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88–810 PDF 2014

IMPLEMENTING THE AGRICULTURAL ACT OF 

2014: COMMODITY POLICY AND CROP 

INSURANCE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

GENERAL FARM COMMODITIES 

AND RISK MANAGEMENT 

OF THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JULY 10, 2014 

Serial No. 113–17 

( 

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

FRANK D. LUCAS, Oklahoma, Chairman 

BOB GOODLATTE, Virginia, 

Vice Chairman 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

MIKE ROGERS, Alabama 

K. MICHAEL CONAWAY, Texas 

GLENN THOMPSON, Pennsylvania 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

SCOTT R. TIPTON, Colorado 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

SCOTT DESJARLAIS, Tennessee 

CHRISTOPHER P. GIBSON, New York 

VICKY HARTZLER, Missouri 

REID J. RIBBLE, Wisconsin 

KRISTI L. NOEM, South Dakota 

DAN BENISHEK, Michigan 

JEFF DENHAM, California 

STEPHEN LEE FINCHER, Tennessee 

DOUG LAMALFA, California 

RICHARD HUDSON, North Carolina 

RODNEY DAVIS, Illinois 

CHRIS COLLINS, New York 

TED S. YOHO, Florida 

VANCE M. MCALLISTER, Louisiana 

COLLIN C. PETERSON, Minnesota, Ranking 

Minority Member 

MIKE MCINTYRE, North Carolina 

DAVID SCOTT, Georgia 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

KURT SCHRADER, Oregon 

MARCIA L. FUDGE, Ohio 

JAMES P. MCGOVERN, Massachusetts 

SUZAN K. DELBENE, Washington 

GLORIA NEGRETE MCLEOD, California 

FILEMON VELA, Texas 

MICHELLE LUJAN GRISHAM, New Mexico 

ANN M. KUSTER, New Hampshire 

RICHARD M. NOLAN, Minnesota 

PETE P. GALLEGO, Texas 

WILLIAM L. ENYART, Illinois 

JUAN VARGAS, California 

CHERI BUSTOS, Illinois 

SEAN PATRICK MALONEY, New York 

JOE COURTNEY, Connecticut 

JOHN GARAMENDI, California 

NICOLE SCOTT, Staff Director 

KEVIN J. KRAMP, Chief Counsel 

TAMARA HINTON, Communications Director 

ROBERT L. LAREW, Minority Staff Director 

SUBCOMMITTEE ON GENERAL FARM COMMODITIES AND RISK MANAGEMENT

K. MICHAEL CONAWAY, Texas, Chairman 

RANDY NEUGEBAUER, Texas 

MIKE ROGERS, Alabama 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

CHRISTOPHER P. GIBSON, New York 

VICKY HARTZLER, Missouri 

KRISTI L. NOEM, South Dakota 

DAN BENISHEK, Michigan 

DOUG LAMALFA, California 

RICHARD HUDSON, North Carolina 

RODNEY DAVIS, Illinois 

CHRIS COLLINS, New York 

VANCE M. MCALLISTER, Louisiana 

DAVID SCOTT, Georgia, Ranking Minority 

Member 

FILEMON VELA, Texas 

PETE P. GALLEGO, Texas 

WILLIAM L. ENYART, Illinois 

JUAN VARGAS, California 

CHERI BUSTOS, Illinois 

SEAN PATRICK MALONEY, New York 

TIMOTHY J. WALZ, Minnesota 

GLORIA NEGRETE MCLEOD, California 

JIM COSTA, California 

JOHN GARAMENDI, California 

—— 

(II) 

(III) 

C O N T E N T S 

Page 

Conaway, Hon. K. Michael, a Representative in Congress from Texas, opening 

statement .............................................................................................................. 1 

Prepared statement .......................................................................................... 3 

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening 

statement .............................................................................................................. 6 

Prepared statement .......................................................................................... 7 

Scott, Hon. David, a Representative in Congress from Georgia, opening statement ...................................................................................................................... 4 

WITNESS

Scuse, Hon. Michael T., Under Secretary, Farm and Foreign Agricultural 

Services, U.S. Department of Agriculture, Washington, D.C. .......................... 8 

Prepared statement .......................................................................................... 10 

Supplementary information ............................................................................. 37 

Submitted questions ......................................................................................... 45 

SUBMITTED MATERIAL

Texas Wheat Producers Association, submitted letter ......................................... 45 

(1) 

IMPLEMENTING THE AGRICULTURAL ACT OF 

2014: COMMODITY POLICY AND CROP 

INSURANCE 

THURSDAY, JULY 10, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GENERAL FARM COMMODITIES AND RISK

MANAGEMENT, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 9:31 a.m., in Room 

1300 of the Longworth House Office Building, Hon. K. Michael 

Conaway [Chairman of the Subcommittee] presiding. 

Members present: Representatives Conaway, Neugebauer, Rogers, Gibbs, Austin Scott of Georgia, Crawford, Gibson, Hartzler, 

Noem, LaMalfa, Hudson, Davis, Collins, McAllister, Lucas (ex officio), David Scott of Georgia, Vela, Enyart, Vargas, Bustos, 

Maloney, Walz, Negrete McLeod, Costa, Garamendi, and Peterson 

(ex officio). 

Staff present: Bart Fischer, Kevin Kramp, Matt Schertz, Nicole 

Scott, Skylar Sowder, Tamara Hinton, Anne Simmons, Liz Friedlander, Mary Knigge, John Konya, and Riley Pagett. 

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A 

REPRESENTATIVE IN CONGRESS FROM TEXAS 

The CHAIRMAN. This hearing of the Subcommittee on General 

Farm Commodities and Risk Management to discuss the implementation of the Agriculture Act of 2014, including commodity policy and crop insurance, will come to order. 

I want to thank Michael Scuse, the Under Secretary for Farm 

and Foreign Agricultural Service, for being here. He has got quite 

the title. Michael and I had the chance to meet for the first time 

the day before yesterday. And I told him we were going to beat him 

about the head and shoulders today. I was teasing him about the 

setup here. We have this august body sitting up here. We have him 

way down there at a lower table, so we are looking down on him. 

It is the one time Congress has the advantage over the Administration, or the Executive Branch, and we take full advantage of that. 

So it is good to have you. 

It has been 5 months since the farm bill became law. And the 

purpose of this hearing is to evaluate the implementation of the 

commodity and crop insurance titles. Again, I want to welcome our 

witness, Under Secretary Scuse. 

2 

The commodity title provisions of previous farm bills included direct payments, counter-cyclical payments, ACRE, SURE, which 

were repealed by the 2014 Farm Bill. These provisions were replaced by a choice of two policies that will only trigger when a producer suffers a loss. During consideration of the farm bill, the Congressional Budget Office predicted this would reduce spending 

under that bill and would be something on the order of $18.4 billion. These budget savings and reforms came with the promise of 

enhanced risk management tools under crop insurance. I understand the lift that the Department has in implementing these provisions. I appreciate the complications involved. This is why the 

farm bill provided extra funds to the affected agencies. And while 

I commend the Department for their efforts so far, I want to challenge the Department to fully deliver on the promise of the farm 

bill. 

The Department’s assurance of a timely, if only partial, implementation of the Supplemental Coverage Option is appreciated. We 

appreciate the RMA Administrator, Brandon Willis, for working to 

ensure that SCO is properly implemented. We hope to learn more 

today about the Department’s plans for a full implementation of 

SCO for all crops and counties as required by the farm bill. We are 

encouraged by RMA’s efforts to move forward with crop margin 

coverage, enterprise units by practice, coverage levels by practice, 

STAX, beginning farmer and rancher provisions, and peanut revenue coverage. The Committee appreciates that there is an effort 

to get the job done on each of these fronts. And while some delays 

are understandable, they should be held to a minimum. 

I am deeply troubled though over the Department’s handling of 

two very important issues that we will discuss today. The first is 

the Actual Production History Adjustment that will provide critical 

relief for those producers struggling through severe drought for a 

number of years. And the second is the rollout of conservation compliance, which I fear will undermine crop insurance and our overall 

conservation goals if the approach is overly punitive. 

There are farmers and ranchers who have experienced severe 

drought for 3 years. Many remain in severe drought this year. And 

a good many of these areas are in D4 drought conditions. Despite 

all this, we understand that the Department intends to administratively delay the APH Adjustments relief until 2016, which would 

be the third year of our 5 year farm bill. I respectfully urge the Department to respond to this natural disaster in states like Texas 

and Oklahoma, New Mexico and Colorado and other states around 

the country with the same speed and determination as one would 

expect in the case of a wild fire or a hurricane. 

One other farm bill provisions where the Department has said it 

can only partially implement a provision on time, we hope to exhibit patience. All we ask on the APH Adjustment is that some effort be made to partially implement the provision in time for the 

2015 crop year where relief is needed the most. 

Beyond providing immediate relief to farmers and ranchers who 

were hit the hardest, timely action might help insulate the Department from legal challenges. The APH Adjustment is meant to be 

self-executing. Farmers were not meant to have to ask permission 

3 

to exclude qualifying yields. The right is the producers, and it became the producers’ right on the day the farm bill became law. 

My second concern regards conservation compliance. This was 

never a smart provision, and the interim rule explains why so 

many of us were concerned with it. For example, page 11 of the 

rule says that if a farmer plants a crop next spring and it is found 

to be non-compliant on June 1, even if he or she were to come back 

into compliance by July 1, within a month, the farmer would still 

be denied premium support for 2016. This effectively means no insurance. As bad as the compliance provision is, the objective was 

to impose the penalty in the following year, and only if the producer did not come back into compliance. 

I maintain that farmers are our best conservationists. They know 

their land, and they know better than you and I how to keep it productive. From my experience, farmers are at their best in making 

conservation investments when they are profitable. This provision 

as interpreted by the Department, along with the EPA’s new waters of the U.S. regulation, are just two examples of why farmers 

and ranchers are scared to death about the regulatory overreach of 

this Administration. 

Finally, on two positive notes, I want to commend the Administrator of the Farm Service Agency, Juan Garcia, for his exemplary 

work in implementing Livestock Disaster Assistance. We hit some 

bumps along the road early on, but this was the first rule out of 

the gate and it turned out well. We really appreciate Juan and his 

team’s excellent work. And, second, I want to commend the Secretary for the role that he played in securing passage of the farm 

bill and his responsiveness during implementation. Fully implementing the farm bill in a timely way not only fulfills a pledge to 

farmers and ranchers, but it honors the work that the Secretary 

did to help the farm bill happen. 

[The prepared statement of Mr. Conaway follows:] 

PREPARED STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE IN

CONGRESS FROM TEXAS

It has been 5 months since the farm bill became law. The purpose of this hearing 

is to evaluate implementation of the commodity and crop insurance titles. 

I want to welcome our witness, Under Secretary Scuse. 

The commodity title provisions of previous farm bills, including Direct Payments, 

Countercyclical Payments, ACRE, and SURE, were repealed by the 2014 Farm Bill. 

These provisions were replaced by a choice of two policies that only trigger when 

a producer suffers a loss. During consideration of the farm bill, the Congressional 

Budget Office predicted this would reduce spending by $18.4 billion. 

These budget savings and reforms came with the promise of enhanced risk management tools under crop insurance. 

I understand the lift the Department has in implementing these provisions. I appreciate the complications involved. This is why the farm bill provides extra funds. 

And, while I commend the Department for efforts so far, I want to challenge the 

Department to fully deliver on the promise of the farm bill. 

The Department’s assurance of a timely—if only partial—implementation of the 

Supplemental Coverage Option is appreciated. We appreciate RMA Administrator, 

Brandon Willis, for working to ensure that SCO is properly implemented. We hope 

to learn more today about the Department’s plans for the full implementation of 

SCO for all crops and counties as required by the farm bill. 

We are encouraged by RMA’s efforts to move forward with Crop Margin Coverage, 

Enterprise Units by Practice, Coverage Levels by Practice, STAX, Beginning Farmer 

and Rancher provisions, and Peanut Revenue Coverage. The Committee appreciates 

that there is an effort to get the job done on each of these fronts. While some delays 

are understandable, they should be held to a minimum. 

4 

I am deeply troubled over the Department’s handling of two very important but 

very different issues. The first is the APH Adjustment which would provide critical 

relief for those struggling against severe drought. The second is the rollout of conservation compliance which I fear could undermine crop insurance and our overall 

conservation goals if the approach is overly punitive. 

There are farmers and ranchers who have experienced severe drought for 3 years. 

Many remain in severe drought this year. A good many of these areas are in D4 

drought condition. Despite all of this, we understand the Department intends to administratively delay APH relief until 2016, the THIRD year of a FIVE year farm 

bill. 

I respectfully urge the Department to respond to this natural disaster in states 

like Texas, Oklahoma, New Mexico, Colorado and other states around the country 

with the same speed and determination as one would expect in the case of a wildfire 

or a hurricane. 

On other farm bill provisions where the Department has said it can only partially 

implement a provision on time, we are exhibiting patience. All we ask on APH is 

that some effort be made to partially implement the provision in time for 2015 

where relief is needed most. 

Beyond providing immediate relief to farmers and ranchers who are hit the hardest, timely action might help insulate the Department from legal challenges. The 

APH adjustment is meant to be self-executing. Farmers were not meant to have to 

ask permission to exclude qualifying yields. The right is the producer’s and it became the producer’s right on the day the farm bill became law. 

My second concern regards conservation compliance. This was never a smart provision and the interim final rule explains why many of us remain concerned. 

For example, page 11 of the rule says that if a farmer plants a crop next spring 

and is found to be non-compliant on June 1, even if he were to come back into compliance on July 1, within a month, the farmer would still be denied premium support for 2016. This effectively means no insurance. As bad as the compliance provision is, the objective was to impose the penalty in the following year and only IF 

the producer did not come back into compliance. 

I maintain that farmers are the best conservationists. They know their land and 

they know better than you or I how to keep it productive. From my experience, 

farmers are at their best in making conservation investments when they are profitable. 

This provision, as interpreted by the Department, along with EPA’s new waters 

of the U.S. regulation, are just two examples of why farmers and ranchers are 

scared to death about the regulatory overreach of this Administration. 

Finally, on two positive notes: I commend the Administrator of the Farm Service 

Agency, Juan Garcia, for his exemplary work in implementing livestock disaster assistance. We hit some bumps along the road early on but this was the first rule out 

of the gate and it turned out well. We really appreciate Juan and his team’s excellent work. Second, I commend the Secretary for the role he played in securing passage of the farm bill and for his responsiveness during implementation. Fully implementing the farm bill in a timely way not only fulfills a pledge to farmers and 

ranchers but it honors the work that the Secretary did to help make the farm bill 

happen. 

I now recognize the Ranking Member, my good friend, Mr. Scott, for any remarks 

he may have. 

The CHAIRMAN. I now recognize my good friend, Ranking Member David Scott, for any remarks he may have. David? 

OPENING STATEMENT OF HON. DAVID SCOTT, A 

REPRESENTATIVE IN CONGRESS FROM GEORGIA 

Mr. DAVID SCOTT of Georgia. Thank you, Chairman Conaway. 

And let me thank you for putting this very critical hearing together, focusing on crop insurance. I am mainly concerned with 

Title I and Title XI. Of course, Title I defines the commodities of 

peanuts, rice, soy beans, wheat, corn, so forth. Title XI specifically 

enhances the coverage of the permanently authorized Federal insurance program. It is very important for us to understand that 

this farm bill completely, completely changes the way in which 

farmers receive assistance now. Farmers must now make a decision 

as to which crop insurance program they will sign on to this fall, 

5 

either the agriculture risk coverage, ARC, or price loss coverage, 

PLC. And then once the farmer makes that decision, they are committed to it for 5 years. For this reason, it is critical that we take 

the time, make sure our farmers and our producers get the correct 

information, the right information, so that they can make the right 

decisions. 

