In early December, USDA’s Risk Management Agency (RMA), which administers the Federal Crop Insurance Program, released the first draft of a proposed new Standard Reinsurance Agreement between the Federal Crop Insurance Corporation and the fifteen crop insurance companies, which deliver the program to family farmers and ranchers across the nation. The 2008 Farm Bill authorized RMA to renegotiate the agreement, which was last negotiated for 2005.

The release of the first draft follows months of preparatory discussions within RMA, and between RMA and the insurance companies to hear their concerns and gather information needed to renegotiate the agreement. RMA expects to notify the companies at the end of 2009 that the current agreement will be canceled as of June 30, 2010, paving the way for a new agreement to be signed by all parties.

The proposed new Standard Reinsurance Agreement includes six primary objectives which RMA hopes to obtain in renegotiation of the agreement: 1) Maintain producer access to critical risk management tools; 2) Align Administrative and Operating (A&O) subsidy to insurance companies closer to actual delivery costs; 3) Provide a reasonable rate of return to insurance companies providing crop insurance to family farmers and ranchers; 4) Protect farmers and ranchers from higher costs while equalizing reinsurance performance across States to more effectively reach under-served producers, commodities, and areas; 5) Simplify provisions to make the SRA more understandable and transparent; and 6) Enhance program integrity.

These objectives align with RMA’s primary mission to help family farmers manage the significant production and income risks associated with agriculture. By achieving these six objectives, the new SRA will ensure financial stability for the program and the producers it serves, while increasing the availability and effectiveness of the program for more producers and making the program more transparent. The new agreement will also provide insurance companies with greater flexibility for their operations and financial incentives to increase service to underserved producers and areas, while ensuring that taxpayers are well served by the program.

RMA data shows that annual federal payments to the crop insurance industry have doubled from $1.8 billion in 2006 to an estimated $3.8 billion in 2009 based on the terms of the existing agreement. Meanwhile, the number of total policies dropped slightly from 1.3 million in 2000 to 1.1 million in 2008. In preparation for these negotiations, RMA contracted with an internationally known company, Milliman Inc., to review historical rates of return and determine what a reasonable rate of return is for the crop insurance industry. In crop year 2008, the Federal crop insurance program protected $89.9 billion dollars in crop value in the U.S.

At the 143rd Annual Convention of the National Grange held Nov. 17-21 in Grand Rapids Michigan, the grassroots Grange delegates from across the nation reaffirmed the following National Grange policy on crop insurance:

“The National Grange strongly supports the continuation of the multi peril federal crop insurance (FCI) program that provides coverage on all program, non-program and specialty crops on a nationwide basis. We support changes in the FCI program that would include multi-peril insurance for all crops. We recommend that FCI coverage be updated annually to reflect the cost of production. We further believe that area coverage should be dropped and insurance policies should reflect a realistic production base that should be established for each tract of land. The National Grange urges the USDA Risk Management Division to take steps to accelerate the processing and payment of claims. The National Grange further believes the Risk Management Division should discontinue supporting insurance coverage on a percentage basis. Coverage should be changed to insure crops on a dollar amount of loss per acre (or unit). The National Grange recommends removing any percent cut on estimated yields if weather conditions prevent timely planting. In addition, the Risk Management Division should require companies marketing crop insurance to delete all of the current footnotes and should clearly state all exceptions, limitations and other provisions concerning crop coverage in the insurance policy.”

Recently the National Grange joined with other victim's rights advocates in sending letters to the U.S. Senate Judiciary Committee and the U.S. House of Representatives Judiciary committee regarding S.2786 and the companion legislation H.R. 4091, the Enhanced Restitution Enforcement and the Equitable Retirement Treatment Act of 2009. The crime victims' advocates express concerns regarding the creation of a new Enhanced Financial Recovery fund that will, in part, be directly used to fund retirement programs for Assistant United States Attorneys. The funds used for these new retirement benefits for Assistant United States Attorneys would come, dollar for dollar, from reduction in deposits into the Federal Crime Victims Fund that will adversely affect crime victims generally who are supported by general disbursements from the Fund, as well as individuals victims of Federal offenses who are entitled to receive restitution.

Under current law, moneys recovered from criminal activities, fines and court ordered victim restitution payments are deposited into a Federal Crime Victims Fund to be used for restitution and state supported services for victims of violent crime across the nation. These new pieces of legislation would divert 5% of late fine payments from the Crime Victim Fund to the new fund to improve retirement benefits for Assistant U.S. attorneys. Rural crime victims in particular, are significant beneficiaries of support services for victims of violent crime.

