Crop Insurance Update: Bill Restoring Crop Insurance to Previous Levels Moves to President

Written by M. Sean High – Staff Attorney

On December 3, 2015, both houses of Congress voted to pass surface transportation legislation titled Fixing America’s Surface Transportation (FAST) Act (H.R. 22). Of importance to the agricultural industry, the legislation contained a provision that would repeal a $3 billion dollar cut to crop insurers included in the recently enacted Budget Act of 2015.

Under sec. 201 of the Budget Act of 2015, the overall rate of return for crop insurance providers was capped at 8.9% (a decrease from the previous overall rate of return capped at 14.5%).  Significantly, the 8.9% capped rate would have resulted in a cut to crop insures of $300 million annually and $3 billion over ten years.  Nevertheless, under sec. 32205 of FAST, sec. 201 of the Budget Act of 2015 is to be repealed and the overall rate of return for insurance providers capped rate is to be restored to the previous rate of 14.5%.

Prior to the December 3 votes, House Agricultural Committee Chairman Mike Conaway expressed his pleasure that through FAST, sec. 201 of the Budget Act of 2015 would be repealed. The Chairman stated that restoring the previous rates was necessary for “ensuring that crop insurance continues to be available, affordable, and accessible to America’s farmers and ranchers.”

Echoing Chairman Conaway, the Crop Insurance and Reinsurance Bureau (CIRB), American Association of Crop Insurers (AACI) and the National Crop Insurance Service (NCIS) issued a joint statement that declared:

The crop insurance industry fully supports efforts to return crop insurance to where it was before the budget bill was passed.  The budget bill contained a disastrous provision that would have devastated crop insurance as we know it today, harming U.S. farmers and taxpayers alike.

Crop insurance is a successful public-private partnership that has already sustained $12 billion in cuts since 2008. The likely result of additional cuts would be increased industry consolidation, reduced choice in insurance providers for all farmers, and a dramatic decline in the availability and service of policies.  Make no mistake - this cut would jeopardize effective private-sector delivery of crop insurance and take risk management for farmers in the wrong direction.

The final votes to approve FAST were 359-65 in the House of Representatives and 83-16 in the Senate.  As a result of the December 3 votes, FAST now moves to the President’s desk for final approval.

U.S. Senators Seek HPAI Protections

Written by M. Sean High

On November 5, 2015, ten U.S. senators issued a letter to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack regarding USDA’s development of its Fall 2015 Highly Pathogenic Avian Influenza (HPAI) Preparedness and Response Plan.  The ten senators signing onto the letter were: Thad Cochran (R-MS), Jeff Sessions (R-AL), David Vitter (R-LA), John Boozman (R-AR), Tom Cotton (R-AR), Richard Shelby (R-AL), Johnny Isakson (R-GA), Roger Wicker (R-MS), Bill Cassidy (R-LA), and David Purdue (R-GA).

According to the senators’ letter, three matters are of particular importance and should be addressed in the regulatory development process being conducted by USDA through its Animal and Plant Health Inspection Service (APHIS).

First, the senators stated that current APHIS regulations “do not allow for the splitting of indemnity payments between owners and growers.” As a result, the senators argue that many contract growers are left “vulnerable in the event of [an HPAI] outbreak.” In an effort to provide protection for these contract growers, the senators “request[ed] that [APHIS] allocate any future indemnity equitably so that producers can maintain access to financing in the short-term and the future.”

Second, the senators stated that current APIHS regulations only permit indemnity for losses associated with bird mortality and not for losses associated with disruptions in the supply chain.  Specifically, the senators stated that “[e]ven if the birds in a particular facility do not contract HPAI, that producer could be affected by a hatchery outbreak.” Accordingly, the senators requested that APHIS consider providing producers with “downtime compensation.”  

Third, the senators stated that “it is important for growers to have expanded financial flexibility” to avoid the possibility of HPAI induced foreclosures.  To accomplish this goal, the senators requested that USDA “direct the Farm Service Agency to begin developing guidelines for its direct and guaranteed loan programs that would enable existing loans to be restructured to provide flexibility for borrowers severely affected by HPAI.”   

Study Indicates COOL Influences Customer Decisions

Written by Katharine Richter

 In a study conducted by the University of Arkansas, Department of Marketing, it was concluded that country-of-origin labeling (COOL) did exert influence on consumer decisions when purchasing meat products.

According to the study, customers were more likely to purchase meat labeled as a product of the United States.  According to a press release from the National Farmers Union (NFU), “Opponents of COOL have argued that it has no impact on consumers’ purchasing decisions.  This study clearly shows the opposite: that consumers use COOL to draw inferences related to a food product’s safety, taste and freshness.” 

The NFU is advocating for Congress to not repeal COOL and “continue to provide consumers with information they use to make informed decisions about what they eat.”  The House of Representatives, on June 10, 2015, passed a bill repealing COOL regulations on beef, chicken and pork and the Senate is proposing alternative programs to COOL, such as a voluntary “Product of the U.S. Label.”

National Pork Producers Council Urges Repeal of COOL

On July 20, 2015, the National Pork Producers Council (NPPC) and its state chapters wrote a letter urging the Senate to repeal country-of-origin labeling (COOL) for beef, pork, and chicken.

The NPPC letter states that unless COOL is repealed, the World Trade Organization will calculate and authorize what level of retaliation Canada and Mexico can place on the United States.  Mexico and Canada are insisting that the retaliatory tariffs will happen if COOL is not repealed and will remain until COOL is repealed. 