And, specifically, I want to start with Title XI. There has been 

great concern, and Chairman Conaway has already alluded to it, 

regarding the Risk Management Agency which largely administers 

the Federal Crop Insurance Program. The issue is why the RMA 

imposes what is known as downward trending adjustment on the 

Actual Production History, or the APH in Georgia and South Carolina, while waiving this requirement on all the other states? That 

is not right. In the case of South Carolina and the case of Georgia 

peach producers, the APH of the producer is based on the preceding 5 years of the Actual Production History. However, in Georgia, in South Carolina, peach growers, the proven yield of the producers that comprise their APH are then administratively adjusted 

downward by the RMA, and this effect of this downward adjustment makes for a reduction in the yield levels that the producer 

may insure. This imposes a tremendous hardship on the peach producers in my State of Georgia who I have represented here in Congress for 12 years, represented in the State Legislature and the 

State Senate for 20, represented in the State Representative House 

for 8. And that is 40 years. And then on top of that, I was born 

in South Carolina, grew up on a farm there. So when you talk 

about Georgia, you talk about South Carolina, you are hitting 

David Scott right in the heart. 

So we need to get a better understanding from the Under Secretary today. We understand the theory behind the downward adjustment is that it is—they say it is necessary in order for an insurance guarantee to be consistent with the production expectations for the peach crop, which is anticipated to be lower in the earlier years of perennial crop. However, any lower yield associated 

with the peach crop is already reflected in the APH of the Georgia 

and South Carolina producers, which is based on its 5 year history. 

Therefore, this downward trending adjustment is unnecessary. It is 

punitive. It is discriminatory to Georgia and South Carolina peach 

growers. This is not right. And we have to correct it, Mr. Under 

Secretary. 

As I mentioned, the downward trending adjustment has been 

waived in each of the 2011 through 2014 crop years for the producers of perennial crops, including peaches, in states from Maine 

to North Carolina. However, the same relief was not granted to my 

farmers in Georgia or in South Carolina. South Carolina and Georgia peach growers suffered a devastating freeze in March, costing 

millions of dollars in losses, losses that were exacerbated by the 

RMA’s discriminatory treatment. And this downward trending adjustment must be waived also for Georgia and South Carolina as 

they are in states from Maine to North Carolina. All we are asking 

for is to be treated equal. And as my granddaddy used to say on 

the farm, ‘‘We all want to be fed out of the same spoon.’’ 

Now, my other concern is with regards to peanuts, and again 

Title XI. The 2014 Farm Bill contains provisions providing for what 

6 

is called revenue assurance, specifically for peanut farmers beginning with the 2015 crop year. Funds for this initiative were included in the existing farm bill. We need to know more about this 

program. We need to know how much money is in the program. We 

need to get a clear understanding of how this money, these funds, 

will be used, the accessibility and benefit for our peanut farmers. 

In conclusion, Mr. Chairman, we are here at this hearing today 

because of these changes. I just briefly want to highlight how dramatic these are. First, direct and counter-cyclical payment programs in the state based revenue program known as ACRE, Average Crop Revenue Enhancement Program, have all been eliminated. And in their place, as I mentioned earlier, a farmer now has 

to choose one of two farm programs that begin with the 2014 crop 

year. One, price loss coverage. And what this program does, it 

makes a payment to a producer when the market price for a covered crop is below a fixed reference price. Or there is the Agriculture Risk Coverage, ARC, a program that makes a payment 

when either the farm’s revenue from all crops that account for the 

revenue from a crop, the farmer has to choose the alternatives 

below 86 percent of the pre-determined bench value. Together, it is 

important that we have these programs. And a highlight is that the 

savings should be $16.6 million. 

And, finally, it is important for us to recognize our cotton growers who are no longer coming under these programs, but we put 

a different program in called the Stacked Income Protection Program for Upland Cotton acreage. And it is an additional area of 

revenue that a cotton producer may use alone or in combination. 

And, finally, the second program, the supplemental coverage option, provides all crop producers with the option of purchase. So we 

have a lot of issues here. I look forward to hearing the Under Secretary. Thank you very much for coming. And thank you, Mr. 

Chairman. 

The CHAIRMAN. Thank you, David, I appreciate your comments. 

We will now recognize the Chairman of the Committee, Frank 

Lucas, for any comments he might have. 

OPENING STATEMENT OF HON. FRANK D. LUCAS, A 

REPRESENTATIVE IN CONGRESS FROM OKLAHOMA 

Mr. LUCAS. Thank you, Mr. Chairman. Under Secretary Scuse, 

I appreciate your being here today. And I appreciate all of the hard 

work that you and your staff have been doing over the last several 

months. The Agricultural Act of 2014 is a shift to a more risk 

based safety net. Gone are the days of making payments regardless 

of market conditions. Congress gave you a large task, and I appreciate the willingness of the Secretary and the Department to listen 

and act when problems arise. 

The Secretary and you have worked with this Committee on 

issues that have arisen in the Livestock Disaster Programs, and 

many of the improvements Congress made to the crop insurance 

title. And I sincerely thank you for that. 

That being said, I am concerned about a few key insurance problems which Chairman Conaway has already highlighted. Producers 

in my state pay incredibly high premiums for their crop insurance 

coverage, often much higher than their colleagues in other parts of 

7 

the country. For example, compared to wheat producers in your 

home State of Delaware, wheat producers in Oklahoma pay almost 

three times more for their crop insurance coverage. We have more 

yield variability in Oklahoma, so we pay higher rates. And that is 

understandable, at least to a degree. But after years of prolonged 

drought, we are now paying much higher rates. To add insult to 

injury, the amount of production my producers can ensure has been 

decimated as well, even though that loss in yield was through no 

fault of their own. 

This second factor is precisely why I included the APH Adjustment in the farm bill. For anyone who is facing the prospect of 

drought, or who has been suffering for years through prolonged 

drought, this provision is designed to provide immediate relief. We 

are almost finished with wheat harvest in Oklahoma. Four years 

of drought, combined with widespread freeze damage, have yielded 

one of the worst crops in state history. The APH Adjustment would 

provide widespread relief for wheat producers, planting and insuring their crops this fall. Congress was clear: all producers who have 

been affected by droughts should be able to exclude those years. 

They should be able to do so immediately. I understand there are 

challenges, but I think producers affected by drought deserve the 

effort. 

Again, I thank you for all that you have done, and I look forward 

to working together in the future to ensure that our producers have 

the full benefits of the new safety net that we all worked so hard 

together to provide. 

Thank you, Mr. Chairman. I yield back. 

[The prepared statement of Mr. Lucas follows:] 

PREPARED STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN CONGRESS

FROM OKLAHOMA

Mr. Scuse, I appreciate you being here today and I appreciate all of the hard work 

that you and your staff have been doing over the last several months. The Agricultural Act of 2014 is a shift to a more risk-based safety net. Gone are the days of 

making payments regardless of market conditions. 

Congress gave you a large task and I appreciate the willingness of the Secretary 

and the Department to listen and act when problems have arisen. The Secretary 

and you have worked with this Committee on issues that have arisen in the livestock disaster programs and many of the improvements Congress made to the crop 

insurance title, and I sincerely thank you for that. 

That being said, I am concerned about a key crop insurance provision, which Mr. 

Conaway has already highlighted. 

Producers in my state pay incredibly high premiums for their crop insurance coverage, often much higher than their colleagues in other parts of the country. For 

example, compared to wheat producers in your home State of Delaware, wheat producers in Oklahoma pay almost three times more for their crop insurance coverage. 

We have more yield variability in Oklahoma, so we pay higher rates. That is understandable (at least to a degree), but after years of prolonged drought, we are now 

paying MUCH higher rates. 

To add insult to injury, the amount of production my producers can insure has 

been decimated as well, even though that loss in yield was through no fault of their 

own. 

This second factor is precisely why I included the APH Adjustment in the farm 

bill. For anyone who is facing the prospect of drought or who has been suffering 

through years of prolonged drought, this provision is designed to provide immediate 

relief. 

We are almost finished with wheat harvest in Oklahoma. Four years of drought 

combined with widespread freeze damage has yielded one of the worst crops in state 

history. The APH Adjustment would provide widespread relief for wheat growers 

planting and insuring their crop this Fall. 

8 

Congress was clear. All producers who have been affected by drought should be 

able to exclude those years, and they should be able to do so immediately. I understand there are challenges, but I think producers affected by drought deserve the 

effort. 

Again, I thank you for all that you have done and look forward to working together in the future to ensure our producers have access to the full benefits of the 

new safety net that we all worked together to provide. 

Background Note: In 2014, wheat producers in Delaware paid $0.0284 for $1 of 

crop insurance coverage. By contrast, wheat producers in Oklahoma paid $0.0812 per 

$1 of crop insurance coverage, almost three times the rate in Delaware. 

The CHAIRMAN. I thank the gentleman. The chair will request 

that other Members submit their opening statements for the record 

so that our witness may begin his testimony, and to ensure there 

is ample time for questions. 

I welcome to our witness table today, the Honorable Michael T. 

Scuse, Under Secretary for Farm and Foreign Agricultural Services, United States Department of Agriculture, Washington D.C. 

Michael, the floor is yours for your comments. Thank you. 

STATEMENT OF HON. MICHAEL T. SCUSE, UNDER SECRETARY, 

FARM AND FOREIGN AGRICULTURAL SERVICES, U.S. 

DEPARTMENT OF AGRICULTURE, WASHINGTON D.C. 

Mr. SCUSE. Thank you. Chairman Lucas, Chairman Conaway, 

Ranking Member Scott, and Members of the Subcommittee, I am 

pleased to be here today to update you on the United States Department of Agriculture’s progress in implementing the commodity 

and crop insurance titles of the 2014 Farm Bill. 

The new farm bill improves the safety net for producers, expands 

crop insurance tools and continues our market development programs. Implementations of these programs is a top priority for 

USDA. In roughly 5 months since enactment, USDA has made considerable progress in implementing key provisions. 

USDA’s first priority was to implement the disaster relief programs for livestock producers. LSP, LIP, ELAP and TAP were implemented in 60 days. As of July 2, USDA has provided more than 

$1.2 billion under LFP and LIP to livestock producers. 

On June 9, CRP continuous signup was restarted, as was the 

CRP transition incentives payment for beginning and socially disadvantaged producers. In lieu of a general signup this year, we are 

allowing producers with CRP contracts expiring in September to receive a 1 year contract extension. 

Another priority for USDA and FSA is helping producers understand ARC, PLC, margin protection program for diary, and NAP 

buy-up programs, and what these programs mean for them and 

their families. On May 29, USDA announced awards totaling $6 

million through our university partners for the development of online decision tools and producer education on these programs. The 

University of Illinois and the University of Missouri with Texas 

A&M will simplify complex decisions that producers need to make 

by easy to use tools that producers can access on their home computers. State extension specialists will be trained on these tools 

and host meetings to educate producers later this fall. 

This summer, FSA plans to provide producers’ information on 

their current base acres yields and 2009 to 2012 planting history, 

and offer them an opportunity to verify this information with their 

9 

local Farm Service Agency office. Later this fall, there will be an 

opportunity to update yields and reallocate bases, the critical first 

step in implementing ARC and PLC. By mid-winter, all producers 

on a farm will be required to make a one-time unanimous election 

between price protection, county revenue protection and individual 

revenue protection for the 2014 through 2018 crop years. By early 

2015, producers can expect to sign contracts for ARC and PLC for 

the 2014 and 2015 crop years. FSA plans to implement the margin 

protection program for dairy by September 1. 

The Committee can also expect to see a proposed definition of 

significant contribution of active personal management later this 

year. 

Crop insurance has become an increasingly important component 

of the farm safety net. Due to efforts that RMA began last summer, 

a whole farm revenue protection program was approved by FCIC 

in May. RMA expects information about this program to be available in time for producers to make decisions for the 2015 crop 

sales. Last week, RMA published an interim rule on seven sections 

of the farm bill. That rule will apply to producers as soon as this 

fall, including beginning farmer and rancher provisions, the authority to correct errors and make late payments, and restrictions 

for producers who plant on native sod. RMA expects to offer enterprise units for irrigated and non-irrigated crops, and coverage levels by practice for the 2015 spring crops. APH adjustment will be 

available for crops planted in the fall of 2015. 

The rule links eligibility for any premium subsidy paid by FCIC 

on a policy or plan of federally reinsured crop insurance to compliance with highly erodible land conservation and wetland conservation compliance provisions. Although no producers will lose premium subsidy for the current reinsurance year, first time compliers 

will need to visit a Farm Service Agency to certify their compliance 

if they have not already done so. USDA intends to provide more details on the new conservation compliance requirements later this 

fall. Education on this requirement will be a priority for USDA in 

the coming months. 

RMA plans to release supplemental coverage option materials 

later this month, and information for corn, grain, sorghum, rice, 

soybean, spring wheat and cotton will be made available later this 

summer or early fall. In addition, RMA will be able to offer SCO 

for spring barley beginning in 2015. Also this fall, RMA will be examining additional crop and county coverage under SCO. We understand that producers need as much information as possible regarding when they make their ARC and PLC election. Policy materials and county availability for the Stacked Income Protection 

Plan for producers of Upland Cotton will be made available in August, and RMA anticipates that STAX will be available for over 98 

percent of cotton acreage in production. Additionally, FSA will have 

information on the Cotton Transition Assistance Payment Program 

available later this summer. 

In closing, I would like to thank the Committee for this opportunity to update you on USDA’s progress in implementing title I 

and title XI of the 2014 Farm Bill. Farmers, ranchers, rural communities and other USDA stakeholders have waited several years 

10 

for this legislation, and USDA has made significant implementation progress. 

I would be happy to answer any questions that you may have at 

this time. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Scuse follows:] 

PREPARED STATEMENT OF HON. MICHAEL T. SCUSE, UNDER SECRETARY, FARM AND

FOREIGN AGRICULTURAL SERVICES, U.S. DEPARTMENT OF AGRICULTURE, 

WASHINGTON, D.C. 

Chairman Conaway, Ranking Member Scott, and Members of the Subcommittee, 

I am pleased to be here before you today to provide an update of the U.S. Department of Agriculture’s (USDA) progress in implementing Title I, the Commodity 

Title, and Title XI, the Crop Insurance Title, of the Agricultural Act of 2014, also 

known as the farm bill. 

The new farm bill improves the safety net for producers, expands critical crop insurance tools and continues our market development programs. USDA and the 

Farm and Foreign Agricultural Services (FFAS) Mission Area have made the implementation of these programs a top priority. In the roughly 5 months since enactment, the three agencies under FFAS, the Farm Service Agency (FSA), the Risk 

Management Agency (RMA) and the Foreign Agricultural Service (FAS) have made 

considerable progress in implementing many of the key provisions. Today I will 

focus on titles I and XI. 

In the Commodity Title, USDA’s first priority was to implement the disaster relief 

programs for livestock producers. With enactment of the farm bill in February, Secretary Vilsack directed FSA to implement the livestock assistance programs by April 

15th, and we met that goal. In fact, we implemented the disaster programs—including the Livestock Forage Program (LFP), Livestock Indemnity Program (LIP), the 

Emergency Livestock Assistance Program (ELAP) and the Tree Assistance Program 

(TAP)—in just 20 percent of the time it took USDA to implement in 2008. USDA 

has, through LFP and LIP, provided more than $1.2 billion in help to livestock producers, many of whom had been waiting for over 2 years for assistance. 

USDA’s next priority for the mission area was resuming conservation efforts. On 

June 9, FSA restarted continuous sign-ups in the Conservation Reserve Program 

(CRP), as well as the CRP Transition Incentives Program (TIP) for beginning and 

socially disadvantaged farmers and ranchers. In lieu of a general sign-up this year, 

we’re allowing producers with CRP contracts expiring this September to receive a 

1 year contract extension. And we’ve implemented the farm bill requirement that 

in certain cases producers enrolled through general sign-up for at least 5 years can 

opt-out of their contracts. 

Another important priority for USDA and FSA is helping farmers and ranchers 

understand the new farm bill safety net programs including Agriculture Risk Coverage (ARC), Price Loss Coverage (PLC), Margin Protection Program (MPP) for 

dairy, and enhanced protection under Noninsured Disaster Assistance Program also 

known as NAP buy-up—and what these programs mean for their families. On May 

29, USDA announced $3 million for two teams of universities representing the geographical diversity of agriculture—one led by the University of Illinois, and another 

led by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri and the Agricultural and Food Policy Center (AFPC) at Texas A&M. 

