John Thune

Posted: August 24th 2011

From Argus Leader

Sen. John Thune and an assembly of agriculture advocates at a roundtable discussion Tuesday in Sioux Falls were in agreement that the next federal farm bill will be focused on crop insurance.

Farmers told Thune access to reasonably priced crop insurance is their safety net and is necessary to safeguard their futures.

Thune said it is the federal farm support most easy to defend when Congress and the president are looking for trillions of dollars of spending cuts.

"It makes sense to make this the centerpiece of ag policy," Thune said. "Insurance is more defensible than subsidies."

The government underwrites farmers' premiums at a designated level, and farmers can purchase additional coverage. The government also reimburses insurance companies for administrative costs associated with offering crop insurance.

Thune told participants at the roundtable organized by the South Dakota Soybean Association that as Congress begins to put together the next farm bill in 2012 in a looming era of budget austerity, "we've got to be thinking about how we can do this in a more efficient, cost-effective way."

Farmers have enjoyed high crop prices for several years. Against that backdrop, federal commodity subsidies are almost irrelevant. But mitigating risk remains job one for the government to support farmers, according to discussion participants.

Gary Duffy, president of the South Dakota Corn Growers Association, also told Thune the program to pay farmers prevented from planting a crop by weather was a matter of economic survival for farmers in flooded northeast South Dakota this year.

"They have good-producing land. But when it's under two feet of water, it's not worth anything," he said.

However, beyond that, "crop insurance is our number one issue," said Duffy. "It's our safety net, and we will fight tooth and nail for it. We'll let a lot of things go by the wayside. Not that."

Tom Kauer, co-owner of Statewide Ag Insurance in Winner, told Thune the current delivery structure where crop insurance is sold through private-sector insurance companies is preferable to having it sold through the U.S. Department of Agriculture, as it was from its inception in 1938 until changes in federal law in 1994 and 2000 increased the role of the private sector.

Thune also heard that as the ethanol industry is poised to scale up cellulose-based ethanol to commercial production, it is vital for Congress to reauthorize a specific subsidy in the next farm bill. Jim Sturdevant, director of Poet's cellulosic ethanol Project Liberty, called for the Biomass Crop Assistance Program to be continued. It was new in the 2008 farm bill. For two years, it offers farmers matching grants on a dollar for dollar basis up to $45 per dry ton to collect, harvest, store and transfer cellulosic feedstock, like cornstalks and corncobs. Sturdevant said this economic incentive is crucial to launching the cellulosic ethanol industry.

"It's a necessary boost to get farmers to do something they've never done before," he said. "It's a two-year producer investment. The harvest is a reduction in the dependence on foreign oil."

Also in the 2008 farm bill was a voluntary new method for farmers to calculate subsidies. The Average Crop Revenue Election program has not been widely adopted in South Dakota.

Paul Casper, South Dakota Soybean Association vice president, said it is needlessly complicated and is difficult for farmers to explain to their landlords. He said ACRE should be simplified in the next farm bill. He also said money should be found, perhaps through a shipping tariff, to do upkeep on dams and locks vital to grain shipping.

Other issues brought before Thune at the roundtable included ensuring livestock producers an abundant supply of feed when they are in competition with ethanol producers for corn, insulating livestock producers from animal rights issues, completing stalled trade agreements that could open export markets to nations such as Colombia, Panama and South Korea, and ensuring that biotechnology advances move from laboratories to farm fields as quickly as possible.

As the session concluded, Thune said peaks and dips in prosperity long have characterized agriculture. But he said a world population growing by 80 million people annually could drive a sustained increased demand for food that smooths farmers' boom and bust cycle.

But Duffy noted farm bills are not written for good times but to help farmers get through tough ones. Commodity prices are sky high now, but food is affordable because the value of the dollar is cheap compared to other world currencies, he said.

"We have not been through this where people still need food, and the dollar is strong and they can't afford it," he said.