“While we greatly appreciate the work of Assistant United States Attorneys and the work they do which benefit victims of crime," the coalition letter explained, "we are concerned that the approach proposed in this bill will adversely affect crime victims." "In effect, crime victims are being asked to help subsidize a fund whose ultimate purpose is to improve the retirement benefits of assistant United States Attorneys," the coalition letter pointed out to Senate and House Judiciary Committee members.

PA Grange Member Testifies Before Pennsylvania Milk Marketing Board
By, Carl Meiss, Membership Director, Pennsylvania State Grange

In an effort to preserve the "opportunity for an eighth generation to work our farm, if they choose to do so," Matt Espenshade, a seventh generation dairy farmer from Lancaster County, presented testimony today on behalf of the PA State Grange, requesting that the Pennsylvania Milk Marketing Board "extend the $2.15 over-order premium payment."

Matt works with his father on their Lancaster County dairy farm, which has been in the family since 1867.  They milk 80 cows, with a 21,000-pound rolling herd average, and raise their own heifers.  They have no hired help to assist in the daily operations of the farm.

Espenshade told the PMMB, "During the past 142 years, our farm has weathered many storms...the Great Depression, a failed attempt at 'going organic,' threats of eminent domain seizure for development.  However...at no time have we been as close to a breaking point as we are now." 

He explained that, "We estimate our overall costs to be approximately $17.00 per hundredweight," and continued, "In March, we were paid $11.27 per hundredweight of milk.  This includes 79 cents worth of premiums and bonuses that we have earned by our efforts to produce a quality product."  "Our feed costs per hundredweight stood at $7.93, leaving just $3.34 to pay for every other expense on the farm, a mere 32 cents for every gallon of milk sold."

Matt, who is the President of the Elizabethtown Area Grange #2076, said, "I have many non-farm friends, and we speak often about our jobs and the challenges we face. Many cannot understand how [dairy farmers] can operate for such a small portion of the price of milk on the shelf.  I am reminded of these numbers each week when I go to the store and pay more than three dollars for a gallon of milk, my milk, for which I was paid 88 cents."

He told the PMMB that in 2008, his farm paid over $131,000 to purchase feed, compared to $80,000 just five years ago. The Espenshades have not been able to afford to use fertilizers on their fields for three years thus reducing their forage output.

Matt's wife must work off the farm to supplement the family income and provide for health insurance for the couple and their two young boys.  But this then necessitates paying for day care for their children, which takes another $11,000 a year chunk from their income.

In an effort to become better dairy farmers in the 21st century, both Matt and his wife, who grew up on a Wyoming County dairy farm, received ag-related college degrees, Matt at Penn State and Charlene at VA Tech. How do you encourage a college graduate, with more than $20,000 of college debt, to return to a farm that would struggle to pay a fair wage?"

Matt stated, "The money you choose to invest in the over-order premium is not just supporting the local farmer, but the businesses they depend on as well.” In asking the PMMB to at least maintain, if not increase, the $2.15 over-order premium for milk sold in Pennsylvania, Espenshade said, "As a seventh generation dairy farmer, in the end, I want only one thing in life: that there be an opportunity for an eighth generation to work our farm, if they choose to do so. Thank you for your assistance to dairy farmers in the past and your consideration of the matter before you today."

Need for Farmland Preservation is Staring Us in the Face
By Allen Stiles, Legislative Director

At a meeting of the State Grange Executive Committee earlier this year, held at the Thurmont Regional Library, we saw a backboard that Bellenger Grange used in their booth at the GREAT Frederick Fair in the 70’s. It spoke of preserving farmland. The Maryland State Grange has always been in the forefront of this effort and is still today. Brother Dan Colhoun is the Grange representative on the Maryland Agricultural Land Preservation Foundation (MALPF) board and as its chairman he asked for my help on a budget issue. In the past, during budget crises, Gov. Schaeffer and Gov. O’Malley have not. However, the General Assembly did. He was able to get it replaced with a bond sale that we believe can be a steadier source of future income than the current Ag Land Transfer Tax.