The awardees are tasked with integrating the complex data and scenarios of the 

new safety-net programs into easy-to-use tools that producers can access on their 

home computers to explore program options and coverage levels. These tools will be 

available later this summer and in early fall. 

Experts at the state cooperative extension services will be trained and, starting 

in late summer, producers will be able to pose questions to and seek advice from 

extension agents about the new safety net programs. FSA also recently launched a 

website with tables of monthly updated data for those who want to begin exploring 

how the ARC and PLC guarantees and payments will be determined for the 2014 

crop. 

Late this summer FSA also plans to provide producers information on their current base acres, yields and 2009–2012 planting history and offer them an opportunity to verify this information with their local FSA office. Then later this fall, 

there will be an opportunity to update yields and reallocate bases—this is the critical first step in implementing the ARC and PLC programs. By mid-winter all producers on a farm will be required to make a one-time, unanimous and irrevocable 

election between price protection, country revenue protection and/or individual revVerDate Mar 15 2010 14:29 Dec 18, 2014 Jkt 041481 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 I:\DOCS\113-17\88810.TXT BRIAN
11 

enue protection for 2014–2018 crop years. By early 2015 producers can expect to 

sign contracts for ARC or PLC for the 2014 and 2015 crop years. 

Late this summer, FSA also plans to implement MPP for dairy. The farm bill has 

a target for MPP to be in effect by September 1 and USDA’s goal is to meet that 

deadline. Late this summer FSA also plans to publish the details on the Dairy Product Donation Program (DPDP). While current margins are well above $4 per hundredweight and DPDP is not expected to trigger, USDA will have the program details finalized. 

By law, dairy producers may not participate in both MPP and RMA’s Livestock 

Gross Margin for Dairy (LGM-Dairy) programs. As a result, FSA and RMA jointly 

sent guidance at the end of June on the transition period, which will afford dairy 

producers maximum flexibility by allowing them to transition to the MPP-Dairy program in either 2014 or 2015. This flexibility will allow producers under LGM-Dairy, 

who already have LGM-Dairy target marketings that go into 2015, to participate in 

MPP-Dairy in 2015 after their insurance contract is over, as opposed to keeping 

these producers out until 2016. 

Later this year, the Committee can expect to see a proposed definition of ‘‘significant contribution of active personal management.’’ 

The crop insurance program has become an increasingly important component of 

the farm safety net, and crop insurance protections for all farmers, particularly beginning farmers and ranchers, have been strengthened under the new farm bill. 

In order to implement the numerous crop insurance changes as quickly as possible, the Risk Management Agency (RMA) began preparing to implement the 

Stacked Income Protection Plan (STAX) and Supplemental Coverage Options (SCO) 

programs months before farm bill passage. Specifically, since both the House and 

Senate had similar provisions related to STAX and SCO, RMA began efforts to develop and implement policies and procedures soon after passage. These efforts have 

paid dividends, and RMA will have information on SCO availability this month and 

STAX availability in August. 

In April, RMA began revising the premium rates charged for Catastrophic Risk 

Protection Endorsement (CAT) coverage base them on the average historical ‘‘loss 

ratio’’ plus a reasonable reserve. This change will not increase costs for growers. 

RMA will update actuarial documents throughout the year as applicable to fully implement this section. Additionally, in April RMA implemented a prohibition of catastrophic coverage on crops used for grazing by issuing a guidance document to 

amend the Special Provisions for the annual forage policy. 

In May, RMA completed the update to its systems to reflect the permanent enterprise unit subsidy as mandated by the farm bill. Also in May, due to efforts that 

RMA began last summer, a Whole-Farm Revenue Protection program, as required 

by the farm bill, was approved by the FCIC Board of Directors. RMA expects the 

Whole-Farm Revenue Protection product information to be available to farmers later 

this year in time for producers to make plans and decisions for 2015 crop sales. In 

mid-May, RMA’s Risk Management Education Request for Application (RFA) for 

Risk Management Education Partnerships grants and Crop Insurance in Targeted 

States grants were published in the Federal Register. These RFAs provide funding 

opportunities related to financial benchmarking. 

Last week RMA published an interim rule on seven sections from the farm bill: 

highly erodible land and wetland conservation for crop insurance, enterprise units 

for irrigated and non-irrigated crops, adjustment in actual production history (APH) 

to establish insurable yields, crop production on native sod, coverage levels by practice, beginning farmer and rancher provisions, and authority to correct errors. 

This rule will allow RMA to begin offering some of these benefits to producers as 

soon as this fall, including the beginning farmer and rancher provisions, the authority to correct errors and make late payments, and restrictions for producers who 

plant on native sod. RMA expects to offer enterprise units for irrigated and nonirrigated crops and coverage levels by practice for spring crops in 2015. Adjustment 

in APH will be available for crops planted in the fall of 2015. This was one of the 

few crop insurance provisions that did not exist in either the House or Senate 

version of the farm bill prior to conference. While RMA understands how important 

this provision is to many farmers who have suffered from natural disasters, it is 

not possible to implement this provision for the 2015 crop year. 

The interim rule links eligibility for any premium subsidy paid by FCIC on a policy or plan of federally reinsured crop insurance to be in compliance with Highly 

Erodible Land Conservation (HELC) and Wetlands Conservation (WC) provisions. 

Although no producers will lose premium subsidy for the current reinsurance year, 

‘‘first time compliers’’ will need to visit a FSA office to certify their compliance if 

they have not already done so. USDA intends to provide more details on the new 

12 

conservation compliance requirements by the fall. New conservation compliance requirement education will be a priority for USDA in the coming months. 

RMA plans to release policy materials later this month for SCO, which provides 

coverage for the layer of risk between 86 percent and the coverage level selected by 

the insured. This means an insured that elects a 70 percent coverage level could 

elect to cover an additional 16 percent of risk under SCO. County availability for 

winter wheat will be published this month. Information for other crops such as corn, 

grain sorghum, rice, soybeans, spring wheat, and cotton will be made available later 

this summer or early fall for the spring planting. I am pleased to announce that 

in addition to these crops, RMA will be able to offer SCO coverage for spring barley 

beginning in 2015. This fall, RMA will look at additional crops that can receive SCO 

coverage as well as additional counties. USDA and I understand that producers 

need as much information as possible regarding when they are required to make 

their ARC or PLC election because producers who elect ARC on a farm will not be 

eligible for SCO, and RMA is working to provide additional information on new 

crops and counties that may have SCO prior to the ARC and PLC election period. 

Policy materials and county availability for STAX will be made available in August. RMA anticipates that STAX will be available for over 98 percent of cotton 

acreage in production. FSA plans to have more information on cotton transition payments available later this summer. For the counties where STAX is not available 

in 2015, upland cotton producers will be eligible for an additional transition payment. 

RMA is also preparing statements of work and cost estimates for contracted feasibility studies on food safety and swine catastrophic loss. In addition, it will be 

issuing a consultation notice as a first step in the research and development of a 

policy to insure biomass sorghum and sweet sorghum grown for the purposes of producing a feedstock for renewable biofuel, renewable electricity, or biobased products. 

Finally, RMA appreciates that Congress recognized the importance of program 

maintenance and program integrity by providing $9 million to conduct policy reviews and to ensure actuarial soundness and financial integrity. As crop insurance 

continues to be more important to our farmers and ranchers, it is vital that we also 

protect the interest of taxpayers. This money will enhance RMA’s investments from 

discretionary funding for these activities. At this moment, I would like to express 

my thanks to the FSA and RMA employees who are working tirelessly to assist the 

American farmers and ranchers who waited so patiently for these programs. I commend the FSA and RMA employees for their hard work. 

In closing, I would like to again thank the Committee for this opportunity to update you on USDA’s continued progress in implementing title I and title XI of the 

2014 Farm Bill. Farmers, ranchers, rural communities and other USDA stakeholders have waited several years for this legislation, and USDA has made significant progress to implement each provision of this critical legislation. 

The CHAIRMAN. Thank you, Michael. 

The chair will remind Members that they will be recognized for 

questions in order of seniority for Members who were here at the 

start of the hearing. After that, Members will be recognized in 

order of arrival. And I appreciate our Members’ understanding. 

I now recognize myself for 5 minutes. 

Michael, thank you for all the great work that RMA and FSA 

and your team have done. You laid out a few of those accomplishments, particularly Livestock Disaster Assistance, and we are truly 

thankful for the hard work. But under the guise of, ‘‘What have 

you done for me lately?’’, we will have some questions about some 

of the things that are yet to be done. I don’t want to take the edge 

off how appreciative we are of what you have accomplished, but 

there are some things that are of concern to us. I also want to 

thank your FSA team; they are anxiously waiting for a lot of the 

stuff that you are trying to kick out to them so that they can actually work with their producers. There is a sincere joint effort in all 

of that. 

Talking about the APH Adjustment, we have had a lot of back 

and forth with your staff. I need some help understanding why this 

is going to be so difficult, why you say you can’t we get it done in 

13 

2015. We had an intern last week pull down 20 years’ worth of 

NASS data for 54 counties in Texas on wheat. It covered about 75 

percent of the wheat crop. They did the calculations. They figured 

out which years could be kicked out under the APH Adjustment. 

So, if we were able to do that with the resources we had, why can’t 

RMA, with the new resources they have, and the broader access to 

data that they have, can’t get at least a partial roll out of the APH 

quicker than the 2016 crop year? 

Mr. SCUSE. Mr. Chairman, I appreciate the concern about getting 

the APH done as soon as we possibly can. And we very much would 

like to do that. 

If you look at everything that RMA is going to be rolling out for 

2015, and the resources that it takes for the Risk Management 

Agency to roll out those programs for 2015, it is no small task just 

on those. One of the reasons why the Risk Management Agency is 

able to roll out this many programs for 2015, Risk Management 

Agency looked at the bills that had been passed by the House and 

Senate previous to the bill that was ultimately passed by both and 

signed by the President. We anticipated these programs, so we 

started to work on these programs long before the final bill was 

passed and signed into law. 

The APH was not in any of those previous forms of legislation. 

And it was a last minute addition to the final farm bill, and one 

that we did not anticipate having to implement. Having said that, 

it is not just about going back and getting 20 years of data for 

every single county, but it is 20 years of data for every single county for every single crop that is grown in that county. And on top 

of that, we also have to work with our approved insurance providers, the 18 companies out there that are responsible for writing 

the crop insurance. It is no small effort to do the IT programs for 

all the commodities that are grown in all of the counties in the entire United States. 

So what I am going to offer up, Mr. Chairman, to the Committee, 

if you will, I will offer up a detailed written explanation of the 

issues that we are facing in trying to implement APH. 

[The information referred to is located on p. 37.] 

The CHAIRMAN. Okay. I appreciate that. As I mentioned in my 

opening statement, the APH Adjustment is self-executing. The law 

says producers shall be able to do this. Given that, what is going 

to happen if producers take it upon themselves to make their own 

adjustments, do their own calculations, and then work through the 

process? Wouldn’t it be better for the Agency to do it versus each 

individual producer taking it upon themselves to say, ‘‘Hey, the law 

says I can do this, and I am going to do it on my own?’’ What do 

we tell producers? 

Mr. SCUSE. We can’t implement something that we do not have 

the information on. 

The CHAIRMAN. Okay. 

Mr. SCUSE. And if we do not have the information that has been 

verified by the Agency, then it is something that is very difficult 

for—and impossible for us to implement. And on top of that, we 

also have to—Mr. Chairman, we actually have to go back and work 

with the companies. We also have to look at the actuarial soundVerDate Mar 15 2010 14:29 Dec 18, 2014 Jkt 041481 PO 00000 Frm 00017 Fmt 6633 Sfmt 6601 I:\DOCS\113-17\88810.TXT BRIAN
14 

ness of these changes and what rates may change because of this 

legislation. 

The CHAIRMAN. Right. I certainly understand the impact on 

rates, but there is no actuarial soundness to the production issue 

itself. That is just a fact that is out there though, right? I understand you have something to do after you have the—— 

Mr. SCUSE. Right. After we get the—— 

The CHAIRMAN. Right. 

Mr. SCUSE. At some point in time, you are going to have to verify 

the actuarial soundness of these changes. 

The CHAIRMAN. Right. All right. Well, we have a few follow-up 

questions of a more legal nature that we will submit for the record. 

So with that, I would recognize my Ranking Member for 5 minutes, 

David? 

Mr. DAVID SCOTT of Georgia. Yes. Thank you, Mr. Chairman. 

Mr. SCUSE. Yes. Thank you. 

Mr. DAVID SCOTT of Georgia. And our Ranking Member of the 

Full Committee, Mr. Peterson has come in. So I would love to allow 

him to say something. 

The CHAIRMAN. Do you have an opening statement? 

Mr. PETERSON. Well, I am going to ask a couple questions. I can 

do it now or—I thank the gentleman. 

The CHAIRMAN. Go right ahead. 

Mr. PETERSON. Yes. My concern is on the implementation of the 

dairy program. I had a discussion with the Secretary last week. So 

I am a little unclear about exactly what the situation is. But I am 

concerned that this thing is not going to get rolled out quick 

enough, and we are going to have a problem getting people to understand this. Talking to dairy farmers in my area, especially the 

smaller ones, they have no idea that we have done anything. They 

have no idea that this margin insurance exists. They are not used 

to going into the FSA office. A lot of them aren’t in the program. 

The rates are in the statute, so there is no rulemaking or anything. 

The rates are in the statute in terms of what the insurance costs 

for the different sized producers. The issue is determining what the 

base is and determining what new producers are—and so forth and 

so on. But I don’t think that is going to affect the decision making. 

I just think that you need to get your FSA people up to speed 

on this. Because in talking to them, they don’t know anything 

about this. I think you need to get this information out for the 

dairy farmers that this new margin insurance program exists, that 

these are what the rates are, that they need to start thinking about 

this. I am just worried that we are going to get a very poor enrollment from what I am hearing out there. And especially because we 

have some of the best prices we have ever had, and people are 

going to think, ‘‘Well, what the heck, I don’t need any insurance, 

because I have $20+ milk.’’ Everybody knows high prices bring low 

prices. It is going to be a problem. So I just think you need to get 

your FSA people up to speed as soon as you can. You need to get 

something out to the dairy farmers that this is coming. And you 

need to do it now instead of in September, I believe. And so I don’t 

know what your timeframe is, but—— 

Mr. SCUSE. We take the education and outreach for all of these 

programs very seriously. And I understand your concerns. 

15 

The Committee that is working on the dairy program will be in 

Washington next week. We are going to finalize that program as 

quickly as we can. And as soon as we finalize it and we have the 

educational tools from the universities, we will do all the outreach 

that we possibly can to the industry, working with the industry, 

working with cooperative extension, working with our Farm Service Agency and the 2,100 offices around the United States. But, 

Congressman, we take our responsibility for the education and outreach very seriously, and we are going to do everything that we can 

to reach as many of those producers as we possibly can as soon as 

we can. 

Mr. PETERSON. So from what I understand, you are kind of holding things up until you figure out the answers on the base and the 

new producers and so forth? You want to have everything done before you roll this out? Is that what I understand? 

Mr. SCUSE. Yes. We would like to have it completed before we 

roll everything out, and answer as many of the questions as we 

possibly can to eliminate any of the confusion that may exist if we 

roll it out piecemeal. 

Mr. PETERSON. Well, I just don’t agree that there is going to be 

confusion, because the decision that people are going to make is not 

going to be, in most cases, based on what their base is. That is 

going to be pretty obvious: 2011, 2012 or 2013 is going to be pretty 

obvious what is going to be the best situation. Very few people are 

going to be affected by the new producer stuff and having sold the 

dairy and so forth. So you are holding up the whole situation over 

things that are not central to making this decision. The problem I 

am picking up out there, people have no idea that this even exists. 

Why couldn’t the FSA office, or somebody, send a letter to these 

dairy farmers saying that there is a margin insurance program 

coming, these are the rates that are in the statute, we are going 

to be finalizing the base issues and so forth later on. Just so they 

understand this is coming, because I am really worried that—— 

Mr. SCUSE. Congressman, I will take that under consideration. I 

will go back and look at it and see if we can do something about 

getting notification out to the dairy producers, just notifying them 

that this is coming, and the timeframes. 

