Transcript Planning for Agriculture

Agricultural Act of 2014
Conservation Compliance and
Crop Insurance
Bruce Knight
SCS
Bill Wenzel
IWLA
March 12, 2014
Sam Willett
NCGA
Agricultural Act of 2014
Conservation Compliance Background
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Broad agreement among agriculture, crop
insurance and conservation groups
 Support for relinking conservation compliance with
crop insurance premium subsidies
 Oppose Adjusted Gross Income test for crop
insurance
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Agreement included in final law
Agricultural Act of 2014
Conservation Compliance Background
 Removal of direct payments
 Crop insurance increasing role as
primary farm safety net
 Need for strong farm and natural
resource safety net
 More defensible for taxpayer
Agricultural Act of 2014
Conservation Compliance + Crop Ins.
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Addresses conservation of two fragile lands
 Highly Erodible Land (HEL)
 Wetlands
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Involves 3 USDA agencies
 Farm Service Agency, Natural Resources
Conservation Service, Risk Management
Agency
Agricultural Act of 2014
Conservation Compliance and the
2014 Farm Bill
March 12, 2014 Strategic Conservation
Solutions
Conservation Compliance
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Enacted in 1985 Farm Bill
Linked Farm Program Benefits to
management of certain fragile lands
Estimated that compliance accounts
for 25% of the soil loss reduction
between 1982 and 1997
Highly Erodible Land (HEL) requires a
conservation plan.
Wetlands can be farmed, but cannot
be drained.
Conservation Compliance
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1985 – linked conservation compliance to crop
insurance and farm program benefits
1990 – expanded wetlands coverage,
expanded linkage to conservation programs,
penalties modified to fit the violation
1996 – crop insurance was decoupled,
provisions to allow a producer one year to
come into compliance
2014 – conservation compliance again linked
with crop insurance subsidies, as well as all
programs within the commodity title (Title I)
Benefits Linked to Compliance in
the 2014 Farm Bill
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Disaster Payments
Conservation Programs
Farm Storage Facility Loans
Production Loans from USDA
Marketing loans
Crop insurance premium subsidies
Both the Agricultural Risk Coverage and Price
Loss Coverage options (which replaced
direct payments)
STAX: Stacked Income Protection for
producers of upland cotton
Swampbuster Enforcement (Farm
Programs)
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Filling, draining, dredging or leveling of
wetlands prohibited after 1990.
Farming of wetlands under natural
conditions is allowed.
Drainage of uplands and prior converted
wetlands is allowed.
Minimal effects and mitigation is allowed.
No graduated penalties for intentional
violations
Farmer Impact
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Fear of increased regulation
Fear of regulatory creep
Compliance cost is actually low and
relatively easy for most farmers
Uncertainty about crop insurance
eligibility
Uncertainty about changes in linkage
to compliance
Implementation
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Conservation compliance is forward
looking from February 7, 2014 (date of
enactment)
While farmers will be able to sign up
for programs under the new Farm Bill
for the current crop year, rules tying
conservation compliance to eligibility
for crop-insurance subsidies go into
effect with 2016 crop year.
Rules and Regulations
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Crop insurance compliance will be
developed by FSA, RMA and NRCS
No significant changes are necessary
for “traditional compliance”
Released in 2014
Implemented in 2015?
Impact the 2016 crop year in the case
of crop insurance.
How Big is the Issue?
Total Number of Violations
(Wetlands + HEL)
700
600
500
400
Total
300
200
100
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Producer Impacts of Enforcement
Producer Benefits Influenced by Compliance Violations
$30,000,000.00
$25,000,000.00
Producer Benefits ($)
$20,000,000.00
$15,000,000.00
$10,000,000.00
$5,000,000.00
$0.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Requested Benefits $2,89 $4,71 $3,65 $8,68 $13,6 $14,0 $17,1 $14,1 $8,73 $24,2 $16,8 $15,9 $9,63 $5,63 $6,38 $7,52 $6,93
Reinstated Benefits $1,81 $3,42 $2,81 $7,33 $13,2 $13,2 $15,2 $12,8 $8,02 $23,0 $14,8 $14,9 $8,68 $4,59 $5,52 $6,44 $5,82
Conclusion
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Compliance is still not a “gotcha
program”
If you were in compliance in the
past - no change.
If you were out of compliance in the
past – decisions to be made.
Coalition efforts and cohesiveness
will be important to help guide the
regulatory process.
Bruce Knight
Strategic Conservation Solutions
50 F Street, NW Suite 900
Washington, D.C. 20001
202-879-0801 (office)
202-213-3887 (mobile)
[email protected]
Agricultural Act of 2014
CONSERVATION COMPLIANCE
AND CROP INSURANCE
Premium Subsidy Eligibility
Highly Erodible Lands (HEL)
Conservation Compliance
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Number one priority for most
conservation groups
Compliance is main source of
protection for farmed wetlands and
highly erodible land (HEL)
Credited with protecting an
estimated 3.3 million wetland acres
and 140 million HEL acres
93% of producers in compliance
Compliance - Highly Erodible Land
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Requirements of 1985 Farm Bill
largely unchanged
Producers receiving farm program
benefits who are farming land prone
to erosion must develop and
implement a conservation plan
Producers must file an annual
certification of compliance (AD –
1026)
Changes to HEL Requirements
Agricultural Act of 2014
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Producers subject to compliance for first
time have 5 years to develop
conservation plan
NRCS will give priority to new producers
who need assistance in developing and
implementing conservation plans
There are no clawback provisions for
premium assistance repayment for
violations
Ineligibility for premium assistance only
after Final Determination of violation
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Agricultural Act of 2014
Conservation Compliance and
Producer Perspective
Agricultural Act of 2014
Conservation Compliance – Producer
Perspective
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Forward looking application of regulations and
penalties
Premium assistance cannot be withdrawn in
year of violation
 No clawback on previous year’s assistance
regardless of appeals process
 Compliance required to restore premium
assistance for future crops
Agricultural Act of 2014
Conservation Compliance – Producer
Perspective
 Tenant Protections
 No liability for land owner refusal to meet
requirements
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Grace Period for newly covered farmers
 Five years for HEL and wetland compliance
 Two years for producers who drain wetlands to
begin mitigation
Agricultural Act of 2014
Conservation Compliance – Producer
Perspective
 Whole Farm subject to ineligibility in the
event of violations
 Current allows wetland conversion with
mitigation
 Question remains regarding impact on a
producer’s other farms
Agricultural Act of 2014
Questions?
www.farmland.org
www.nacdnet.org
www.iwla.org
www.ncga.com