Keep crop insurance, farmers tell senators

Keep crop insurance, they said in a strong voice. But don't be quick to do away with direct payments to farmers, many added, a little more softly.

And while you're at it, Congress, do something about streamlining the system that feeds subsidies to agriculture.

That's the short form of what agriculture leaders, producers and lenders said Thursday during a public field hearing on the 2012 Farm Bill.

While facing the reality that cuts are coming because of the federal deficit and sacrifices are inevitable, they also stood firm in hopes of blunting the effect of the knife on a Kansas ag industry that produces about $15 billion annually in sales.

"Crop insurance is the most important part of a farmer's safety net," said Ken McCauley, a member of the Kansas Corn Commission and a farmer in White Cloud.

Noting that crop insurance has already taken a $12 billion hit over the last two years, Kansas Farm Bureau President Steve Baccus said, "Stop cutting crop insurance. We can't afford to lose this safety net."

About 500 people, many of them producers from across the state, packed into a meeting room at Hilton Wichita Airport to hear 17 panelists give their testimony to Sens. Pat Roberts and Debbie Stabenow. Roberts, R-Kan., is the ranking member of the Senate Committee on Agriculture, Nutrition and Forestry, which Stabenow, D-Mich., chairs.

Gov. Sam Brownback called on Congress to consider policies for the farm bill that would benefit the Ogallala Aquifer, the main source of underground water for western Kansas farmers. But he also took his turn in backing the need for crop insurance.

"If people can't get crop insurance," Brownback said, "they can't get financing."

Since something in ag will be cut when the farm bill is completed, Roberts and Stabenow challenged the panelists to give them priorities.

"We need to know what's effective and what's not," Stabenow said. "We have to look at the farm bill differently than in the past because of the deficit."

Farm incomes have been up across the nation and in Kansas the last four years, but the current drought in the Sunflower State makes producers particularly anxious about losing any subsidies. Current high prices don't mean anything if there's not a crop to sell, they told the senators.

Farm subsidies

Farm bill decisions are significant. Kansas farmers received nearly $1 billion in federal subsidies in 2010. Nationally, the total was $15.2 billion.

Crop insurance makes up about one third of those subsidies, with the federal government paying 59 percent of the premium. Most farmers carry 65 to 70 percent coverage on their crops.

Direct payments appear to be the biggest target for cuts. Those payments, which are based on a formula set in the early 1980s, generally send the same amount of money to farmers each year regardless of market conditions or whether anything is produced.

"The most efficient program is crop insurance," Jeff Whitham, chairman and CEO of Western State Bank in Garden City, told the senators.

The fact that farmers are paying 41 percent of the premium and don't receive benefits unless there is a loss makes it the best deal for taxpayers, he said.

"If our intent is to provide support to farmers when they have had a difficult revenue year," said Whitham, "the direct program is not as effective as other programs."

At the same time, he acknowledged that direct payments are helpful to young farmers who haven't built up as much equity.

That point was also echoed by others.

"In a day when the average age of a Farm Bureau member is 59 years old, this concept becomes more important than ever," said Baccus, who farms in north-central Kansas, near Minneapolis, Kan.

Roberts later said that everything is on the table, not just direct payments.

"I don't want to give up something unless I know for sure that the money saved actually goes to (reduce) the deficit or to something like crop insurance," he said.

At the same time, he noted that crop insurance is an easier sell to a largely urban Congress than direct payments.

"When you say direct payment or some other system, their eyes glaze over in 10 seconds," Roberts said. "But if you say crop insurance, they say, 'Well, that's reasonable.' So I think that's key."

'Reduce the red tape'

Stabenow said during the hearing, "We want to streamline it, take away the paperwork."

No one had a problem with that.

"Reduce the red tape," said Karl Esping, a panelist who is fifth-generation farmer from McPherson County. "It's difficult for everyone."

The U.S. Department of Agriculture has more than 30 subsidy programs, including 10 or 12 for conservation.

Roberts said savings could be attained by reducing overlap.

There were also suggestions that a farm bill stretched over a longer period of time would be more efficient. Currently it is rewritten every four years or so.

At times, Roberts led the panelists to bring out answers he wanted.

In addressing Ron Bach, director of High Plains Farm Credit in Jetmore, Roberts said, "Tell us the degree of predictability, of stability, that you can look at down the road. I think there's a lot of money sitting on the sidelines because of lack of stability."

"It would be great if there was a longer farm bill," Bach said. "Knowing that the program is going to be there year after year."

"That was the answer I was looking for," Roberts said.

The 12-member supercommittee, created by the debt bill and made up of representatives and senators, wants a recommendation from the ag committee by Oct. 14. It's not known whether the supercommittee wants a recommendation for a dollar or percentage amount to be cut from the farm bill or just ideas.

Whichever it is, Roberts said, "I want to make sure it's not just a numbers game. Yeah, we'll meet our numbers, but I want to get the policy right."

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