Mr. PETERSON. Yes. 

Mr. SCUSE. So I will go back and take a look at it, Congressman. 

[The information referred to is located on p. 38.] 

Mr. PETERSON. I appreciate that, and I thank the Chairman. I 

yield back. 

The CHAIRMAN. The gentleman yields back. Thank you. I recognize David Scott now for 5 minutes. David? 

Mr. DAVID SCOTT of Georgia. Thank you, Mr. Chairman. 

Under Secretary, let us go immediately to the point I brought up 

concerning the treatment of the downward adjustment trend to 

Georgia and South Carolina peach producers. First of all, we need 

to correct that. It is very punitive. It is not fair. It is costing. And 

it is not a level playing field. Can we get your commitment to address this issue for the satisfaction of the peach farmers in Georgia 

and South Carolina? 

Mr. SCUSE. I will do even better than that. We have the Administrator for the Risk Management Agency in South Carolina today 

16 

who will be leaving South Carolina and going to Georgia. We are 

looking at this issue as we speak, and we are taking it very seriously. And we are looking for a solution. 

Mr. DAVID SCOTT of Georgia. And what would that solution be? 

What would be a part of that solution? And will a part of that solution take into consideration that extraordinary freeze in March 

that affected Georgia and South Carolina to the tune and the losses 

of millions of dollars? Will that be taken into consideration as well, 

as you attend to this issue? 

Mr. SCUSE. It is—it would be premature for me to speculate on 

what the solution might be. I haven’t—again, the Administrator is 

down there today and the rest of this week talking with the producers, and talking with the staff. So it would be premature for me 

to speculate at this time what the solution ultimately will be. But 

we do take this very seriously. 

Mr. DAVID SCOTT of Georgia. Well, would a part of that solution 

be to give Georgia and South Carolina the same waivers and consideration that you give the other peach growers from Maine to 

North Carolina? 

Mr. SCUSE. That is one of the options we are looking at. 

Mr. DAVID SCOTT of Georgia. Good. And would you please work 

with my office, and the people in Georgia and South Carolina, to 

give us updates on this? 

Mr. SCUSE. Sure. And, again, when the Administrator returns to 

Washington, as we make progress in this, we will be more than 

glad to keep your office posted. 

[The information referred to is located on p. 39.] 

Mr. DAVID SCOTT of Georgia. And let me just ask you, is there— 

why in the first place would we have these waivers for some peach 

farmers from Maine to North Carolina and we didn’t have it in the 

first place for South Carolina and Georgia? Is there something I am 

missing? 

Mr. SCUSE. And I can’t answer your question. I will get you a response. But that was done before I came into office. But we will 

get you a response. 

Mr. DAVID SCOTT of Georgia. Okay. I just want you to know I am 

very concerned about that. I would like to work with you and follow-up on that to make sure we correct that to the satisfaction of 

everyone. Our farmers are faced with tremendously devastating 

issues right now. It is almost so difficult for them to actually farm 

for the amount of other things that they have to deal with. Now, 

let me go to the other issue I raised about this reserve assurance 

fund for peanuts. Can you tell us about that? And I do recall that 

we put money in there in this fund. I would like to know how much 

money did that finally come to, how will that be utilized? 

Mr. SCUSE. Congressman, I will be perfectly honest with you. I 

am not aware of any money that was put in a fund. I do know that 

there was a requirement for us to come up with a peanut insurance 

policy. It is one that we have been working on now for quite some 

years. I know it is of great concern for the producers in your state. 

We continue to work on a peanut revenue policy. I think the requirement is for us to have one rolled out by 2015. That will depend on a couple different factors, whether we have a—someone do 

a private submission, or if we have to go out and develop it through 

17 

the Risk Management Agency. So it is something that we take very 

seriously, and we are looking into. 

Mr. DAVID SCOTT of Georgia. Okay. And, again, you will keep me 

appraised of that? 

Mr. SCUSE. Yes, sir. 

[The information referred to is located on p. 39.] 

Mr. DAVID SCOTT of Georgia. I mean, after all, my State of Georgia leads the nation in peanuts and peaches, as well as poultry and 

pecans. 

Mr. SCUSE. Understood. 

Mr. DAVID SCOTT of Georgia. Watermelons and blueberries. 

Thank you, Mr. Under Secretary. 

The CHAIRMAN. The bragging is unflattering. Mr. Neugebauer, 5 

minutes. 

Mr. NEUGEBAUER. Thank you, Chairman Conaway. Thanks for 

having this important hearing. Mr. Secretary, thank you for being 

here this morning. 

First of all, I want to start off with thanking you for the progress 

that you have made, and the hard work that your folks are doing 

to implement this very important farm bill. 

Unfortunately, these hearings are generally not about all the 

things that you are getting done, it is about the things that you 

didn’t get done because those are the things that we are hearing 

about. You and I had a conversation yesterday about the implementation of the APH. And one of the things that we were talking 

about was that Congress had put about $70 million into the implementation for title XI. I think you weren’t aware that they had put 

that much money. You thought that that was for title I, but in fact 

Congress put $70 million in for implementation of title XI. And additionally, section 20 provides $9 million which you mentioned in 

your testimony, and it gives the Secretary discretion to move these 

dollars for implementation. I know that you have a lot to implement. I think one of the things that was so important about putting this implementation of the crop insurance, just because some 

of the commodity titles aren’t really eligible for any title I programs. And one of those is cotton. Is there a misunderstanding 

here about what the money is for and how it should be used? And 

if so, do we need to clarify that? 

Mr. SCUSE. We are definitely going to need to clarify that, be- cause I am not aware of $70 million for us to implement these policies or provisions for the crop insurance title. So I am at a loss. 

And we will have to have a follow-up conversation. 

Mr. NEUGEBAUER. Please do, because we recognize we have given 

you a big task to complete in a very short period of time. And so 

it is my understanding that this money was put into the farm bill. 

And if it is not, then I stand corrected. But if it is, and you didn’t 

know about it, then we need to clarify that as quickly—— 

Mr. SCUSE. We certainly do. And we will look to clarify that. 

Mr. NEUGEBAUER. I think along those same lines, because what 

you said was the APH issue wasn’t necessarily about the money 

but just about the timeline, and I guess the importance about if 

there is a way here to put additional resources to work to speed 

up that timeline. I think something that Chairman Conaway mentioned that sparked a question on my part is if we do have these 

18 

areas where that production history is critical to next year, is there 

an opportunity for say a partial implementation earlier for some of 

those areas, for example, Texas, Oklahoma and other states that 

have been involved in this serious drought so that they can go 

ahead and benefit from making that election on the production history? 

Mr. SCUSE. I can’t give you an answer to that right now, because 

we would have to go back and take a look within the Agency about 

everything that would be impacted by making that decision. We 

would also have to go back and talk to the 18 approved insurance 

providers about the impacts for writing the policy. So there would 

be a lot of questions that we would have to answer if we were able 

to—before I could give you an answer on whether or not we would 

be able to do a partial implementation. 

Mr. NEUGEBAUER. Well, the reason that is important is because, 

as I said, for commodities like cotton, basically the crop insurance 

program is their safety net. And so delaying the implementation of 

that becomes a critical issue to them. I want to go back to something else that we had a conversation about. What you and I 

agreed was that we have lawyers with different opinions, but that 

is on the enterprise units. 

Mr. SCUSE. Yes. 

Mr. NEUGEBAUER. The statute says—or the law—the bill said the 

corporation shall make available separate enterprise units for irrigated and non-irrigated acreage. The current interpretation that 

your agency has is that if you elect one, you have to elect the enterprise for the other. I do not think that was the original intent. We 

may try to get the lawyers to take another look at that. But what 

I would like to hear from you is if in fact we have an unintended 

consequence there that which caused that interpretation, I would 

love to hear that you would help support some efforts to clarify 

that. 

Mr. SCUSE. Well, yes, most definitely we will look at getting some 

additional clarification on the issue. But I do want to point out that 

under that program previously—under enterprise units, if you had 

one farm in a county, or five farms, you had to enroll every farm 

in the enterprise units. Every farm within that county that you 

were tilling had to be part of that enterprise unit. If you look at 

how the program has been previously run, and then the legislation 

now to give you the ability to separate irrigated and non-irrigated, 

I think that is still keeping with how the original law was intended. And, again, I am not an attorney. I think that was part of 

what we were looking at when that decision was made. 

[The information referred to is located on p. 40.] 

Mr. NEUGEBAUER. Well, and one of the things that we tried to 

do in this farm bill is expand the choices and the opportunities. 

And so what we did previously, particularly with the fact that we 

are shifting the safety net to more of a crop insurance oriented— 

anyway, I would love to—— 

Mr. SCUSE. And as I pointed out, there is the provision where 

you can, if you don’t want to go with enterprise units, you can get 

separate insurance for irrigated and non-irrigated, which has been 

an issue for many of our producers around the United States for 

a long time. So, that was a really good addition to the farm bill 

19 

that is going to help a lot of our producers that have both irrigated 

and non-irrigated. 

Mr. NEUGEBAUER. I yield back. 

The CHAIRMAN. The gentleman’s time has expired. Mr. Vela, for 

5 minutes. 

Mr. VELA. Yes. I just have the same concerns that my Texas colleagues do in terms of the implementation of the APH Adjustments. I think you have kind of responded. You are going to come 

up with a detailed response and explanation on that. When can we 

expect that? 

Mr. SCUSE. We will have that to the Committee next week. 

Mr. VELA. Okay. Thank you. 

Mr. SCUSE. Okay. 

Mr. VELA. Mr. Chairman, I yield back. 

The CHAIRMAN. Thank you, Mr. Vela. Mr. Crawford, for 5 minutes. 

Mr. CRAWFORD. Thank you, Mr. Chairman. 

A quick question on the cotton transition program, Mr. Secretary. 

Is USDA still on track to conduct a sign-up for the cotton transition 

program in August and issue payments in October? 

Mr. SCUSE. Yes. 

Mr. CRAWFORD. Okay. Good. All right. Let me ask you about peanuts. I certainly appreciate the efforts to ensure that peanut revenue coverage is in place for the 2015 crop year. Do you have an 

update on that, how we are progressing there? 

Mr. SCUSE. Again, we have been working on that program now 

for quite some time. We will continue to look at it and monitor and 

review any submissions that come before the Board. It would be my 

wish that we could have something by 2015. But, again, whatever 

is submitted has to have the approval of the FCIC Board before we 

can implement it. So if there is approval by the Board for a program this year, we could implement it for the 2015 crop year. 

Again, as I pointed out, if there is not a private submission that 

the Board could approve, then we would be tasked to go out and 

have a contractor develop one on our own in-house. And if that 

were the case, then the earliest that we would be able to do one 

would be 2016. 

Mr. CRAWFORD. Okay. One of the challenges in particularly my 

district with rice producers is crop insurance trying to find a crop 

insurance product that works. There is an authorization for RMA 

to develop a margin product. It may be a little early. But can you 

comment on what the progress has been on that? 

Mr. SCUSE. It is a bit early to—and premature to comment on 

anything that we have done so far with that. We do know that it 

has been an issue for the rice producers. Again, this is something 

that the rice producers have brought to our attention for several 

years. And it—and I agree with your point, they are growing a crop 

in water, so it is not—they are not looking at crop failure. They are 

looking at revenue. 

Mr. CRAWFORD. Right. 

Mr. SCUSE. So it does create a little bit of a different scenario for 

us to get a product for the rice producers out there that they are 

going to be satisfied with, again that the companies can run that 

is going to be actuarially sound. 

20 

Mr. CRAWFORD. Well, and you mention actuarially sound. And we 

are only talking about probably this year, 3 million acres at the 

most, by comparison. 

Mr. SCUSE. Yes. 

Mr. CRAWFORD. That makes it difficult for an actuary base to 

exist. Is that a fair statement? 

Mr. SCUSE. I think you understand some of the problems that we 

face in developing a product. Okay. 

Mr. CRAWFORD. Well, I just want to kind of keep my eyes on that 

one for obvious reasons. My district is probably the biggest rice producing district in the country. About 1⁄2 of the rice crop is produced 

there. Let me switch gears, supplemental coverage option. One of 

the inequities that is resulting from the delay in SCO implementation is that farmers must elect sometime later this year, or early 

next year, between PLC and SCO versus ARC. For some farmers, 

SCO won’t be available yet. So you can see where the problem exists there. It means that some farmers have to make a choice on 

whether or not supplemental coverage will be available. Can you 

comment on—is it safe for them to make that election for the 2015 

crop year? Are we going to have that in place? 

Mr. SCUSE. This is one of the hopes that the decision tools will 

be able to provide the information for them. They will be able to 

plug in the yields, the prices for the different programs, and see 

the overall impacts and make a decision for when SCO actually becomes available to them. Right now, SCO will be available in the 

2015 crop year to 90 percent of the corn farmers in the United 

States, 90 percent of the soybean farmers in the United States, 95 

percent of the cotton producers in the United States, 80 percent of 

the wheat, and 70 percent of the rice producers. That is for the 

2015 year. And we will continue to take a look at that and add to 

that in the coming year, and for the 2016 crop year. So the majority of producers will have SCO available to them in the 2015 crop 

year. 

Mr. CRAWFORD. Excellent. Thank you, Mr. Secretary. I yield 

back. 

The CHAIRMAN. The gentleman yields back. Mr. Maloney, for 5 

minutes? 

Mr. MALONEY. Thank you, Mr. Chairman. Again, Under Secretary Scuse, the farm bill contains a number of provisions that 

help small diversified producers like the ones I represent in the 

Hudson Valley of New York. And a number of us, including my colleague, Chris Gibson, who represents the same region of New 

York—a number of us worked on a number of provisions to help 

those types of farmers. In particular, I am interested in the whole 

farm revenue insurance program. The Secretary recently announced he thought those programs would be available for the 

2015 crop year. I was just hoping you could expand on that and 

give us a little update on that timeframe and whether you are comfortable with that? 

Mr. SCUSE. The whole farm revenue will be available in a pilot 

in 2015 for the areas where we had AGR and AGR-Lite. And so it 

will be available to those producers where we had those programs 

the last few years in a pilot, and then it will be expanded in 2016. 

21 

Mr. MALONEY. Well, and you anticipated my next question, 

which is how will the program, if you can tell us, differ from this 

existing AGR and AGR-Lite programs? 

Mr. SCUSE. I would have to provide that to you in writing what 

the differences are. There are some differences between how the 

programs are going to be functioning. But we will provide you 

those differences in writing. 

[The information referred to is located on p. 41.] 

Mr. MALONEY. That would be wonderful. Thank you. And as you 

know, there is also a provision in the bill called the CROP Act, 

which is dear to my heart, that I worked on. And that would help 

facilitate the development of new insurance, particularly for these 

smaller specially crop and diversified family farms that I mentioned. And one aspect of that is to allow the RMA to develop these 

plans in-house. Is there work being done on that that you can give 

us an update on? 

Mr. SCUSE. We greatly appreciate your efforts and the efforts of 

other Members of the Committee in getting that language put in 

there to allow RMA to develop some of these. As you know, there 

are products out there that some of the larger companies may not 

want to develop because of the time or the money that it would 

take and what little return there might be on that investment. And 

this gives RMA an opportunity to look at some of those products. 

There has been a demand for crop insurance for additional products now for quite some time. I think this will allow us an opportunity to develop some of those products in-house, and help many 

of those smaller producers that aren’t able to get coverage today. 

So it is one of the things that we are going to look at as the demand comes in for new products. We will take a look at developing 

those. 

Mr. MALONEY. Is there any specific work being done now? 

Mr. SCUSE. Not at this moment. But, again, we continue to look 

at the demand. And as the demand for products comes in, then we 

will look at developing some of these products in-house. 

Mr. MALONEY. Well, I appreciate that. And I appreciate your attention to that, because it is really very important for the types of 

farms that we have in the Hudson Valley in New York. So I am 

very glad to hear that you are eager to utilize those provisions. 

Mr. SCUSE. We greatly appreciate that. 

