The permanent disaster aid program in the 2008 Farm Bill was intended to spare Congress from having to scrape up extra money every time a drought, flood or hurricane struck farm country, but growers in the South claim the plan has failed them.
They argue the program needs changes, and as proof they point to the situation in Arkansas, where Sen. Blanche Lincoln has for months struggled to secure a special $1.5 billion package of disaster aid for Southern farmers hit by bad weather last year. After Lincoln failed to get the funding through Congress, the Obama administration agreed to provide the money administratively.
Southern farmers said they need the help because they didn’t buy crop insurance, a requirement to qualify for the permanent disaster aid plan. Crop insurance sign-up is high among Midwest corn, soybean and wheat farmers, but in the South, many rice and cotton farmers complain premiums are too high for the benefits they receive.
“The parts of the country where we had the worst weather the last couple years are areas where they don’t buy crop insurance,” said Tara Smith, a director of congressional relations for the American Farm Bureau Federation.
U.S. Rep. Earl Pomeroy, D-N.D., a member of the House Agriculture Committee, said he and others who crafted the permanent disaster aid program didn’t intend to skew it to the Midwest.
“We want a program that is equitable right across the country, because that’s the kind of program that’s going to stand the test of time,” Pomeroy said.
Pomeroy said he wasn’t sympathetic when Lincoln, a Democrat who chairs the Agriculture Committee, put her proposal forward because the permanent plan was supposed to end ad hoc, or one-time, aid. But he agreed Southern farmers are hurting.
“So maybe this last one is needed while we evaluate what is required to make sure these programs work on a level of regional fairness,” Pomeroy said.
Joe Mencer, a rice, cotton, corn and soybean farmer from Lake Village, Ark., said many Southern farmers opt not to buy crop insurance because it’s geared toward protecting yields, not profits. Yield is the amount harvested per acre.
“Our disaster comes with revenue loss, not yield loss,” said Mencer, chairman of a crop insurance task force of the USA Rice Producers’ Group.
For example, rice is an irrigated crop so a drought doesn’t usually cut yields, but the cost of pumping the extra water the rice needs in a drought can turn what should have been a profit to a loss, he said.
Roger Johnson, president of the National Farmers Union, said making crop insurance attractive to Southern farmers would help fix the system. Johnson’s group fought to establish the Supplemental Revenue Assistance Payments Program, the largest component of the permanent disaster aid plan.
“If we can get crop insurance to work for them, the SURE program will as well,” Johnson said.
The Supplemental Revenue Assistance Payments Program just started paying farmers who experienced crop losses from disasters in 2008.
The government had paid out more than $1.2 billion under the program, known as SURE, as of Aug. 17. Iowa farmers received the most money with nearly $211 million, followed by North Dakota at nearly $164 million, Texas with $133 million, Ohio at close to $85 million and Wisconsin with nearly $58 million. SURE will keep taking applications for 2008 losses through Sept. 30.
To qualify for SURE, a farm usually must be in or bordering on a county designated as an agricultural disaster area.
Most counties in the continental United States qualified in 2008 and 2009, as did most of Hawaii, as various areas were hit by drought, heavy rain or hurricanes. Yet 2008 was a banner year for farmers not affected by the weather, thanks to some of the highest crop prices in years.
“If you got affected by those floods or the hailstorms there was an impact, and it could have been sizable on your farm,” said Chad Hart, an economist at Iowa State University. “But in the grand scheme of U.S. crop agriculture, it was a very good year for returns. And yet it was also a very good year for SURE disaster payments.”
That could end, though. Under current law, SURE runs out four years into the five-year 2008 Farm Bill. There’s no money in it for disaster losses in 2012, and it’s too early to tell what will happen in the next farm bill.
“If we want to continue it we’re going to have to come up with the money from somewhere else to do it,” Smith said. “That’s going to be very difficult to do.”