OTA - legislation

RMA to Partially Address Organic Agriculture Crop Insurance Concerns

admin — Tue, 01 Mar 2022 00:20:11 +0000

February 28, 2022

“What’s in a word? A rose by any other name would smell as sweet.”

–William Shakespeare, Romeo and Juliet

In a recent flurry of press releases and federal rulemaking, USDA’s Risk Management Agency (RMA) is possibly re-thinking to change its understanding of organic agriculture. Perhaps the most intriguing is the proposal by RMA to change its definition of organic agriculture. While one might think the definition of organic agriculture is common across all USDA agencies, it is not. The new proposed RMA definition is as follows:

“Organic farming practice. A system of plant production practices used on organic acreage to produce an organic crop this is approved by a certifying agent in accordance with 7CFR, part 205.”

What is interesting about this new definition and perhaps of most significance is that RMA now agrees at least in part that organic production is a system of production. However, the changed definition is still confusing since it also continues to see organic agriculture as a practice or set of practices.

The important point here is what a system of production actually means. A system of production is not merely a set of practices, but rather the dynamic interaction of those practices where the whole is much greater than the sum of its parts. RMA has not fully embraced the concept of a system of production in part because it seems to believe organic production is riskier than non-organic production, which our recent research calls into question as not likely.

Because RMA’s definition does not embrace a system of production, organic livestock production is excluded. This, too, may be short sighted since the re-integration of cropping with livestock production systems would likely lower revenue risk as well as address climate disruption.

This confusion around organic agriculture systems and crop insurance is partially understandable given the conflictive and confused history of how RMA established insurance for newly certified organic farmers and livestock producers.

Although not well known, the first organic crop insurance policies were written in 2002. A total of 110 policies covering 20 different organic crops were sold. However by 2004, fundamental changes were made by RMA such that organic crop insurance policies were limited to a small number of commodity crops, based indemnity (loss) payments on non-organic prices, added a 5% surcharge on the premium costs of all organic crops, generally established that the ten-year county average yields of most organic crops were 35% of non-organic yields, and finally that organic prices of crops were always about double those of non-organic crops. These policies led to a situation where many organic farmers paid more for crop insurance with less coverage than their non-organic peers.

It took until the passage of the 2014 Farm Bill to see significant reform with an elimination of the 5% premium surcharge and the creation of the Contract Price Addendum (CPA) whereby organic and transitioning organic farmers who had sales contracts could insure their crops at almost the full contracted price rather than the projected price established by RMA, which was wholly based on non-organic prices.

The passage of the 2014 Farm Bill also created the Whole-Farm Revenue Protection (WFRP) policy, which provides coverage based on the historic or expected economic capacity of the whole farm to generate revenue. Because organic farmers and livestock producers tend to generate higher levels of gross revenue and generally grow a higher diversity of often unique crop and livestock products otherwise uninsurable, WFRP offered a clear advantage to organic farmers.

However, use of WFRP has declined thanks to an over-complicated application, confusing policy requirements, and the lack of interest by many crop insurance agents and crop insurance companies to sell the product. This is unfortunate since it’s the only approach to crop insurance that incentivizes crop and livestock diversity, which according to USDA has great potential to address climate disruption. It is also the only crop insurance product that provides high-quality revenue-risk protection for almost any product and is available nationwide.

Additional recent changes by RMA beyond redefining organic agriculture include:

The ability of farmers to hay, graze, chop cover crops for silage, haylage, or baleage after having received a prevented planting insurance payment. The intent of this change is to encourage cover cropping which is a conservation practice used by almost all organic farmers. This change in policy occurred as a response to the pandemic disruptions and a desire by RMA to further promote cover cropping.

Added flexibility to the “1 and 4” rule as to when land can and cannot be eligible for prevented planting coverage. The “1 and 4” rule required that to be eligible for a prevented planting coverage, the specific insured land must have been planted, insured, and harvested in at least one of the four most recent years.

Allows only organic farmers who use WFRP to make adjustments for rapid gross revenue expansion in estimating the revenue guarantee for insurance coverage possibly leading to better over-all coverage.

Introduction of a “micro” option for users of WFRP, such that if applicants have less than a historic gross revenue of $100,000 (or $125,000 if a previous user of WFRP), onerous application and policy requirements that are part of a regular WFRP are waived. For instance, a regular WFRP requires the tracking of historical and current year expenses such that if one does not spend at least 70% of their historical expenses in the year of insurance, a penalty is assessed. This requirement is waived for the micro option.

Jeff Schahczenski is an agriculture and natural resource economist with the National Center for Appropriate Technology (NCAT) and co-author of Is Organic Farming Risky? Improving Crop Insurance for Organic Farms, available for free download at https://attra.ncat.org/product/is-organic-farming-risky/.

Resources:

For a look at related press releases: Conservation and Climate; Organic Expansion & WFRP and proposed rules and how to comment at: www.govinfo.gov/content/pkg/FR-2021-11-30/pdf/2021-25925.pdf.

Morris, M., Belasco, E., Schahczenski, J., 2019. Is Organic Farming Risky? Improving Crop Insurance for Organic Farms. National Center for Appropriate Technology, Butte, Montana.

See: USDA Action Plan for Climate Adaptation and Resilience 2021 at: www.sustainability.gov/pdfs/usda-2021-cap.pdf.

This article was originally published in the Spring 2022 Organic Report, you can view the full magazine here.

Setting Up Priorities for Organic for Next Farm Bill

admin — Mon, 28 Feb 2022 23:45:13 +0000

February 28, 2022

It seems like just yesterday that the 2018 Farm Bill was signed into law. Now, the fruits of that labor are finally being implemented by the U.S. Department of Agriculture (USDA). In fact, the Organic Trade Association’s top priority for the last farm bill was giving USDA’s National Organic Program more tools, authority, and resources to combat global fraud in organic.

