Earlier this month, 31 commodity, crop insurance and conservation organizations reached an agreement described in letters to the Senate and House Agriculture Committees as “a good compromise position supporting linking conservation compliance with crop insurance premium assistance and opposing means testing, payment limitations or premium subsidy reductions for the crop insurance program.”
Signatories of the letters included the American Farm Bureau Federation, National Corn Growers Association, American Soybean Association, National Cotton Council, American Association of Crop Insurers, Ducks Unlimited, Pheasants Forever, National Wildlife Federation, National Association of Conservation Districts, Theodore Roosevelt Conservation Partnership and The Nature Conservancy. (Here is a link to the letter and a second link to a conservation compliance position paper.)
Legislative language to codify this agreement was added to the Senate version of the Farm Bill during the mark-up in the Senate Agriculture Committee on May 14. While the compromise language will most likely not be included in the House version of the Farm Bill, it is anticipated that it likely will become part of a conference agreement, assuming that the bills pass the full Senate and House.
Conservation compliance requires producers to follow specified conservation practices or risk losing most farm financial assistance. To maintain eligibility for most federal agricultural programs, farmers must actively apply a Natural Resources Conservation Service (NRCS) approved soil conservation plan on “highly erodible” land, refrain from cultivating highly erodible land that was not already cropland in 1985 without applying an approved conservation plan, and refrain from draining wetlands for crop production.
Some have characterized this compromise between agriculture and conservation organizations as a “grand bargain,” or “historic, landmark agreement.” The agriculture groups compromised by agreeing to recouple crop insurance with conservation compliance for the first time since 1995. The conservation groups compromised by agreeing to support the record high levels of funding for the crop insurance program contained in the Farm Bill, and to oppose reforms to the current crop insurance program structure. The conservation groups also compromised by agreeing to changes which would make the program more workable in the eyes of the crop insurance industry.
This agreement has been very controversial. Some national agriculture associations didn’t sign on. Some state associations of national associations that did sign on do not support the agreement because they do not want any strings attached to crop insurance premiums. Some environmental groups, taxpayer organizations and fiscal conservative groups oppose the compromise because they think the crop insurance program is in dire need of reforms and the high levels of government subsidies for crop insurance premiums are too much or inappropriate.
Despite the controversy, a review of the numbers from the Farm Services Agency (FSA) and real world application of conservation compliance in recent years would seem to indicate that conservation compliance may not be as onerous as some make it out to be. Only 1,916 producers were found out of conservation compliance across the entire United States during the five-year period from 2007-2011. USDA allows good faith waivers and affords opportunities to producers to get back into compliance and have their benefits reinstated. Among the 2007-2011 group found to be out of compliance, 86% were reinstated during the five-year period.
Only about $5 million of benefits were ultimately denied to all producers nation-wide over that five-year period. That works out to a ballpark of 0.0000001% of all Conservation and Commodities Title funds that were ultimately denied to producers during that period for being out of compliance (assuming an estimated average of $10 billion per year for both the Commodities and Conservation Title programs). That works out to about $1 denied out of every $10 million program dollars.
Recently all six living former Chiefs of the Natural Resources Conservation Service sent a letter to Congress in support of recoupling conservation compliance with crop insurance. In my view, that would be good politics for the agriculture sector. In exchange for generous federal crop insurance premium subsidies, farmers should be expected to take basic and reasonable steps to reduce soil erosion and conserve wetlands.
Conservation compliance is not onerous. It is a practical qualification for receiving taxpayer-funded program benefits. Farmers who choose to not be compliant would also choose to bear more of the risk of their operations. Not recoupling conservation compliance with crop insurance would discriminate against good actors by rewarding the tiny minority of producers who choose not to comply.
Recoupling conservation compliance with crop insurance will help improve water quality, enhance soil conservation and conserve economically important fish and wildlife habitat. It would also strengthen crop insurance by ensuring that federal crop insurance dollars are focused on those most traditionally productive acres. This agreement will help to prevent a small minority of producers from tarnishing the reputation of the agriculture sector and also paves the way for an enduring and strong safety net for U.S. farmers. In the end, I hope this agreement will come to be viewed as a landmark grand bargain and a good deal for both agricultural and conservation organizations.