Mr. MALONEY. Finally, let me just ask you, sir, a question about 

fraud and the crop insurance program. You know, we had quite a 

debate in this Committee around nutrition assistance and around 

possible fraud in the SNAP program. There has been some attention paid recently to instances of fraud in the crop insurance program. I would like to give you an opportunity to speak about that 

since there are considerable amounts involved in these programs. 

Is this a concern? What is being done on it? And can you give us 

an update on that? 

Mr. SCUSE. Well, let me start out by thanking the Members for 

the money that was added to the title XI to help us look at some 

of the issues that we have faced. That funding is greatly appreciated. 

We are looking at—we do data mining to go back and look at the 

producers, look at the acreage, look at the yields, look at the inVerDate Mar 15 2010 14:29 Dec 18, 2014 Jkt 041481 PO 00000 Frm 00025 Fmt 6633 Sfmt 6601 I:\DOCS\113-17\88810.TXT BRIAN
22 

come. We also go out and do field spot checks. The Risk Management Agency works with the Farm Service Agency to go out and 

do those checks to verify production or non-production. We are 

going to be looking at using some of that funding to hire additional 

staff, again, to help us look at different policies and additional data 

mining so that we can have any abuse of the system cut to a bare 

minimum. So, again, we greatly appreciate the funding that was 

put in the farm bill for the use for us to look at those issues. 

Mr. MALONEY. Thank you. Mr. Chairman, I yield back. 

The CHAIRMAN. The gentleman yields back. Thank you. Mrs. 

Hartzler, for 5 minutes? 

Mrs. HARTZLER. Thank you, Mr. Chairman. First, I want to start 

off and thank you for the good work that you and the USDA has 

done to implement the Livestock Disaster Programs in such a timely fashion. I can tell you from my constituents in Missouri that the 

money is going out, and it is very much appreciated. Obviously, 

they were devastated with those droughts a couple years ago. So 

we very much appreciate that. 

We do have one concern though as it relates to the forage programs and the dairy farmers in our area. As you know grazing 

dairies intensively manage their operations, and this management 

practice allows them to meet the greater forage need of the dairy 

cows in their program. However, the current formulas used by the 

USDA uses beef cow forage values on a per unit basis that are significantly less than the needs of a dairy cow. And my office and 

others have raised this issue with the USDA. And I would like to 

know if the USDA plans to explore this inequity to address the concerns of these operations? 

Mr. SCUSE. Thank you. And I visited your state in 2012 on several occasions. And I personally saw the effects of the drought and 

the impact that it had on your producers. In fact, on April 16, I 

went back to your state and I visited a dairy operation that we 

were going to be able to give LFP funding to. So—and they were 

very appreciative. But we—it is something that we take seriously. 

This is not the first time the issue has been brought up. There is 

a difference between dairy operations and beef operations and the 

pasture, the amount of forage that it does take. It is an issue, and 

it is something that we are looking into. I don’t know that we are 

going to be able to address the problem. But it is something that 

we are looking at. And I would ask that the producers—the dairy 

producers that feel that they have been adversely affected work 

with Cooperative Extension, get better information and deliver that 

information to our Farm Service Agency offices so that we will 

have a better understanding of exactly what the issue is. 

Mrs. HARTZLER. Okay. Well, thank you for looking in that. And 

we will certainly pass that on as well. On another topic, many producers have been chomping at the bit to learn more about the 

signup for the safety net programs. I understand they may start 

this fall. And the farm bill provides $3 million for decision making 

tools. And the USDA decided to split that money between two separate consortiums of universities. And I want to thank you again 

that the University of Missouri is part of that. But I was curious. 

Can you provide a little more insight into the reason USDA decided 

23 

to create two separate tools as opposed to focus the resources on 

just a single tool? 

Mr. SCUSE. We discussed that quite a bit about the funding. Of 

course, we went out—it was an open process. You know, it was 

open to any university to apply for the funding. When we look at 

the proposals that came back, and you looked at the proposal from 

Illinois and A&M, these were two very, very good proposals. One 

went a little bit further than the other when it came to the dairy 

and to the NAP buy-up. And we felt that the other proposal was 

a solid proposal for ARC and PLC. And then if you look at the comfort level for the producers and what they are going to be comfortable—which tool they would be comfortable using, to us it made 

a lot of sense to split the funding and allow the one group to do 

ARC/PLC dairy and the NAP buy-up, and then the other group to 

do ARC and PLC. We just thought it was really good to have two 

different tools out there for our producers to take a look at. 

Mrs. HARTZLER. I am sorry. I just wanted to clarify. Did you say 

that both of them though will be doing PLC and ARC? 

Mr. SCUSE. Both groups will have PLC and ARC. 

Mrs. HARTZLER. Now, will that be divided up by county? So if a 

farmer in one county uses one tool and then somebody—or is it—— 

Mr. SCUSE. In theory, both tools should work the same way anywhere. 

Mrs. HARTZLER. Okay. Just hope it doesn’t cause confusion like 

medical records like—— 

Mr. SCUSE. Understood. 

Mrs. HARTZLER. Electronic medical records. 

Mr. SCUSE. One of the things that—one of the requirements is 

that before these tools are released, they will come back to USDA 

and they will be tested for accuracy. 

Mrs. HARTZLER. Okay. Very good. Well, I have more questions. 

Time is up. Thank you very much. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentlelady yields back. Rodney Davis, for 5 

minutes? 

Mr. DAVIS. Thank you, Mr. Chairman. And thank you, again, Mr. 

Scuse, for being here. I appreciated our conversation before the 

hearing began. And a lot of the questions that I had planned to ask 

have already been asked. That is the detriment of being a freshman and to being a little further down the dais. But I do want to 

thank you for what you guys are doing in implementing many of 

the provisions in the farm bill. As a freshman legislator and as a 

Member of the conference committee on the farm bill, it has been 

a great learning experience for me. And it is also something that 

I look forward to working with your agency on to further our implementation goals. 

I had one question though, and it is in regards to the standard 

reinsurance agreement. And the 2008 Farm Bill authorizes the 

SRA to be renegotiated every 5 years. And the last SRA was negotiated in 2010 and implemented in 2011. Are there any plans within your Department to renegotiate the SRA next year? 

Mr. SCUSE. Not at this time. 

Mr. DAVIS. All right. Do you have any plans to renegotiate the 

SRA down the road? 

24 

Mr. SCUSE. I can’t make that determination today. I don’t know 

what is going to come down the road. But we have no intentions 

of renegotiating the SRA next year. 

Mr. DAVIS. Okay. Well, I look forward to your written responses 

to some of the questions that were asked earlier. And I look forward to working with you on implementing some of the new provisions, especially in relation to the crop insurance which is crucial 

to my district in central Illinois. 

And thank you for your visits. And I yield back the rest of my 

time. 

The CHAIRMAN. The gentleman yields back. Mr. Scott, do you 

want to give it a go? 

Mr. AUSTIN SCOTT of Georgia. Thank you, Mr. Chairman. I will 

do my best to get—I have been a little under the weather lately. 

But just to share my colleague from Georgia’s concerns about the 

peaches and the peanuts, and certainly appreciate seeing your response to that. And I will submit my other questions in writing. 

Thank you. 

Mr. SCUSE. Thank you. 

Mr. AUSTIN SCOTT of Georgia. I yield back. 

The CHAIRMAN. The gentleman yields back. Mr. LaMalfa, for 5 

minutes? 

Mr. LAMALFA. Thank you, Mr. Chairman. Thank you, Mr. Scuse, 

for appearing here today. I know you have as many different Members as there are here as there are different aspects of the programs you have to administer and make work. So I know it is not 

easy. As you know in California, we are facing huge drought problems with many constituents affected different ways over—at least 

over 1⁄3 of the state is suffering under some of the worst of the 

drought conditions. And it seems to be getting worse. Optimism for 

the El Nin ̃ os coming off of—filling up the reservoirs next year. So 

I don’t know. We are looking pretty tough. 

Mr. Crawford talked pretty well about some of the rice issues 

earlier that affect a lot of my constituents. I am a rice grower myself. But also, we have great concerns with our livestock growers 

as well with the disaster funding that has been very critical for 

them. And, again, their concern that there has been a backlog ever 

since the passage of the farm bill that the offices aren’t able to 

keep up with that. And so I know you have staffing issues there. 

And there is kind of a which one do you work on the most of the 

different aspects you have to try and catch up to in the short 

amount of time. 

In two of my 11 counties, for example, I represent, cattle outnumber the people. So you can understand how big of a deal this 

is for those payments to be made for these ranchers up there. And 

some of them are still waiting on 2013 payments, and that the 

2014 payments are going to be behind. So can you just speak briefly about how we can assure them that we are going to catchup to 

the backlog as you are balancing everything that you are dealing 

with there? 

Mr. SCUSE. Sure. I visited your state earlier this year. I went to 

one cattle operation. And, unfortunately, the day that I was there, 

the gentleman was dividing his herd into two. And 1⁄2 the herd was 

going to be sold that day because of the lack of pasture. I visited 

25 

another sheep operation where they could no longer irrigate out of 

the river because of the salt line, and the cost for drilling a well 

was going to be prohibitive. So I can appreciate what your constituents are going through. 

What we are doing, we have hired temporary staff in offices 

where we know that we need additional staffing levels. On top of 

that, we have asked the SEDs in each state to look at their staffing 

levels, where they currently are, and if they are in non-livestock 

production areas to see about a temporary shift of those workers 

into areas where we have the livestock production taking place. So 

we are looking at different ways to manage—to better manage the 

resources that we have available so that we can get through the 

signup. 

Mr. LAMALFA. Do you squeeze the balloon there, then it starts 

to fall short on the PLC program, for example, was—— 

Mr. SCUSE. Well, that is why we want to get—that is why we 

want to do the shift now. That is why we want to get as many resources in place today as we can, because we recognize the fact 

that we are going to have ARC and PLC signup, and we will be 

hiring additional temporary staff to help us with the signup for 

ARC and PLC and that work later this year. So we are trying to 

get as much—keep trying—— 

Mr. LAMALFA. Would that still be—keep people on time for 2015? 

Mr. SCUSE. Pardon? 

Mr. LAMALFA. It will still keep people on time for 2015? 

Mr. SCUSE. Yes. 

Mr. LAMALFA. And then some of the 2014, we are wondering 

about that. Is that going to catch up here pretty soon for those that 

are still—— 

Mr. SCUSE. Yes. You—— 

Mr. LAMALFA. And adding the 2014 Fiscal Year as well? 

Mr. SCUSE. And I appreciate your concern. But we are asked at 

the Farm Service Agency to do 3 year’s worth of work in just a very 

short time period. The 2008 Farm Bill—these disaster programs 

expired before the 2008 Farm Bill did. So they weren’t in existence 

in 2012. In 2013, these programs—when the farm bill was extended, these programs were included in that extension but were 

not funded. And now, if you look at the drought in California, as 

well as the Southwest, we are now asking our office staff to do 3 

years’ worth of work in a very short period of time. And in spite 

of that, I think they are doing a very, very good job. I will brag on 

my staff. I think I have the best workforce in all the Federal Government in those county offices. So we are looking at managing our 

resources as best we can to get as much of that backlog taken up 

as quickly as we can. 

Mr. LAMALFA. All right. Maybe you can comment more—my time 

has expired—on what is it we need to provide either in legislation 

or funding efficiently to help catch you up even more so, so we 

don’t face 2015 problems. Thank you. 

The CHAIRMAN. The gentleman’s time has expired. Mr. 

McAllister, for 5 minutes? 

Mr. MCALLISTER. Thank you, Chairman. And thank you, Secretary. I will try to be—me being from Louisiana and being under 

26 

the weather, it is probably going to be really tough to understand 

me. But I will try to be as clear as possible. 

I have just a couple of quick questions. We know farmers know 

how to farm. And when they farm, they do their job. But when it 

comes to implementation of crop insurance, some of the concerns 

I have is there are a couple of very important issues that were included in the farm bill. One provision just tells the FSA to be sure 

to share important information with the producers’ crop insurance 

agent so that the agent has all the information they need to write 

the policy and not have it canceled because of some error. The provision is really aimed to avoiding errors in the first place. The second provision allows the agents to correct honest errors that have 

in the past led to the nullification of a policy, which is pretty harsh 

medicine to the farmer. We certainly hope and expect the Department to implement these provisions in a way that it in fact prevents errors from ever occurring in the first place. But if they do 

occur, as they will, to allow the errors to be corrected without 

yanking coverage from a producer. How is this implementation 

coming on these fronts? 

Mr. SCUSE. Those are some of the things that we are looking at 

and taking very seriously. As you pointed out, we don’t want any 

of our producers to be put at a disadvantage because there may not 

be proper information. One of the ways that we hope to accomplish 

this is there was funding in the farm bill for the acreage, crop reporting streamlining initiative. And what this does is this will 

allow us to share information between the Farm Service Agency, 

Risk Management Agency and vice versa, so that we don’t have the 

two different crop reports, so we don’t have a risk of misinformation unintentionally being given to one or the other. So those are 

some of the things that we are looking at. We also have the system, 

SCIMS where we can share information between the Farm Service 

Agency and the Risk Management Agency. So we take that very seriously. And we want to do everything that we can to make sure 

that our producers have the very best information, as well as their 

agents. 

Mr. MCALLISTER. I appreciate that. And then second is I appreciate all your efforts to ensure that STAX is made available to all 

the cotton producers in all the counties and parishes in Louisiana, 

where we have the parishes, in time for the 2015 crop year. But 

I have heard that you expect the STAX to be made available to 

about 98 percent of cotton acreage by 2015 crop year. Can you tell 

us what cotton producing counties or parishes you are having difficulty with, and when you expect those difficulties to be resolved 

so that we have 100 percent availability? 

Mr. SCUSE. Those maps will be released I believe next month, so 

we will be able to see where these programs are going to be—where 

they are going to be available. But, again, it is 98 percent of the 

production will be available to get that product. We are going to 

release the maps next month. 

Mr. MCALLISTER. Okay. Well, I appreciate all the hard work. We 

know this has been a monumental task. And these are one of the— 

this is one of the agencies that does work well sometimes. So anything that we can do, we appreciate the hard work. And I yield 

back my time, Chairman. 

27 

Mr. SCUSE. Thank you. And I didn’t have any trouble understanding you because Commissioner Strain is a good friend of 

mine. 

Mr. MCALLISTER. There you go. 

The CHAIRMAN. The gentleman yields back. Mrs. Noem, 5 minutes? 

Mrs. NOEM. Yes. Thank you for being here. I am from South Dakota, so we are home of the disaster of Winter Storm Atlas that 

hit us last October. And so I want to really tell you how much I 

appreciate the fact that when we had signup for the Livestock Indemnity Program on April 15, my producers came back telling me 

that within 6 to 7 days, they had checks in their hands. So that 

was real help that was desperately needed, especially since we 

have been hit with the drought of 2012 as well. And so a lot of 

these guys took two hits right in a row. And that was absolutely 

devastating for South Dakota. So that gave them a little hope that 

they would be able to stay on their ranches and maybe someday 

see cattle back in their pastures. So thank you for that hard work 

and making it a priority, which we had asked and you really followed through and did that. 

I do have some concerns about the Livestock Forage Program, because I understand that there is some backlog that is going on and 

that you are moving people around trying to deal with the backlog 

that is happening across the country in some areas. Can you speak 

to that? 

Mr. SCUSE. Yes. 

Mrs. NOEM. And also, when you speak to it, give us an update 

on where we are as far as dollars out the door on the indemnity 

program and on the forage program, on both of those? 

Mr. SCUSE. I don’t have that particular breakdown. But if you 

look at the combination of the both, we are looking at $1.2 billion 

in money out the door. The last week of June, for the example, we 

had just over 17,000 applications done that week. So we are still 

receiving a tremendous amount of applications. We are looking at 

not only hiring temporary staff and reallocating resources within 

the state, but we have also put together jump teams from other 

states that don’t have livestock to go into those states where we do 

have a backlog and try to deal with that backlog and get it taken 

care of as quickly as possible. So we have used a combination of 

things, temporary staff, reallocation of resources in-state, and jump 

teams from other states to help us get through this. 

