Congressman K. Michael Conaway (R-Texas), Chairman of the General Farm Commodities and Risk Management Subcommittee, issued the following statement regarding Secretary Vilsack’s recent decision to speed up implementation of a critical drought relief provision in the Farm Bill:
The provision became effective on February 7 but USDA announced in March that the relief would not be available until 2016. The Secretary announced today that the provision will now be moved up to start with the 2015 spring crop.
"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."
The 2014 Farm Bill provides that for purposes of calculating a producer's actual production history (APH) under crop insurance, a producer may elect to exclude any yield in a crop year when the yield in the county or a contiguous county is equal to 50 percent or less of the 10 year average. Producers making this election must pay an actuarially appropriate premium.
Disaster years--particularly severe disasters occurring in a row of consecutive years like the drought in Texas--reap havoc on a producer's actual production history, reducing the yields a producer may insure in future years at a level well below what a producer can expect to produce. The depressed insurance coverage makes it difficult for producers to cash flow and secure financing, especially with the recent collapse in prices.
"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 Willis for working to move up its implementation."