Recession is a Bipartisan Teaching Moment for Politicians
By Joseph De Sandre, Legislative Committee

Much of what we hear about the present economic situation of the current times is related to what needs to be done to correct the problem. Money from the federal government is being spent with the reasoning that this will correct the economic problems the country is facing. The downturn in the housing market is being blamed for the start of our economic slide. While this may be true to some extent, should the blame not be placed where it needs to be so that the same thing does not happen again if things improve in the near future?

With support from both political parties, the government has been spending beyond their means on many levels. Many lenders of money were encouraged to lend money to people that could not afford to repay this money without getting into trouble financially. But wait, if you cannot see your way clear to repay a loan, should you have even borrowed the money? Should governments borrow money without a plan to repay this borrowing? Where are the balanced budgets?

The Grange, as well as others, has often made requests of governments for funding of interests or projects for which they support. The question is, where does the government get its funding? To the best of my knowledge, government funding comes from taxes. Taxes come from people and businesses, with some borrowing. Borrowed money needs to be repaid even by the government, so back we come to people and businesses.

The “recession” we are presently in should be a lesson that everyone can learn from. Will everyone forget and return to living beyond their means without getting into financial trouble? Will government curb some of its wasteful spending? Time will answer many questions.

State University Tuition Increases Should be Fair to Campuses in Rural Montana
By, Fred Cavill, Legislative Director

I have been watching the economic mess unfold and the fuzzy math used is something beyond my educational experience. I’ve been especially disappointed in President George Dennison’s demands for at least a 5% increase in in-state tuition. It does not seem to be anything but threat that the “Flag Ship” institutions, Bozeman and Missoula, deserve higher tuition fees than Dillon, Havre, Billings, or the Junior Colleges. We are still a rural state and we need to make sure when a potential student chooses a college, all are considered equal. The Board of Regents compromised between Governor Schweitzer and Dennison, left similar colleges with frozen tuition and gave Bozeman and Missoula a 3% raise. I do believe all colleges deserve equal treatment and status. It is time that the Board of Regents brings President Dennison into council that equalizes funding and accountability.

By way of background, I inherited a non-functioning farm in Hancock, NH. The core area is 38 acres – 8 arable, the rest woodland and marsh – with a farmhouse, barn, outbuildings, and a water-powered woodworking mill.

My time here has brought the property to an economic “take-off” point with a functioning 80 member CSA (Community Supported Agriculture), a listed historic woodworking hydro site, increased plantings, and an agricultural education/labor component with numerous intern students.

But, I’m aging out of productivity – my fingers and body parts don’t work as well as they did before, and I need to “cash out” and pass the farm to the next generation. That transition turns out to be more complex than I had anticipated, and I am hoping both that the Grangers can help and that this transition can be sort of a case study of how to pass farms in our region without losing their heritage.

How do we maintain, and build upon, the capital of sweat equity, increased fertility, the infrastructure and equipment, and the intimate knowledge of the land, which has been accumulated over an aging farmer’s life? I don’t want a Wal-Mart, gas station, or housing development to take over this site – this is a farm – active, sustainable, ecologically tuned agriculture for, and within, the local community. It has a history, an increased fertility and biodiversity, an established presence, and a wealth of crop, pest management, marketing, and microclimate information which must not be lost if we are to farm our landscapes well.

Transfer of a farm is difficult even when within a family, which is preferred, with at least three generations together – but many farm transfers occur without family continuity. Most such transfers also probably lose vast amounts of specific ecological and social information on which a viable agriculture enterprise depends. If each new farm generation must start learning the land when they arrive, at mid-life or early adulthood, we will not farm very well.

A Grange question is then, how do we pass on, and build on, the knowledge and capital improvements of the farm when the farmer passes on? How can we, as a community, preserve the intimate knowledge of soil, micro-climate, animal husbandry, crops, markets, etc. and build upon it in each successive generation? Are there examples where this has been done successfully? Can the Grange be a repository, clearinghouse, and advocate for rational, orderly, land enhancing, farm succession?

An additional question arises also when we choose to pass farms on responsibility. How do we value the farm? There is the land, the buildings, equipment and infrastructure, the development value, the prospective agricultural income value under various managements, sweat equity, and doubtless many other considerations, but I need overage of old-age expenses, off the farm, something of inheritance to pass on to the children, and a “goodwill” value, which is a combination of business success, past efforts, knowledge equity, and other intangibles. Yet we do not want to value out good intentional, replacement farmers and farm families.