Mrs. NOEM. Do you have an end date on when—like an occurrence like Winter Storm Atlas that we had—an end date where applications will no longer be accepted? 

Mr. SCUSE. I believe—let me get that to you. I believe it is later 

on this year. 

Mrs. NOEM. Okay. Okay. And then we have some—— 

Mr. SCUSE. January—— 

Mrs. NOEM. 2015? 

Mr. SCUSE. That is really good. January of 2015. I didn’t want 

to give you a wrong date. 

Mrs. NOEM. Oh, you have staff back there? Yes, that is great. 

Mr. SCUSE. But it is January. I have visited your state. 

Mrs. NOEM. Yes. 

28 

Mr. SCUSE. I was there after the blizzard. I was there in 2012. 

And I was also there for the first day of signup on April 15. 

Mrs. NOEM. I appreciate that. Also, I have heard some instances 

where extreme heat losses are not covered. Again, we have that in 

South Dakota. Unfortunately, while we are a land of extremes, but 

once in a while we will lose some cattle due to extreme heat and 

feed lots, especially. Can you speak to why that would happen that 

there would be a denial based in that program? 

Mr. SCUSE. I will have to get back to you on what is and is not 

covered, because there are some things that are covered under LIP. 

[The information referred to is located on p. 43.] 

Mrs. NOEM. Okay. Yes. 

Mr. SCUSE. And then there are other things that are covered, or 

maybe covered, under the Emergency Livestock Assistance Program. 

Mrs. NOEM. Okay. I have another question about conservation 

compliance, because I am concerned about how that—the rules are 

being written and how they will be implemented. But the interim 

rule suggests that all farmers need to sign up for all acres and 

show that they are in compliance. But yet the law is written such 

that they will only have to be in compliance on tillable acres that 

they till each year. So can you speak to why that appears to be 

being implemented a little bit differently than how the law states 

that—the law states that they will have to be required annually on 

tillable acres to be in compliance, rather than the producer having 

to come in and sign up there? 

Mr. SCUSE. Because the conservation is now tied to crop insurance, so it is directly tied to the subsidy for the land that you are 

farming. 

Mrs. NOEM. Yes. But it is only going to be tied to tillable acres? 

Mr. SCUSE. I don’t—you have to have a—you will have to have 

a conservation plan for your farm in effect when you sign up to 

give the 1026 Form, which those that do not currently have a 1026 

Form filed with the FSA office will have to do so by the 1st of June 

next year. 

Mrs. NOEM. Okay. So then if a producer is found to be out of 

compliance in 2015, my understanding is that they could not receive the subsidy in 2016 and could not be reinstated till 2017, 

which seems as though even if it is a good faith effort, honest mistake, not someone who knowingly violated the conservation practice laws, is that true? 

Mr. SCUSE. Yes. If you are not in compliance, you cannot receive 

the subsidy. 

Mrs. NOEM. So even if a producer in 2016 went back in good 

faith and fixed that conservation practice, they are still going to be 

ineligible for—— 

Mr. SCUSE. They are going to be—they will be ineligible for 2016. 

Mrs. NOEM. That is a heavy penalty for producers, considering 

the amount of subsidy on crop insurance policies to not be reinstated until 2017. 

Mr. SCUSE. Well, remember, we are asking them to sign up that 

they will be in compliance on June 15. And then they are given a 

period of time to come into compliance. 

Mrs. NOEM. How long is that period of time? 

29 

Mr. SCUSE. They will have until the next—now—I can’t answer 

that right now, because that is going to be in the rule when it is 

ultimately—— 

Mrs. NOEM. Well, if they are—and that is what I would like the 

rule to reflect is that if they are found to be in violation and they 

can show that it is a good faith mistake, that they didn’t knowingly 

violate their conservation practice, if there is a period of time for 

them to fix that and come back and repair what was done without 

losing the subsidy, that is how I would prefer to see it written, because I know producers out there many times are busy. They have 

a lot of acres they are covering. They may knowingly make a 

change—or unknowingly make a change, and to make it whole before they lose that subsidy would be the right thing to do. 

Mr. SCUSE. Again, they are having—they have the ability to 

come into compliance before the 2016 crop year. 

Mrs. NOEM. Yes, let me know what that timeframe is. 

Mr. SCUSE. Okay. 

Mrs. NOEM. How much time they—— 

Mr. SCUSE. They have the ability to come into compliance. That 

is the way the law is written, before the—crop year so that they 

will not lose that subsidy. 

Mrs. NOEM. Okay. Yes—— 

The CHAIRMAN. The gentlelady’s time has expired. Mr. Gibson, 

your 5 minutes? 

Mr. GIBSON. Thanks, Mr. Chairman. And I thank you and the 

Ranking Member for your leadership in pulling this together today. 

And, Mr. Under Secretary, thank you. This has been an informative hearing, and I appreciate your leadership and the work of the 

great Department. 

I just have a few points. I just want to follow-up on a few things. 

The first thing with regard to what Mr. Peterson was talking about 

earlier, I share the concern that we get the widest dissemination 

about the margin insurance program. I am doing my part on that 

doing a series of events to get the word out. I am encouraged to 

hear you are considering a letter that would go out to dairy farmers. And should you decide to do that, I would love to get a copy 

of it. Maybe we can get it to the Cornell Cooperative Extension and 

the Farm Bureau. I can use it, going forward, in radio engagements 

and the like. I think that is something we can do together, continue 

to get the word out on that. 

Likewise, on risk management—and I appreciated your colloquy 

with my colleague, Mr. Maloney, and that part of the intent of 

when we drew up some of the language was to bring in closer the 

Department with our farmers to collaborate, to take their input as 

you work together with the RMA to come up with new products. 

And I am just curious, have you come forward with any processes 

that would get the input of farmers for these new products? 

Mr. SCUSE. Well, the way that this works, I travel a great deal 

around the country to meet with different producers, as does the 

Administrator. As I pointed out earlier, Administrator Willis is in 

South Carolina and Georgia this week. And we get feedback from 

producers on what products they would like to see us develop. 

Some of the products that have been developed in the past have 

come from the agricultural community, because that is what they 

30 

have asked us for. We have been asked, for a period of years, for 

a peanut program and one for rice as well. And these are some of 

the things that we have taken very seriously and looked at. So a 

lot of the times, it comes from our visits out in the countryside 

talking with the producers and what they would like to see. A good 

example would be several years ago, sweet potatoes in Louisiana, 

the producers came. There was an opportunity there to have a facility built, but the farmers weren’t willing to grow the sweet potatoes unless there was a revenue product or a crop insurance product out there for them. So we worked with them and developed 

that and helped build an entire industry down there. So that is a 

good example of how the system works that when they come to us 

with their concerns or with a product that they would like to have 

developed, we take it seriously and take a look at it in-house and 

then see if there is a private submitter that is interested. 

Mr. GIBSON. Well, thank you. And on behalf of my colleague, we 

would invite you to the Hudson River Valley. We have had the Secretary before as well. So our staff will be reaching out. We would 

love to have an event where you get to hear firsthand, from especially our crop growers, as you pull together these products. So we 

will be reaching out to your staff on that. And thank you for your 

willingness to move all about the country on this. It is very important. 

Last—similarly, the young farmers program—Sergeant Major 

Walz and I worked together on that. And I have one of the leaders 

in the Younger Farmer’s Coalition right in our district, Lindsey 

Shute. And I am curious how the expansion we put in there for this 

farm bill, how that is coming along, and would likewise offer that 

if I could be of assistance linking you up with some of the leadership in the Young Farmer’s Coalition as you roll out implementation, I would be honored to do it. 

Mr. SCUSE. Those benefits for the young and beginning farmer 

programs will start in 2015. I think those were really outstanding 

provisions. As you know, the average age of the American farmer 

continues to get older. I finally surpassed it. But it does continue 

to increase in age. We need to do everything that we can to get 

that next generation involved in farming. The Department has 

worked—it is something that is near and dear to Secretary Vilsack 

and Deputy Secretary Harden’s heart. They have worked very, very 

hard on some of these programs. And so we take it quite seriously. 

And we think that these were great additions to the farm bill to 

help those young producers get started in farming. I think with 

the—not just the provisions that pertain to them in the farm bill, 

but the provisions in general in the farm bill that is the safety net 

that they so desperately need, I think that is a help. And then if 

you look at the current prices for livestock and some of the grains, 

good prices help entice the next generation. I think a combination 

of things, we are looking better. 

Mr. GIBSON. Well, thanks, Mr. Under Secretary, and look forward to working with you. With that, I yield back. 

The CHAIRMAN. The gentleman’s time has expired. Mr. Rogers, 

for 5 minutes? 

Mr. ROGERS. Thank you, Mr. Chairman. I just had a comment. 

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31 

gress. It gets increasingly difficult each cycle. It is very complex politically. And I recognize for you it is going to be very complex undertaking to implement. But I would remind you that there is a 

whole universe of producers out there that are excited but also anxious about how you are going to choose to implement it. One of the 

evidences of that came with Kristi Noem’s question about this time 

period. So I would urge you that as you walk along on this that 

you stay in touch with this Committee about Congressional intent. 

If you do get to an implementation component that you have questions about, I can assure you that I will meet with you at any time. 

And I am sure the other Members of this Committee would explain 

why a provision was inserted, because I can tell you it wasn’t easy 

for us to explain why we put an extra $100 million in for implementation. So be good with it. And be sure and stay in touch with 

us. 

And that is all I have, Mr. Chairman. 

The CHAIRMAN. Thank you. The gentleman yields back. We have 

time for a second round of questions. I think Mr. LaMalfa has another question and I have a couple more to ask. 

Michael, again, I appreciate you being here today. Thank you. 

Given that we have begun to blend title I and crop insurance and 

the decision making tools that have been referenced that are about 

to be released, and that your FSA folks are excited about and so 

are the producers, can you give us the assurance that RMA and 

FSA are working together to make sure those decision tools are appropriate with that blend between the two programs? Let us say 

you have one that does PLC and the other one does—— 

Mr. SCUSE. I can assure you that they are working closely together. Both of those—the Farm Service Agency and Risk Management Agency, they both are under me. And if I thought for 1 

minute that they weren’t working together in getting this done, 

they would know how I feel about it real quick. Let us put it that 

way. 

The CHAIRMAN. It is good to hear that. Thank you. And then following up on conservation compliance: If a producer is in compliance today, as we understand compliance, will they be in compliance, going forward? I mean, are you going to be moving the goal 

post on them? 

Mr. SCUSE. No. No, we are not going to move the goal post. If 

they are in compliance today, they are in compliance for next—for 

the next crop—unless they do something—— 

The CHAIRMAN. Right, right, right. 

Mr. SCUSE.—subject to some change. If they don’t do anything—— 

The CHAIRMAN. Yes, subject to some change. 

Mr. SCUSE. But if there is no change to their operation—if they 

are in compliance today—— 

The CHAIRMAN. If they are in compliance and they don’t do any 

change to get out of compliance, they are good to go? 

Mr. SCUSE. No—yes. 

The CHAIRMAN. Okay. Thank you. Mr. Scott? 

Mr. DAVID SCOTT of Georgia. Thank you very much, Mr. Chairman. Thank you, Under Secretary. 

32 

Let me ask you, because there are two safety net issues—risk 

areas to the future farming, and threats. One we touched upon. 

And that is you touched upon a little bit earlier. And that is the 

age of the average farmer is now right at 60 years of age. Each 

year, it continues to escalate. And I am wondering if the Department—the Agriculture Department is really looking at this in a 

way in which to truly address this issue. And I know the waiving 

of $300 for the administrative fee—I mean, that is sort of like a 

little—not even a drop in the bucket. And I know you are doing 

some other things. But why not take a look at the farm bill, and 

how creative have you all been, in looking at how we can really put 

some incentives in here to really, truly help beginning farmers? We 

have land-grant universities, and most of which are in Farm Belt 

states. Florida, you have University of Florida, and you have Florida A&M University. Alabama, you have University of Alabama, 

Alabama A&M. Georgia, you have the University of Georgia, you 

have Fort Valley State, 1890s, 1862s institutions. We put millions 

of dollars in the farm bill for these. But we do not allow any of that 

money to be used for scholarships for those who would study Agriculture. Incentives for loan forgiveness for those students who will 

go into agriculture. I think that would be a very, very important 

step that we could take forward. Would the Agriculture Department be interested in taking a look at this, and it only would require some language change in the farm bill that would just simply 

say in addition to research, in addition to the other things that we 

put in there for these, that some of this money could be used to 

give kids scholarships to go into agriculture and farming, or pay 

their loans? 

Mr. SCUSE. The Department continually looks at ways to get new 

people involved in agriculture, whether it be a young producer or 

someone that is coming out of another occupation, or our veterans. 

As I pointed out earlier, this is something that the Secretary and 

the Deputy both take very, very seriously and push very, very hard 

for us to look at in the Department. We are open, Congressman, 

to any suggestions. 

Mr. DAVID SCOTT of Georgia. Okay. Great. 

Mr. SCUSE. If you look at our microloan program and the success 

of that program that the Department created, and the farm bill increased the funding for that microloan program, that has helped a 

lot of people get involved in agriculture. But we are open to suggestions and any help that this body can give us. 

Mr. DAVID SCOTT of Georgia. Well, that is one we are percolating 

on, and we will be working with you on that. Another is that some 

of the groups outside of Congress, like Farm Credit for example, 

and AgSouth we call it down in our part of the country, have an 

excellent program that they are moving with with getting beginning farmers. I was wondering if you all at the Agriculture Department were familiar with what Farm Credit was doing and how you 

might be able to work with them? 

Mr. SCUSE. I think if you look at our loan program at the Department, there is a very high percentage of our loans that are targeted 

for young, beginning and socially disadvantaged producers out 

there. But, again, we are open to suggestions. Any way that we can 

33 

get that next generation or someone new involved, we are looking 

for suggestions and help. 

Mr. DAVID SCOTT of Georgia. Yes. I would encourage you to look 

at the Farm Credit. Now, the other area to mention, if I may, that 

we really have to seriously address, and that is workers for these 

farms and for our producers. I hear it all the time, they can’t find 

workers to pick the blueberries. They are on the ground. They can’t 

find workers to get the peach crop, pecans, so forth. Has the Department taken a strategy of being able to separate this issue and 

focus on the dire consequences that face this country and the future of agriculture and getting food into Publix and into Kroger for 

our American people, if we don’t have workers, if we don’t address 

this? I mean, there is a cry out there from wherever we hear it 

throughout the country from our farmers, we need to address this 

problem. If it is guesswork or whatever it is. And I was wondering 

if the Agriculture Department is developing a strategy in which 

they could deal with this in a way away from this—deal with it as 

a basic labor and economic issue facing the future of farming? 

Mr. SCUSE. The labor issue is, as you pointed out, of great concern almost in every state. I think the Secretary, on numerous occasions, as have I when we have had the opportunity, have said 

that we desperately need for the sake of agriculture, meaningful 

immigration reform. Agriculture needs a workforce and a workforce 

that we know will be there, one that we can depend on. I personally have visited farms that had crops rot because we could not get 

a workforce to harvest those crops. If you look at our processing 

plants, if you look at our dairy operations, if you look at our fruit 

and vegetable operations, all of these are very dependent on a 

workforce. So we have spoken repeatedly on the need for meaningful reforms so that the agricultural community will in fact have 

that workforce available to them. 

Mr. DAVID SCOTT of Georgia. Thank you, Mr. Under Secretary. 

Thank you, Mr. Chairman. 

The CHAIRMAN. The gentlemen’s time has expired. Mr. LaMalfa, 

5 minutes? 

Mr. LAMALFA. Thank you, Mr. Chairman. I will try to move 

quickly here. There is a lot to cover. 

We were talking earlier about the moving around of resources 

and personnel within USDA to address the backlog—on the livestock, forage program backlog portion. In California, we face 

droughts. Some areas are having trouble getting grazing permits, 

as they had been in the past with sage grouse going on, even wild 

horses. And so especially northeast California faced some really 

acute problems with grazing there. So can you address this—have 

you had the opportunity to push the resources up into that portion 

of the state with the acute problem there is there? 