The NPPC letter asserts there will be a negative economic impact if the senate chooses to not repeal COOL.  According to the NPPC letter, Mexico was the United States second largest export market for pork in 2014 and totaled $1.55 billion and Canada was the third largest export market totaling $984 million.  “Exports helped add $63 to the price of each hog marketed last year. Furthermore, pork exports support more than 147,000 U.S. jobs.”  The NPPC letter states that jobs will be affected if COOL is not repealed, “[a]ccording to Iowa State University economist Dermot Hayes, the U.S. economy stands to lose 17,000 jobs if the WTO sets a retaliation level of $2 billion. Over 25,000 U.S. jobs will be lost if the retaliation level is set at $3 billion.”

The NPPC letter urges the Senate to repeal COOL before the August recess.

Written by Katharine Richter - Research Assistant

July 23, 2015

Senate Committee on Appropriations Approves GE Salmon Labeling

On July 16, 2015, the Senate Committee on Appropriations approved the Fiscal Year 2016 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill. The bill received bipartisan support, which would appropriate $148.3 billion for agricultural and rural development, as well as food safety, public health, and nutrition programs.

The bill covers a wide variety of issues, but one amendment to the bill may prove to be very controversial. Senator Lisa Murkowski (R-AK) introduced an amendment to the bill that would require the FDA to spend “not less than $150,000…to implement a requirement that the labeling of genetically engineered salmon offered for sale to consumers indicate that such salmon is genetically engineered…” Sen. Murkowski assured her colleagues that the labeling would not set precedent for the labeling of bioengineered crops, claiming “[c]orn doesn’t swim from one field to the next…Fish move. Fish escape.”

Although the bill passed with a vote of 28-2, it is important to note that Sen. Murkowski’s amendment was unanimously accepted. A press release summarizing the highlights of the bill can be read here. The full text of the bill can be found here.

Written by Tyler R. Etter- Research Assistant
July 17, 2015

Senate Committee Holds Avian Influenza Hearing

On June 7, 2015, the United States Senate Committee on Agriculture, Nutrition, and Forestry held a hearing on Highly Pathogenic Avian Influenza (HPAI) and its effect on the U.S poultry industry.  The hearing highlighted areas that need to be addressed in order to effectively handle the outbreak and potential future outbreaks.

Dr. John Clifford, Deputy Administrator for USDA’s Animal and Plant Inspection Service (APHIS), testified that if a site is confirmed to have HPAI, the producer must create a flock plan designating the procedures necessary for the producer’s farm to return to normal production.  The flock plan requires signatures from the owners, a state animal health official, and an APHIS official, and is necessary to be eligible for indemnification payments.  A flock plan is required before APHIS can issue an appraisal document valuing the production lost.  When an owner signs off on the appraisal, APHIS can begin depopulating.

Additionally, Dr. Clifford testified that a major issue that needs to be addressed to increase efficiency in depopulation efforts is “the lack of ready sites to receive and process dead birds.”

Egg and poultry producers also testified at the hearing.  Ken Klippen, President of the National Association of Egg Farmers, stated the association had sent in to APHIS an indemnity plan which could help APHIS bring a quick and fair appraisal to the producer.  Brad Milone, Manager and Owner of Moline Farms LLC, experienced firsthand HPAI when he lost 56,000 turkeys and touched upon issues he experienced in the process.  He emphasized the need for increased communication between the government and producers as well as faster depopulation time periods when there is confirmed HPAI.

Written by Katharine Richter - Research Assistant

July 8, 2015

Raw Milk Update: Maine Governor Vetoes Bill that Would Have Exempted Small Farmers’ Raw Milk From Licensing and Inspection

On July 8, 2013, Maine Governor Paul LePage vetoed LD  1282, entitled “An Act To Help Small Farmers in Selling Raw Milk Products.”  Upon return to the Maine Senate on July 9, the Senate voted not to overturn the Governor’s veto of the bill.

Currently, dairy producers in Maine must apply to the state for licensing and both their facilities and products must undergo inspections.  This regulation applies to both pasteurized and raw dairy products.  LD 1282 would have exempted small dairy producers, those who produce less than 20 gallons of raw milk daily, from the licensing and inspection regulations.  The Maine Legislature passed this bill in June, after the measure was amended to require raw milk producers to test their product regularly, under guidelines set by the Maine Department of Agriculture, Conservation and Forestry.

In his statement concerning the veto, Gov. LePage expressed his support for the majority of the content in the bill, but stated that his concern was the inclusion of provisions which would allow raw milk producers to sell their product at farmers’ markets.  LePage stated that he would support a modified version of the bill which permitted “on Farm only” sales of raw milk.

For more information, please see the Maine Legislature’s website on LD 1282 and the Current Issues section of the Agricultural Law Resource and Reference Center’s website.

Written By Gaby Gilbeau – Research Assistant

The Agricultural Law Resource and Reference Center

July 17, 2013

Governor Signs Bill to Regulate Captive Swine for Hunting

On June 24, 2013, Governor Tom Corbett signed SB 644 into law as Act No. 25. This Act amends the definition of “wild animal” in Title 34 of the PA Consolidated Statutes to exclude any “species or variation of swine, pig or boar” that is kept in captivity. Act 25 also adds a subchapter, entitled Swine Hunting Preserves, to Title 3 of the PA Consolidated Statutes. The subchapter requires all male swine kept for hunting be neutered. In addition, the subchapter gives the authority to regulate captive swine kept for hunting, previously belonging to the Game Commission, to the Department of Agriculture.

For more information on Act 25, please see Pennsylvania’s General Assembly’s website.

Written By Clara E. Conklin – Research Assistant
The Agricultural Law Resource and Reference Center
June 25, 2013