Rep. Ted Yoho entangled in dispute over farm bill
Published: Saturday, July 27, 2013 at 7:18 p.m.
Last Modified: Saturday, July 27, 2013 at 7:18 p.m.
The farm bill making its way through Congress includes a significant change — away from direct payments and toward crop insurance — in the federal safety net that protects farmers.
But this potential policy change has put U.S. Rep. Ted Yoho, the newly elected Republican congressman for this region, in a delicate political position.
He supports insurance over subsidies, saying that approach is more consistent with his conservative stance on assistance and economic issues. But conservative groups like the Heritage Foundation and Taxpayers for Common Sense are bitterly opposed, saying the feds are taking on far too much expense with crop insurance.
Meanwhile, Yoho’s district — which includes much of Marion and Alachua counties — is a significant winner under the current system. In fact, his district was tops in Florida last year in the amount of government subsidies paid to farmers.
According to the Environmental Working Group a Washington-based organization that tracks federal farm subsidies, the USDA in 2012 paid $6.7 million to farmers in Yoho’s district for all agriculture-related subsidies, including disaster relief.
That represented about 6 percent of the $114 million the USDA paid to Florida farmers last year, the EWG reports.
Crop insurance has blossomed in recent years to already become the nation’s costliest farm-support program.
Under the new farm bill, which looks out 10 years, the program will widen in scope and further escalate in cost.
Proponents of expanding crop insurance maintain that the program, whose roots stretch back to the Great Depression, has brought stability to an erratic, and often expensive, system of federal farm support.
Proponents also point out that crop insurance improves on the direct-payment system. That’s because farmers buy the insurance and because the coverage only kicks in only during the worst of circumstances.
Critics, however, counter that crop insurance has become more expensive and offers less accountability than the direct payments that would be phased out in the measure.
The farm bill remains stuck in Congress, although not so much because of crop insurance.
The food stamp program is also part of the bill, and House leaders last week said they will try to cut billions from food stamps before negotiating with the Senate on the overall bill.
An issue of accountability
For years thousands of farmers across the country have received direct payments — a $5 billion annual entitlement based on the historic production of the growers’ land.
The payments — provided to producers of key staples such as wheat, corn, rice, soybeans, peanuts and cotton — are unaffected by fluctuations in crop yields, crop prices or the farmers’ income.
Lawmakers, Republican and Democratic alike, favor ending direct payments. A U.S. Government Accountability Office report issued in early July helps explain why.
The GAO called for overhauling the program, highlighting practices it considered questionable.
For instance, the government paid U.S. farmers $46 billion in direct payments between 2003 and 2011.
The GAO found that almost a quarter of that amount, $10.6 billion, went to farmers who in a given year did not actually grow the crops that qualified for the subsidy, which is permissible.
Moreover, the GAO discovered that between 2007 and 2011 about 2,300 farms received direct payments despite allowing their land to remain fallow each of those years. In 2011 alone, those farmers collectively reaped $3 million.
The auditors recalled in the report a previous GAO study from 2007 that revealed the U.S. Department of Agriculture had paid $1.1 billion in direct payments to 170,000 people who were dead.
Richard Barber, a west Marion County peanut farmer, maintains that farmers need a safety net.
“Agriculture is a little bit different than most manufacturing,” he said. “You get one shot and if you miss it, you’ve got to wait a whole year.”
“It helps the safety net. It helps the general farm economy,” he added.
Still, Barber is not bothered to see direct payments go.
“It’s not needed now,” he said.
He took out crop insurance last year but said he will not do so again. “It’s not a good investment because my yields are always good,” he said.
USDA data shows that farm incomes have hit record levels in recent years.
The agency reported in February that net farm income has doubled since 2009, leaping from $63 billion that year to a projected $128 billion this year.
Barber, however, isn’t so sure insurance will duplicate for farm economies what direct payments did.
“If it does anything, it might keep a farmer from quitting. It might keep you in business if you’re just going to stay in business,” he said.
Problems with both parties
When the initial version of the farm bill was defeated in the House in June, Yoho, the only Florida lawmaker on the House Agriculture Committee, slammed Democrats and his fellow Republicans.
The bill, Yoho said in a statement, failed because of a “plague of ignorance” in Congress.
Democrats earned Yoho’s scorn because of their unflagging commitment to the status quo on food stamps. The freshman lawmaker chastised his fellow GOP members for not recognizing that the shift from direct payments to crop insurance represented “a conservative movement toward market-based policy.”