New regulations for the organic sector are set to debut this spring that will implement those critical provisions in the 2018 Farm Bill via the release of the Strengthening Organic Enforcement final rule. As the ink barely dries on that rule, Congress will have already kickstarted the process for developing the next farm bill as the current bill expires and must be renewed by 2023.

Although Congress has written and passed many farm bills over the years dating back to the 1930s, organic did not make its debut until 1990 when that year’s Farm Bill included the Organic Foods Production Act—legislation that established national organic standards and led to the creation of USDA’s National Organic Program. Over the past 30 plus years, organic agriculture has made many advancements in each subsequent farm bill.

What will be different about the 2023 Farm Bill?

Several factors will make the next farm bill negotiations different than the development of the 2018 Farm Bill. Farm bills are drafted by the House and Senate Agriculture Committees, and the Chairs and Ranking Members from both political parties make up the leadership of the committee. They are oftentimes referred to as “the Big Four” because they have an outsize influence on the negotiations and shepherding the legislation through the congressional process. Three of the big four players are new this time around.

Senator Pat Roberts (R-Kansas), a member of Congress first elected in the early 1980s and the only lawmaker to have served as both the Chair of the House and Senate Agriculture Committees throughout his long career, retired in 2020. He participated in eight farm bills and helmed the committee for two of them. Congressman Collin Peterson (D-Minnesota), first elected in 1990, was the lead Democrat on the House Agriculture Committee serving both in the Chair and Ranking positions since 2005, making him a lead negotiator for three out of the five farm bills he worked on throughout his career. Peterson lost his reelection in 2020. Congressman Mike Conaway (R-Texas), Chair of the House Agriculture Committee during the 2018 Farm Bill negotiations, retired in 2020.

That leaves Senator Debbie Stabenow (D-Michigan) as the only remaining veteran of recent farm bill negotiations. She is currently Chair of the Senate Agriculture Committee. Senator John Boozman (R-Arkansas) is the Ranking Member. The new leaders of the House Agriculture Committee are David Scott (D-Georgia), who is Chair, and Glenn “GT” Thompson (R-Pennsylvania), who is the Ranking Member. These leaders will protect their states and farm constituencies closely in the negotiations. Although organic is still a burgeoning sector in the Southeast, it is firmly established in both Pennsylvania and Michigan.

Another major factor different from the last farm bill is political control in Washington. In 2018, Republicans controlled the White House, House, and Senate. Party control flipped during the 2020 elections, and currently Democrats control the White House, House, and Senate. And while farm bill negotiations will start in earnest this year, the actual farm bill won’t likely be on the table until 2023, which means the outcomes of the 2022 midterm elections this fall will be crucial to how the farm bill will play out.

It is possible that the Republicans could take control of the House and Senate, setting a collision course with the Democratic President, or win back one of the chambers in Congress to seize total control of the legislative agenda from the Democrats. That being said, the farm bill has traditionally been one of the few remaining bipartisan pieces of legislation left in Washington, although it is not immune from partisan and regional fights over agriculture subsidies, spending, and the food stamp program.

Lastly, writing and passing a new farm bill could be a difficult prospect with current budget constraints, setting up a scenario where the 2018 Farm Bill might just be extended temporarily rather than fully reauthorized. Both President Trump and the current administration have lavishly spent on shoring up farm country outside of traditional farm bill programs. During the Trump administration, tens of billions of dollars were given to farmers to offset retaliatory tariffs and actions taken against the U.S. agriculture sector because of international trade conflicts. And then, COVID disrupted the food supply chain resulting in billions more in assistance for agriculture.

The future of the label is at stake

So, what will be the top priority for the Organic Trade Association in the next farm bill? It’s been more than 30 years since the passage of OFPA and more than 20 years since USDA implemented the final rule that established the regulations. Although the USDA Organic label remains the gold standard around the world for transparent standards in agriculture, the sector is losing steam to competing private labels in the marketplace.

Much more can be done to meet the evolving expectations and demands of consumers concerned about the impacts of our food system on climate change, soil health, animal welfare, and the health and well-being of humans and workers. Organic must be well-positioned to meet these needs into the future. Although OFPA is updated and amended every farm bill, now is a good time to take a fresh look and make major changes to ensure a sustainable market.

While the organic market has skyrocketed from $8.6 billion in sales in 2002 to more than $62 billion today, USDA—the regulatory body charged with updating the organic standards—has not kept pace with industry growth or consumer expectations. The biggest challenge facing organic businesses, farmers, and consumers is USDA’s failure to update and clarify the organic standards regularly, leading to inconsistent enforcement and competitive harm in the marketplace.

In the lead up to the next farm bill, the Organic Trade Association has partnered with Arizona State University’s (ASU) Swette Center for Sustainable Food Systems led by Dr. Kathleen Merrigan who, when congressional aide to Senator Patrick Leahy, helped write OFPA during the 1990 Farm Bill. The Organic Trade Association and ASU recently hosted a series of virtual workshops bringing together a diverse array of stakeholders from certifiers, inspectors, retailers, consumer-facing brands, farmers, researchers, non-profits, and advocacy organizations to discuss the future of organic.

Over 200 individuals participated and contributed their ideas and perspectives. The workshops explored topics such as the structure of the public-private partnership between USDA and the organic sector, continuous improvement in the organic standards, accreditation, certification, accountability and enforcement, and the future of marketing claims and their relationship to organic. The outcomes of these dynamic conversations will culminate in the release of a report later this spring that will help shape necessary updates to both the organic law and regulations in the next farm bill.

Stay tuned! And to find the most up to date information go to ota.com/future.

Megan DeBates is Vice President of Government Affairs for the Organic Trade Association.