flow and secure financing, especially with the recent collapse in prices, the statement noted.

"It takes years for farmers to recover after the kind of drought we have faced in Texas and other parts of the country, and falling prices will make the recovery even tougher," Conaway said. "Depressed insurance coverage in future years makes a difficult climb even more uphill. This Farm Bill provision simply allows producers to insure their expected yield and I thank Secretary Vilsack and RMA Administrator (Brandon) Willis for working to move up its implementation."

Rep. Randy Neugebauer , R-Texas, a senior member of the House Agriculture Committee, said his farmers have been plagued by drought and deserve some relief.

"While I have been deeply frustrated with the delayed implementation of the APH adjustment, I welcome today’s news and applaud Secretary Vilsack for providing this much-needed relief for our producers. I look forward to working with Secretary Vilsack and my colleagues on the House Agriculture Committee to see that the Farm Bill implementation process moves forward and meets the true needs of America’s farmers.”

Follow me on Twitter @ChrisClaytonDTN.

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