Changes for dairy farmers, added crop insurance programs part of proposed Farm Bill

OSCEOLA COUNTY — As members of a U.S. House-Senate conference committee prepare to meet for the first time Wednesday to discuss the Farm Bill, members of Michigan’s farm community have a simple message: Just get it done.

“(Our) No. 1 focus is to see that we have a farm bill before the end of the year,” said Ryan Findlay, National Legislative Counsel for the Michigan Farm Bureau. “Making sure we have all (the Farm Bill’s) programs in place heading into 2014 is important because businesses and farmers don’t like uncertainty. (Not having a Farm Bill) really hurts when they go into planning session.”

With implications for farms, nutrition, rural development and conservation, the best way to describe the bill is as a book with lots of different chapters, Findlay added.

“It is not just for farmers,” he said. “It’s really for rural Michigan.”

The Farm Bill, which must be re-authorized every five years, authorizes funding and contains guidelines for dozens of programs including, crop insurance, conservation, nutrition and more.

The vast majority of the Farm Bill — approximately 80 percent — is dedicated to nutrition programs, Findlay said.

On the agricultural side, one of the biggest proposed changes would move dairy farms from a direct subsidy model based on the price of milk to a margin model, where farmers purchase insurance to cover the difference between their input costs and the price of milk.

Currently, a price is set in law at a certain level, and if the price falls below that level, the farmer would receive a check for the difference multiplied by how many hundred weight of milk that farmer sold.

“At the time it was developed, it was all about the price and people were saying, ‘The price is too low,’” Findlay said. “Inputs were relatively static. Today, have a lot of volatility (with input costs), and the old model is kind of out-dated.”

With the new model, farmers would have to decide what level of margin insurance they purchase. Findlay said the program would start at a base level of $4 per hundred weight and go up to $8 per hundred weight.

“I think everybody’s going to have their own opinion if this would work for their own farm,” he said. “Some (studies) say this is good for specific regions. The concept of margin protection, the majority (of dairy farmers) are very comfortable supporting this (and) Michigan dairy farmers like this concept.”

How farmers respond to the margin protection program will depend greatly on the cost of the insurance, said Michigan State University Extension Educator Jerry Lindquist.

“It all comes down to having the premium payment, and what’s going to be the pricing of those premiums versus the risk,” Lindquist said. “Many dairy farmers are hesitant to spend (for coverage), because now they’re having to buy insurance too, and that’s an extra cost.

“The government wants to move away from guaranteed coverage. That’s what (has been) done with the crop side of it, they provide some level of protection. Some people may say, ‘I’ll wait and see what the cost is, and what risk (it covers).’”

Debate is expected to center around a dairy stabilization program, which was included in the Senate’s version of the farm bill but not in the House version.

“Some say it is a supply management program and others say (it gets) the government way too involved in production,” Findlay said.

The way the program would work is if the market gets out of balance, farmers would only get margin protection for the units sold up a government-set level.

“That’s the big rift,” Findlay said. “Diary farmers in Michigan are split on that as well.”

The proposed Farm Bill also has a lot of provisions for the specialty crop industry that were included in both the House and Senate versions of the legislation.

Not all crops have insurance programs in place, and if this provision is included in the final version of the Farm Bill the Risk Management Agency — the U.S. Department of Agriculture agency that handles risk management — would begin creating insurance programs for specialty crops.

“It says, ‘RMA, we want you to look at all the insurance programs and look at the commodities that do not have insurance, and prioritize and determine if you can develop a program for them as we move forward,’” he said.

Specialty crop research funding also is addressed in the legislation. This is important because many companies are unlikely to spend money researching developing commodities that have small markets, Findlay noted.

“One of these big companies isn’t likely to develop a commodity for niche market,” he said. “The Farm Bill really has provided a lot of dollars for land grants, like MSU, to develop pest and disease detection models and how to combat (pests).

“A lot of research dollars comes from the Farm Bill. In some areas it has held steady and in others it increases.”

Conservation districts are still waiting to see what funding for programs they oversee will be, said Osceola-Lake Conservation District conservationist Greg White.

The district helps private landowners apply for federal programs that assist with the cost of conservation practices. Funding for those programs is authorized through the Farm Bill, White said.

“We have around 50 contracts and are holding pretty steady,” he said. “Each year, we have between 25 to 30 new applicants, and maybe 10 of those get funded and some are expiring after being completed.”

Each state is allocated a set amount and applications are selected based on their conservation ranking score. A reduction in funding to the program would mean fewer new projects could be taken on each year, White said.