Mr. SCUSE. I am not aware of where we have moved our resources in the State of California. But we could get the information. I can get in touch with our State Executive Director, and we 

can provide you with that information on what we have done and 

what the issues are in that part of the state. 

[The information referred to is located on p. 43.] 

Mr. LAMALFA. All right. I appreciate being able to work with you 

on that. On the—with the Act in 2014—the Agricultural Act, we 

34 

have more important key roles for the FSA and RMA they are 

going to be taking on. And so in implementing the new law, we are 

wondering are they going to be able to speak the same language? 

Because you are going to have growers that are going to have types 

of crops that are in the category of each of those organizations. And 

so are they going to be able to coordinate and work well together? 

Do you see any roadblocks or any hurdles that— 

Mr. SCUSE. Congressman, I don’t see any issues with us working 

together through the Farm Service Agency and Risk Management 

Agency. Both organizations know that we are there for the same 

purpose, and that is to serve our producers to the very best of our 

ability. So we will continue to look for ways to work together. I 

think right now, there are agencies along with NRCS. I think everyone right now is working together more closely than we have at 

any other time. I know Chief Weller has been great for us to work 

with at NRCS. We understand the importance of all of us getting 

together, especially because of this farm bill—— 

Mr. LAMALFA. Well, being able to share data and things like that 

should be—— 

Mr. SCUSE. Yes. And so we understand the importance of working together, sharing the data, sharing the information and trying 

to get things done for our producers. 

Mr. LAMALFA. Good. Thank you. Finally, on specialty crops here, 

we have, in California, Mr. Gibson was talking about how important they are up in his state. And it is really huge in California, 

as you know, that the changes involved in the Whole Farm Insurance Program, and that overlaid on top of the catastrophic coverage, we are understanding the requirements there might be that 

they are going to have to have duplicate coverage for the same proportion of the crop—the amount of crop. I don’t think that would 

really be the intended consequence, but it would make it very, very 

difficult for specialty crop growers to be able to be in both and participate in both, because it is not going to pencil out for them. So 

we don’t think that was the intention in the farm bill, but we are 

getting feedback that that might be the direction the USDA is trying to take this. What can you say on that? 

Mr. SCUSE. We will take a look at it. 

[The information referred to is located on p. 44.] 

Mr. LAMALFA. Okay. Because the overlap just blows up the program for the ability of the farmers to be in—the specialty crop 

growers to be in the catastrophic program as well as overlapping 

with the other aspects of the two. So anyway, I appreciate the time, 

Mr. Chairman. Thank you. And I thank you for appearing with us 

today. 

Mr. SCUSE. Thank you. 

The CHAIRMAN. The gentleman yields back. Mrs. Bustos, for 5 

minutes? 

Mrs. BUSTOS. Thank you, Mr. Chairman. Mr. Scuse, thank you 

for your work on behalf of the American farmer, and especially as 

it pertains to crop insurance. When I go around and talk to our 

farmers, it is the issue I hear more about than anything. So thank 

you for your hard work on that. 

As you know, there are as many parts of the country where farmers and many of us have to worry about either too much water or 

35 

not enough. And when you have a district like mine where your entire western border is the Mississippi River, and then you have the 

Illinois running through—the Illinois River running through the 

southern part, it is—we have had a lot of water, and we have had 

a lot of rain lately, as you may know. What I am wondering about 

is producers are dealing with the crop insurance prevented planting rules, and can you walk me through how this policy works for 

crop insurance? 

Mr. SCUSE. Sure. I can give you the basics. Preventive planting, 

if a producer does not plant the crop and does not harvest, then 

they will get 60 percent of their premium. 

Mrs. BUSTOS. Okay. 

Mr. SCUSE. If in fact they end up planting a second crop later 

on in the year, they will receive 35 percent of the premium. Their 

yield, that will not be held against them because they—in the first 

scenario, if they didn’t plant it and didn’t harvest it, the zero yield 

would not be held against them. That is the basic. 

Mrs. BUSTOS. Okay. So how is prevented planting treated for Actual Production History? 

Mr. SCUSE. The zero will not count. 

Mrs. BUSTOS. Okay. Okay. All right. Good. That is all I need. 

Mr. SCUSE. Okay. 

Mrs. BUSTOS. Thank you, sir. 

The CHAIRMAN. The gentlelady yields back? 

Mrs. BUSTOS. Yes, I do. Thank you. 

The CHAIRMAN. Okay. The gentlelady yields back. 

Before we adjourn, I would like to invite the Ranking Member, 

Mr. Scott, for any closing remarks he has. David? 

Mr. DAVID SCOTT of Georgia. Thank you, Mr. Chairman. And 

thank you, Mr. Under Secretary. You have given an excellent presentation, very informative, very straight forward. As you have 

noted, we have a number of challenges. And we really, really appreciate you looking very, very closely at the Georgia/South Carolina situation regarding peaches and the adjustable downward 

trend methodology. They hope you will correct that. And we look 

forward to working with you with my office on that particular 

issue, as well as moving forward on the peanut issue as well. 

Thank you very much for being with us. 

The CHAIRMAN. The gentleman yields back. 

Mr. Scuse, I too want to thank you for your appearance today. 

You have made reference to the best workforce, particularly at the 

county level, in the government, and I would not disagree with 

that. You have great folks. And please express to them our appreciation for the hard work they are doing. A lot of them will work 

a lot of extra hours over the next several months, making sure the 

producers that they live next door to are taken care of. It is a labor 

of love. I want to thank them in advance for all they will do. Thank 

you to your team and everything that you are working on. I know 

they are working really hard at it. 

I would like to just reiterate one more time how important the 

Actual Production History Adjustment is and making that work. 

The intensity of your answer a while ago on making sure that RMA 

and FSA work together on the decision tools, and that there are no 

conflicts, I would hope you bring that same kind of intensity to takVerDate Mar 15 2010 14:29 Dec 18, 2014 Jkt 041481 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 I:\DOCS\113-17\88810.TXT BRIAN
36 

ing a hard look at whatever the barriers might be with respect to 

making the Actual Production History Adjustment available to producers, particularly in those areas of our country that have been 

really hard hit. I don’t know it has to be an all-or-nothing kind of 

circumstance. I would appreciate you continuing to push. If you 

have the authority to contract out some of that kind of thing, if 

that needs to get done. It is important to us, I appreciate your efforts so far. 

Most of what we have said, we have talked about the things that 

were of concern, going forward. Again, please don’t let that taint 

the hard work you have already done, and the recognition for what 

your team has put in place. My producers are just normally anxious at the beginning of every farm bill. This isn’t their first rodeo. 

They have seen it before. Your FSA folks and RMA folks have seen 

it as well. So we will get through these transition periods, and 

quickly, hopefully. And with as little impact—negative impact as 

we can. We know that is your goal. We are on the same side. We 

just wanted to make sure that we are doing our job to make sure 

that the resources available to you, that have been made available 

to you, are properly structured. So again, thank you very much for 

being here. 

Under the rules of the Committee, the record of today’s hearing 

will remain open for 10 calendar days to receive additional material and supplemental written responses from the witness. You 

have mentioned several times you will get us written responses to 

some things posed by the Members at this hearing. 

The Subcommittee on General Farm Commodities and Risk Management is adjourned. 

[Whereupon, at 11:12 a.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

37 

SUPPLEMENTARY INFORMATION SUBMITTED BY HON. MICHAEL T. SCUSE, UNDER SEC- RETARY, FARM AND FOREIGN AGRICULTURAL SERVICES, U.S. DEPARTMENT OF AGRI- CULTURE

Insert 1 

The CHAIRMAN. . . . 

Mr. SCUSE. . Talking about the APH Adjustment, we have had a lot of back and forth with 

your staff. I need some help understanding why this is going to be so difficult, 

why you say you can’t we get it done in 2015. We had an intern last week pull 

down 20 years’ worth of NASS data for 54 counties in Texas on wheat. It covered about 75 percent of the wheat crop. They did the calculations. They figured 

out which years could be kicked out under the APH Adjustment. So, if we were 

able to do that with the resources we had, why can’t RMA, with the new resources they have, and the broader access to data that they have, can’t get at 

least a partial roll out of the APH quicker than the 2016 crop year? 

Mr. SCUSE. Mr. Chairman, I appreciate the concern about getting the APH 

done as soon as we possibly can. And we very much would like to do that. 

If you look at everything that RMA is going to be rolling out for 2015, and 

the resources that it takes for the Risk Management Agency to roll out those 

programs for 2015, it is no small task just on those. One of the reasons why 

the Risk Management Agency is able to roll out this many programs for 2015, 

Risk Management Agency looked at the bills that had been passed by the House 

and Senate previous to the bill that was ultimately passed by both and signed 

by the President. We anticipated these programs, so we started to work on 

these programs long before the final bill was passed and signed into law. 

The APH was not in any of those previous forms of legislation. And it was 

a last minute addition to the final farm bill, and one that we did not anticipate 

having to implement. Having said that, it is not just about going back and getting 20 years of data for every single county, but it is 20 years of data for every 

single county for every single crop that is grown in that county. And on top of 

that, we also have to work with our approved insurance providers, the 18 companies out there that are responsible for writing the crop insurance. It is no 

small effort to do the IT programs for all the commodities that are grown in 

all of the counties in the entire United States. 

So what I am going to offer up, Mr. Chairman, to the Committee, if you will, 

I will offer up a detailed written explanation of the issues that we are facing 

in trying to implement APH. 

APH Adjustment Issue 

Question. Why isn’t the APH provision being implemented sooner? 

• One reason RMA was able to implement so much of the farm bill so quickly 

was that they began preliminary work before the farm bill passed on many of 

the changes that were consistent between the two bills. For example, the House 

and Senate each had similar language for SCO and STAX. 

• I appreciate that the APH adjustment is important to producers who have suffered multiple years of widespread drought. However, this was one of the very 

few provisions, as ultimately written, in the Crop Insurance Title that wasn’t 

in either the House or Senate passed version of the farm bill. This provision 

was significantly revised during Conference. 

Question. Why this cannot be completed for 2015? 

• Determining what counties qualify 

» There is a significant amount of administrative work involved in not only determining which counties will qualify, but also which historical years will 

qualify for the yield exclusion. For example, to identify whether crop year 

2012 qualifies for exclusion for irrigated corn in 2012, yield data must be compared to crop years 2001–2011, 2011 must be compared to 2000–2010 and so 

forth, spanning numerous years of past history for which the data is not consistently available for all crops by practice and location. At a minimum, to 

assess qualifying years back to 2001 requires consistently reported yield data 

from 1991 to present. This must also be done at the irrigated and non-irrigated practice basis. 

» RMA must establish procedures for how to address sporadic and limited yield 

histories outside of the primary growing regions to determine qualifying 

years. This will require decisions regarding imputation, substitution or other 

38 

legal alternatives of missing years and data for counties in order to make the 

option widely available. 

➢ For example, the National Agricultural Statistics Service (NASS) did not 

publish crop level wheat estimates for Roger Mills County, Oklahoma in 

2008 or 2013. In addition, practice specific (irrigated vs. non-irrigated) estimates have not been reported since 2007. 

➢ RMA is establishing a framework to address these situations with the implementation of STAX. RMA intends to use lessons learned from STAX in 

the implementation of Section 11009 (as well as further refinement and expansion of SCO in 2016 to more effectively align the coverage with practice 

(i.e., irrigated vs. non-irrigated). 

➢ While the data compiled for SCO could be utilized for Section 11009, this 

data is largely at the county level and does not reflect or differentiate between irrigated and non-irrigated acreage. RMA intends to utilize crop insurance data for SCO beginning with 2016 that allows for more offers at 

the practice specific level, at which time APH yield exclusions can also be 

appropriately aligned. 

• IT Issues 

» This complexity also carries over to the IT systems and with the effort involved in SCO and STAX there simply isn’t the manpower to get this up and 

running this year. Adjustments to APH requires substantial programming 

modifications for RMA’s business support systems to accept the APH yield exclusions submitted by insurance providers. RMA has an obligation to consider 

program integrity and considerations of improper payments with the Improper Payments Elimination and Recovery Act of 2012. RMA verifies the calculation of approved yields in these cases, and validates the year(s) qualifying 

for the exclusion. 

➢ RMA’s Actuarial Filing System (an RMA Mission Essential Function) has 

to develop an entirely new actuarial processing standard to detail to AIPs 

and producers which years are eligible for exclusion appropriately for each 

crop and county. RMA’s Policy Acceptance Storage System (PASS) Yield 

and Yield History processing records have to be modified to validate proper 

eligibility for which years can and can’t be substituted. This all requires 

substantial time to reprogram systems. 

➢ Other considerations that must be addressed for the yield exclusions include validation and edit checks to recognize the excluded years, and including other new farm bill changes like the 80 percent T-Yield plugs for 

beginning farmer and rancher, conservation compliance, enterprise units by 

practice, coverage levels by practice, as well as changes in subsidy for beginning farmer and rancher along with crop insurance on native sod that 

will have indirect impacts stemming from this significant farm bill change. 

RMA, AIP, and Agent automation tools that include quoting software 

changes must be made to accommodate all the various choices of yield exclusions and substitutions impacting the overall guarantee and policy premium so producers can make informed buying decisions. 

• In addition, this section requires substantial data analysis and actuarial review/ 

rating adjustments to ensure actuarial soundness and maintain program integrity. By law, RMA must assess actuarial soundness of existing premium rating 

methodology in light of this provision and make appropriate adjustments, if necessary. To the extent that yield exclusions increase coverage, expected indemnities are also likely to increase requiring RMA to calculate the amount of premium increase that may be needed to cover anticipated losses. In addition, if 

the premium rate changes needed are outside what the current methodology 

produces, then an alternative mechanism will be needed for assessing appropriate premium rate charges. The actuarial analysis considerations span roughly 39,000 county crop programs, or half the Federal crop insurance program. 

Insert 2 

Mr. PETERSON. So from what I understand, you are kind of holding things up 

until you figure out the answers on the base and the new producers and so 

forth? You want to have everything done before you roll this out? Is that what 

I understand? 

Mr. SCUSE. Yes. We would like to have it completed before we roll everything 

out, and answer as many of the questions as we possibly can to eliminate any 

of the confusion that may exist if we roll it out piecemeal. 

39 

Mr. PETERSON. Well, I just don’t agree that there is going to be confusion, because the decision that people are going to make is not going to be, in most 

cases, based on what their base is. That is going to be pretty obvious: 2011, 

2012 or 2013 is going to be pretty obvious what is going to be the best situation. 

Very few people are going to be affected by the new producer stuff and having 

sold the dairy and so forth. So you are holding up the whole situation over 

things that are not central to making this decision. The problem I am picking 

up out there, people have no idea that this even exists. Why couldn’t the FSA 

office, or somebody, send a letter to these dairy farmers saying that there is a 

margin insurance program coming, these are the rates that are in the statute, 

we are going to be finalizing the base issues and so forth later on. Just so they 

understand this is coming, because I am really worried that—— 

Mr. SCUSE. Congressman, I will take that under consideration. I will go back 

and look at it and see if we can do something about getting notification out to 

the dairy producers, just notifying them that this is coming, and the timeframes. 

Mr. PETERSON. Yes. 

Mr. SCUSE. So I will go back and take a look at it, Congressman. 

USDA Farm Service Agency will be sending guidance to state offices, including 

a draft form letter to producers, that can be sent out in advance of the implementation of the program to ensure producers are aware of the program and options available to them. 

Insert 3 

Mr. DAVID SCOTT of Georgia. Thank you, Mr. Chairman. 

Under Secretary, let us go immediately to the point I brought up concerning 

the treatment of the downward adjustment trend to Georgia and South Carolina peach producers. First of all, we need to correct that. It is very punitive. 

It is not fair. It is costing. And it is not a level playing field. Can we get your 

commitment to address this issue for the satisfaction of the peach farmers in 

Georgia and South Carolina? 

Mr. SCUSE. I will do even better than that. We have the Administrator for 

the Risk Management Agency in South Carolina today who will be leaving 

South Carolina and going to Georgia. We are looking at this issue as we speak, 

and we are taking it very seriously. And we are looking for a solution. 

