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Timing of government shutdown could have been worse for farmers … but barely

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  • The closure of USDA's Risk Management Agency could lead to failures to pay out federal crop insurance claims if the shutdown drags on.
  • Closure of the Farm Service Agency, NRCS and a host of other agencies mean farmers cannot apply for Commodity Credit Corp. loans, emergency loans or most other USDA services. 
  • The frustration level among farmers and their organizations is growing daily.

The shutdown of the federal government has caused heartburn all across the U.S. and in many parts of the world where folks work in offices such as those funded by the USDA Foreign Agriculture Service’s Market Access Program or Foreign Market Development program, which are now closed.

If there’s a silver lining in any of this it’s that it didn’t happen last year when many farmers were in the midst of one of the worst droughts in decades. If the closure had happened a year ago, U.S. agriculture would have been in even bigger trouble.

Among the 800,000 or federal employees who have been furloughed are several hundred who work for the USDA Risk Management Agency. RMA has closed its offices because 100 percent of its funding is discretionary; that is, the money must be appropriated by Congress before the agency can continue its function of overseeing the Federal Crop Insurance Program.

With no funding available, all contractural or regulatory functions of the RMA have been shut down. Thus, no administrative or operating funds can be paid to companies that provide crop insurance coverage and thus to agents and claims adjusters. No revenue harvest prices will be posted.

The National Sorghum Producers is quoting RMA officials as saying companies can choose to pay indemnities as long as they are financially able to do so, but the government cannot provide any help beyond that.

Last year, those companies paid out roughly $17 billion in crop insurance claims as drought conditions in the Southwest and the Midwest, primarily the “I” states, reduced yields to 20 to 30 percent of normal. The payouts are credited with keeping many farmers in business.

Weather conditions improved in 2013, but some areas still suffered from too little or, in some cases, too much rainfall. Farmers in Colorado where floods destroyed crops and infrastructure have been told the government cannot process claims for emergency assistance until the USDA Farm Service Agency and NRCS offices are allowed to reopen. That is not good news for farmers wondering where Tropical Storm Karen will make landfall.

Several commodity groups have reported they anticipate exports sales could drop in coming weeks because of the shutdown of the Market Access Program and Foreign Market Development program offices in cities around the world.

Grain and livestock marketers are also beginning to express concerns that the lack of Agricultural Marketing Service reporting is creating uncertainty in the commodity markets that eventually could lead to lower crop prices.

Obviously, some people are happy that the government is shut down and that government spending is, at last, curtailed. But the cost to small businesses like farmers is mounting every day, and producers are beginning to wonder when common sense will prevail and the Congress will approve a continuing resolution that will reopen the government.

One of the mainstays of the cotton industry, the USDA Cotton Classing Office, is open for business as usual since the program itself is fee-based instead of tax-supported. However, any lapse in service could halt the entire marketing process. USDA reports related to cotton quality are unavailable due to the shutdown, as is the entire USDA website.

“For the sake of our country, and especially agriculture and those affected directly by this shutdown, we hope that Congress and the Administration will come to a resolution soon so we can get America back on track,” said Steve Verett, executive vice president of Plains Cotton Growers, the largest cotton producer organization in the country.

“We are approaching a very critical time in the 2013 crop year, and we need all systems to flow smoothly so we can get this crop harvested and moving through the marketing chain.”

It’s a frustrating time throughout the country, but especially so for farmers who get one chance to gather their crops and sell them this fall.

As American Soybean Association President Danny Murphy said this week “Congress has yet again failed in its most basic duty to debate and pass legislation and, frankly, we’ve run out of ways to say we’re disappointed.

“The farm bill authorizes and provides critical funding for myriad programs on which farmers depend, including key conservation programs, indispensable foreign food assistance and market development activities, and industry-advancing research,” said Murphy, who farms near Canton, Miss.

“These and other programs have helped to make American agriculture a bright spot throughout the recession and into the recovery. We’ve created jobs, supported rural communities and fed our neighbors both at home and abroad. All of these programs have come to a grinding halt because this Congress is more interested in scoring partisan political points than serving its constituents. Once again, Congress fails to act and American farmers pay the price.”

 

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