Crop insurance is heavily subsidized by the government and now costs nearly three times as much yearly as direct payments.
Yoho’s office did not respond to The Sun’s multiple attempts to ask the congressman to further explain how the reform helps taxpayers.
On July 11, when the House passed its version of the revised farm bill, Yoho noted in a statement that the measure reformed, reduced and eliminated more than 100 “wasteful and duplicative” programs.
As the name implies, crop insurance is an insurance policy.
It protects farmers against, as the USDA says on its website, the “unavoidable perils beyond the farmer’s control.”
Policies can be written to cover the farmer for a drop in crop yield, a decline in revenue, or both. Farmers pay premiums and a deductible is applied as with other insurance policies.
That is, unless the loss is due to a catastrophe. Then the government covers the deductible as well.
Janell Hendren, national affairs coordinator for the Gainesville-based Florida Farm Bureau, called crop insurance “a great risk-management tool.”
“Farmers have skin in the game, it makes them follow good farming practices and it’s good risk management, because the whole point is to have a secure food supply,” Hendren said in an interview.
One way crop insurance benefits taxpayers, Hendren noted, is that farmers must demonstrate to regulators they did all they could to produce a solid crop in order to have a claim honored.
“It gives a good farmer a chance to start over, and for a bad farmer not following good practices, it’s not propping them up any more,” she said.
Still, the program is heavily laden with federal dollars, and it is growing.
The USDA reports that 180 million acres of farmland were covered by crop insurance in 1998.
Last December, the Congressional Research Service released a study indicating 282 million acres of cropland were insured in 2012.
Much of the increase is attributable to an expansion of the program.
Today, more than 100 different crops can be protected. The USDA even makes policies available to livestock and dairy producers.
Participation has also risen because of increases in the subsidy amount for insurance premiums and mandates for coverage from the government and financial institutions that make farm loans.
While premiums are assessed on the amount of coverage a farmer wants, the CRS pointed out that Washington pays on average 62 percent of the farmers’ individual premiums.
Paying those premiums costs the government $7.1 billion in 2012, double what it was just five years earlier.
“In the absence of premium subsidies, farmer participation in the crop insurance program and/or purchased coverage levels would be lower,” the CRS report said.
The EWG database indicates that the government spent $3.9 million between 1995 and 2012 on crop insurance in Marion County. That went to pay claims and the insurers’ overhead.
That was offset by about $1 million from premiums paid by farmers over that period.
In Alachua County, the government’s cost was $8.3 million over that same time frame.
Alachua farmers paid $1.8 million for their policies.
Besides helping with premiums, U.S. taxpayers fund the administrative overhead for the 17 insurance companies that underwrite the policies.
That came to $1.4 billion last year.
That cost has dropped in recent years, but it remains significantly above what it was in the early part of the last decade.
Combining the payments for premiums, claims and overhead, the taxpayers’ cost has risen from $2.2 billion in 2000 to $14.1 billion last year.
In the new farm bill, Congress sought to further pad the amounts over the next 10 years.
The Senate version would add $5 billion over current spending over that time, while the more generous House would up it by $9 billion.
Moreover, the bill creates new exceptions for cotton and peanuts, and the legislation directs studies for possibly insuring poultry, swine and catfish.
Even the natural allies of conservative lawmakers like Yoho are expressing skepticism.
The Heritage Foundation, a conservative think tank in Washington, referred to crop insurance costs as “out of hand” in a June blog post.
The group linked to another GAO report from April that argued had the USDA cut the average for premium subsidies from 62 percent to 52 percent, taxpayers would have saved $1.2 billion.
“When the House bill is to the left of (President Barack) Obama on the most expensive farm program, what does that say about the House farm bill?” Heritage asked in its blog post.
Taxpayers for Common Sense, another right-leaning group in Washington, noted in a report on crop insurance last October that deserving farmers need a “thoughtful level” of taxpayer support, if the private insurance market cannot sustain them in a disaster.
Beyond that, though, taxpayers should be spared the expense, the group said.
“Farm businesses should use their own dollars to purchase private crop insurance or utilize other methods to protect against most yield and revenue risks,” the report said.
“(E)xpanding crop insurance to cover shallow losses that guarantee farm business income and transfer unnecessary risk to taxpayers should be rejected outright.”