“National Farmers Union is pleased USDA is seeking to expedite the rule making process for the Agriculture Assistance Act of 2003,” the statement said, referring to comments by Agriculture Secretary Ann Veneman that USDA would go direct to a final rule on some program provisions to speed up the rulemaking process.
“However, the announcement that sign-up for the disaster program will not begin until June 6 will leave many producers who have suffered production losses during the 2001 or 2002 crop years in a position where they may have difficulty arranging financing to plant a crop this spring,” it said.
“The 2000 disaster program took 5.5 months from date of enactment to get checks going out,” a USDA spokesperson said in response. “Despite this year's program being more difficult to implement and, despite our not having any lead time (because we did not know what the bill would look like for sure until it was passed), we will expect to get payments out in only 4.5 months.”
NFU leaders also said they were concerned about the use of the price election for MPCI/APH crop insurance policies rather than crop revenue coverage or revenue assurance lines.
“USDA has also announced that the cap on disaster payments and the valuation of actual production used in determining the level of producer payment will be based on higher of the National Agriculture Statistics Service season-average price or the price election for MPCI/APH policies,” the NFU said.
“This mean that producers who insured their crops under one of the available revenue insurance products, such as Crop Revenue Coverage or Revenue Assurance, will not be able to utilize those potentially higher price guarantees in establishing the disaster payment cap for their production.”
In addition, the NFU said, the secretary has not clarified whether the crop insurance indemnity reductions from the payment cap will be net of the producer paid premium or the gross indemnity received by the producer.
“We urge USDA to clarify the treatment of producer paid crop insurance premiums and to further expedite the program sign-up and distribution of benefits to producers,” the statement said.
A USDA spokesperson said the season-average price for determining the cap will permit almost all producers with crop insurance to receive a full disaster payment.
“The law is clear.” She said. “It says the cap is the value of the crop had a loss not occurred. The price used in revenue policies can only be collected IF a loss occurs, so it is clearly not the relevant price had a loss not occurred. USDA in fact is being quite farmer friendly by using a post-drought price to calculate the cap – which is what the NASS price is.
“We are using the net indemnity in our calculation not the gross indemnity. It will be calculated as gross indemnity less the producer paid premium.
In a press briefing on Friday, the secretary said crop disaster payments would be calculated using the same formula as used for the 2000 crop so that crop losses for 2001 and 2002 will be valued using the price election for Actual Production History crop insurance policies or, if that is unavailable, a five-year average.
She said crop disaster payments will also be subject a formula, which states that the sum of the crop not lost, the disaster payment and the crop insurance indemnity cannot exceed 95 percent of the crop value if there had been no loss.
“Crop disaster payments will be reduced if the 95 percent limitation is exceeded,” she said. “The value of the crop not lost and the 95 percent limitation will be valued at either the actual production history price election or the National Agricultural Statistics Service season average price.
“That is an approach that is consistent with the recommendation of many of the farm organizations that have come into visit with our officials at USDA.”