Mr. DAVID SCOTT of Georgia. And what would that solution be? What would 

be a part of that solution? And will a part of that solution take into consideration that extraordinary freeze in March that affected Georgia and South Carolina to the tune and the losses of millions of dollars? Will that be taken into 

consideration as well, as you attend to this issue? 

Mr. SCUSE. It is—it would be premature for me to speculate on what the solution might be. I haven’t—again, the Administrator is down there today and the 

rest of this week talking with the producers, and talking with the staff. So it 

would be premature for me to speculate at this time what the solution ultimately will be. But we do take this very seriously. 

Mr. DAVID SCOTT of Georgia. Well, would a part of that solution be to give 

Georgia and South Carolina the same waivers and consideration that you give 

the other peach growers from Maine to North Carolina? 

Mr. SCUSE. That is one of the options we are looking at. 

Mr. DAVID SCOTT of Georgia. Good. And would you please work with my office, and the people in Georgia and South Carolina, to give us updates on this? 

Mr. SCUSE. Sure. And, again, when the Administrator returns to Washington, 

as we make progress in this, we will be more than glad to keep your office posted. 

USDA Risk Management Agency continues to work on this issue and will schedule a follow-up phone call with Rep. Scott’s staff to summarize the resolution for 

the peach growers in this region. 

Insert 4 

Mr. DAVID SCOTT of Georgia. Okay. I just want you to know I am very concerned about that. I would like to work with you and follow-up on that to make 

sure we correct that to the satisfaction of everyone. Our farmers are faced with 

tremendously devastating issues right now. It is almost so difficult for them to 

actually farm for the amount of other things that they have to deal with. Now, 

let me go to the other issue I raised about this reserve assurance fund for peanuts. Can you tell us about that? And I do recall that we put money in there 

40 

in this fund. I would like to know how much money did that finally come to, 

how will that be utilized? 

Mr. SCUSE. Congressman, I will be perfectly honest with you. I am not aware 

of any money that was put in a fund. I do know that there was a requirement 

for us to come up with a peanut insurance policy. It is one that we have been 

working on now for quite some years. I know it is of great concern for the producers in your state. We continue to work on a peanut revenue policy. I think 

the requirement is for us to have one rolled out by 2015. That will depend on 

a couple different factors, whether we have a—someone do a private submission, or if we have to go out and develop it through the Risk Management Agency. So it is something that we take very seriously, and we are looking into. 

Mr. DAVID SCOTT of Georgia. Okay. And, again, you will keep me appraised 

of that? 

Mr. SCUSE. Yes, sir. 

USDA Risk Management Agency continues to work on this issue and will schedule a follow-up phone call with Rep. Scott’s staff to summarize the status of the peanut revenue policy. 

Insert 5 

Mr. NEUGEBAUER. The statute says—or the law—the bill said the corporation 

shall make available separate enterprise units for irrigated and non-irrigated 

acreage. The current interpretation that your agency has is that if you elect 

one, you have to elect the enterprise for the other. I do not think that was the 

original intent. We may try to get the lawyers to take another look at that. But 

what I would like to hear from you is if in fact we have an unintended consequence there that which caused that interpretation, I would love to hear that 

you would help support some efforts to clarify that. 

Mr. SCUSE. Well, yes, most definitely we will look at getting some additional 

clarification on the issue. But I do want to point out that under that program 

previously—under enterprise units, if you had one farm in a county, or five 

farms, you had to enroll every farm in the enterprise units. Every farm within 

that county that you were tilling had to be part of that enterprise unit. If you 

look at how the program has been previously run, and then the legislation now 

to give you the ability to separate irrigated and non-irrigated, I think that is 

still keeping with how the original law was intended. And, again, I am not an 

attorney. I think that was part of what we were looking at when that decision 

was made. 

Question: Why has the Risk Management Agency (RMA) written the new regulations regarding enterprise units for irrigated and non-irrigated acreage to require 

an insured producer to qualify independently for each practice in order to be eligible 

as opposed to allowing Enterprise units on one practice coupled with non-enterprise 

units on the other practice? 

Response: Section 11007 states that ‘‘the Corporation shall make available separate enterprise units for irrigated and non-irrigated acreage of crops in counties.’’ 

We believe that this section simply allows an existing enterprise unit, as currently 

defined in the crop insurance policy, to be divided into two enterprise units, one for 

irrigated and one for non-irrigated acreage. Since nothing in the section otherwise 

modifies the existing definition of an enterprise unit, each of these units must still 

qualify as enterprise units as defined in the policy. This definition requires an enterprise unit to include all the acreage of the crop in the county, and such acreage 

must be located in two or more sections, section equivalents, FSA farm serial numbers, or units established by written agreement. In addition, two or more of the sections, section equivalents, FSA farm serial numbers, or units established by written 

agreement must each have planted acreage that constitutes at least the lesser of 

20 acres or 20 percent of the insured crop acreage in the enterprise unit. Section 

11007 does not provide RMA authority to define an enterprise unit differently for 

different purposes. This means that acreage not meeting all the requirements for 

an enterprise unit cannot qualify as enterprise units. 

This is consistent with the premise of enterprise unit construction stemming from 

the 2008 Farm Bill, and follows current rules for an enterprise unit (EU) which requires all the acreage within a county to be in one EU. The new policy provision 

published in the Interim Rule follows similar rules, and allows for one EU to be subdivided into two EU’s, one for all the irrigated acreage in the county and one for 

all the non-irrigated acreage in the county. 

If a producer does not qualify for separate irrigated and non-irrigated EUs, there 

are two options based on the timing of the discovery: (1) If the discovery is made 

on or before the acreage reporting date (ARD) the insured may have one EU, if they 

41 

qualify, which is the same as current rules. Or they will have basic (BU) or optional 

(OU) units depending on which unit structure the insured has reported on the acreage report; and (2) If the discovery is made after ARD, the policy allows the insured 

to have one EU if they meet the qualifications, or a BU will be assigned. In addition, allowing EU for one practice and another unit structure for the other practice 

complicates program administration and premium subsidy determinations. 

Meeting the enterprise unit requirements specified above is critical in justifying, 

on an actuarially soundness basis, the current enterprise unit discount. For example, to qualify as an enterprise unit, the producer must have acreage planted in 

least two sections, with a minimum of 20 acres (or 20 percent of all acres) of the 

unit in each section. This is because the enterprise unit discount, and the higher 

premium subsidy that goes with it, is based on the risk-reducing effects of spreading 

production over a wider area. For example, if you currently have a 500 acre EU 

made up of both irrigated and non-irrigated acreage, and you decide to have separate EUs by irrigated and non-irrigated practice, the smaller premium discount associated with 250 acres will apply to EU by practice instead of the larger premium 

discount associated with what would have been the 500 acre EU. 

The larger the enterprise unit, the lesser the risk and the greater the enterprise 

unit discount. To the extent smaller tracts of land may be considered as enterprise 

units, the average size of the discount diminishes and the premium subsidy will be 

commensurately reduced. 

Subdividing EU’s by practice has implications for the EU subsidy. The 2008 Farm 

Bill directed RMA to set the EU subsidy rates such that a grower would get about 

the same number of subsidy dollars per acre as if he or she had selected optional 

or basic units. For example, if EU’s are around 30 percent cheaper (due to lower 

risk), then the EU subsidy rate would need to be 30 percent greater to keep the 

number of subsidy dollars the same with optional/basic units. 

The reduction in risk for EU’s is due to their size and geographical spread. On 

average, the bigger the EU, the more that risk is diversified away, and the bigger 

the discount. 

The 2014 Farm Bill now allows for EU to be subdivided, which undermines the 

risk reducing effects of combining land together, and reduces the EU discounts. The 

smaller discounts require decreased subsidy rates to equalize the subsidy dollars between EU’s and optional/basic units 

The more that EU’s start to resemble optional/basic units, the more that the EU 

subsidy rates will resemble those for optional/basic units. 

The enterprise unit qualification standards are intended to ensure that only those 

producers whose risks have truly been reduced receive the additional benefit of the 

enterprise unit discount and increased subsidy. For example: Allowing a producer 

to choose EU on irrigated acreage and optional units on non-irrigated acreage because the non-irrigated acreage is in locations more susceptible to early season 

flooding, and other acreage more prone to later season drought and hail, would not 

necessarily be reducing their risk, but adversely selecting against the program while 

taking advantage of increased subsidy on the least risky acreage. 

Insert 6 

Mr. MALONEY. . . . In particular, I am interested in the whole farm revenue 

insurance program. The Secretary recently announced he thought those programs would be available for the 2015 crop year. I was just hoping you could 

expand on that and give us a little update on that timeframe and whether you 

are comfortable with that? 

Mr. SCUSE. The whole farm revenue will be available in a pilot in 2015 for 

the areas where we had AGR and AGR-Lite. And so it will be available to those 

producers where we had those programs the last few years in a pilot, and then 

it will be expanded in 2016. 

Mr. MALONEY. Well, and you anticipated my next question, which is how will 

the program, if you can tell us, differ from this existing AGR and AGR-Lite programs? 

Mr. SCUSE. I would have to provide that to you in writing what the differences are. There are some differences between how the programs are going 

to be functioning. But we will provide you those differences in writing. 

USDA’s Risk Management Agency shared information highlighting the key differences between Whole Farm and AGR/AGR-Lite with Rep. Maloney’s staff the 

week of July 14. A summary is below and a table is attached with more details. 

• Whole-Farm Revenue Protection covers 50 to 85 percent of revenue. AGR/AGRLite previously covered 65–80 percent. The change reflects diversified farmers 

42 

who wanted to be able to insure lower levels and farmers that were not as diversified that wanted to be able to purchase higher levels of coverage. 

• The Whole-Farm Revenue Protection product does not have ‘payment rates’ that 

were present in the AGR/AGR-Lite programs (75% and 90%) so once the loss 

threshold is met, 100 percent of the loss is paid. 

• Sales closing dates for Whole-Farm Revenue Protection will be the spring sales 

closing dates applicable for the county, or January 31, February 28, and March 

15. Previously AGR had a sales closing date of January 31 in all areas and 

AGR-Lite allowed new insured’s to purchase their policy on March 15 but returning insured’s had to purchase by January 31. 

• Liability limits—Whole-Farm Revenue Protection has an $8.5 million liability 

limit compared to the AGR limit of $6.5 million and the AGR-Lite limit of $1 

million. Eligibility also requires no more than 35 percent or $1 million of expected revenue to come from animals and animal products. AGR previously had 

a 35 percent limitation for animals and animal products to a maximum of 35 

percent or $1 million and there was not a limit for AGR-Lite. Whole-Farm Revenue Protection also has an eligibility requirement of no more than 35 percent 

or $1 million of expected revenue from greenhouse/nursery and neither AGR/ 

AGR-Lite had this limit. 

• The Whole Farm Revenue Protection recognizes that farm operations may be 

expanding and that prices change over the years and includes a new calculation 

in the determination of the amount of insured revenue that allows for expanding operations in addition to the indexing procedure that was also available in 

the AGR/AGR-Lite programs. 

• Whole-Farm Revenue Protection has a ‘‘market readiness’’ feature that allows 

the value of washing, trimming, packing, packaging, labeling, and any other 

similar on-farm activity that is the minimum necessary to make the commodity 

market ready to not be deducted from the revenue amount insured. (Not covered under market readiness are activities that change the form of the commodity (such as slicing apples), storage costs, added value (gift baskets/wine, 

etc.), or any off-farm activities.) 

• Replanting coverage—Under Whole-Farm Revenue Protection, producers may 

receive payment for replanting annual crops, when appropriate. This coverage 

was not available under AGR/AGR-Lite. 

• The new Whole-Farm Revenue Protection product requires a Farm Operation 

Report to be filed during the common acreage reporting period of July which 

is a new requirement that was not previously present in AGR/AGR-Lite. 

Whole-Farm Revenue Protection 

What Changed Compared to AGR and AGR-Lite? 

[As of July 30 2014.] 

Comparison AGR-Lite AGR WFRP 

Liability Limit $1 Million $6.5 Million $8.5 Million 

Coverage Level 65, 75, 80* 65, 75, 80* 50–85 in 5% increments 

3 Commodities for 80 and 85% 

One Commodity No Restriction No Restriction Not eligible for WFRP if only one commodity and that commodity has an 

MPCI revenue product available. 

Payment Rate 75, 90 75, 90 None 

Animal or Animal 

Product Limit 

None 35% of Expected Income 35% of expected revenue up to $1 million (Max) 

Nursery and Greenhouse Limit None None 35% of expected revenue up to $1 million (Max) 

Potato Requirement Minimum of 2 Commodities (with calculation) 

Minimum of 2 Commodities (with calculation) 

Minimum of 2 Commodities (with calculation) 

Replant Payments None None Up to 20 percent of expected revenue 

for annual commodity with 20 acres 

or 20 percent of crop needing replant. Not allowed if also insured 

under MPCI with replant provisions. 

Other Federal Crop 

Insurance 

Optional MPCI required if 

50% of expected income from MPCI 

crops and allowed 

otherwise—CAT 

level allowed 

Optional—MPCI allowed—No CAT 

level MPCI allowed. 

43 

Whole-Farm Revenue Protection—Continued 

What Changed Compared to AGR and AGR-Lite? 

[As of July 30 2014.] 

Comparison AGR-Lite AGR WFRP 

Market readiness 

amounts left in insured revenue 

No No Yes 

Expanding operations No No Average allowable historic revenue increased by 10% if approved by AIP, 

to allow for minor farm growth that 

might not trigger indexing. 

Cancellation/Termination 31-Jan 31-Jan Same as sales closing date for county. 

(2/28, 3/15) 

Contract Change 31-Aug 31-Aug 31-Aug 

Sales Closing Date March 15 New 

Jan 31 Carryover 

31-Jan In Actuarial Documents—same as 

dates for spring crops for county: 2/ 

28 and 3/15 depending on county 

Rating Methodology Same as AGR Rates revenue variability of individual 

commodities. 

Same as AGR 

* 3 Commodities. 

Insert 7 

Mrs. NOEM. I appreciate that. Also, I have heard some instances where extreme heat losses are not covered. Again, we have that in South Dakota. Unfortunately, while we are a land of extremes, but once in a while we will lose some 

cattle due to extreme heat and feed lots, especially. Can you speak to why that 

would happen that there would be a denial based in that program? 

Mr. SCUSE. I will have to get back to you on what is and is not covered, because there are some things that are covered under LIP. 

Extreme heat is an eligible cause of loss under LIP. An eligible livestock owner 

on a farm that retains ownership in livestock that are being fattened in a feedlot 

and that die in the feedlot due to an eligible adverse weather event, such as extreme 

heat, will be eligible for compensation under LIP, if all other eligibility conditions 

under the program are met. 

Insert 8 

Mr. LAMALFA. Thank you, Mr. Chairman. I will try to move quickly here. 

There is a lot to cover. 

Mr. LAMALFA. Thank you, Mr. Chairman. I will try to move quickly here. 

There is a lot to cover. 

We were talking earlier about the moving around of resources and personnel 

within USDA to address the backlog—on the livestock, forage program backlog 

portion. In California, we face droughts. Some areas are having trouble getting 

grazing permits, as they had been in the past with sage grouse going on, even 

wild horses. And so especially northeast California faced some really acute problems with grazing there. So can you address this—have you had the opportunity 

to push the resources up into that portion of the state with the acute problem 

there is there? 

Mr. SCUSE. I am not aware of where we have moved our resources in the 

State of California. But we could get the information. I can get in touch with 

our State Executive Director, and we can provide you with that information on 

what we have done and what the issues are in that part of the state. 

USDA sent the attached summary of applications and payments in Rep. LaMalfa’s 

district on July 16, 2014. 

Livestock Programs in CA–1 (LaMalfa) 

[July 21, 2014] 

2013 NAP: 

Butte County—12 producers have grazing coverage; seven have filed an application for payment 

for grazing and seven of those have been paid. 

Total NAP paid as of today ............................................................................................................ $77,096 

Glenn County—46 producers have grazing coverage; 46 have filed an application for payment 

for grazing and 42 of those have been paid. 

Total NAP paid as of today ............................................................................................................ $1,308,617 

44 

Livestock Programs in CA–1 (LaMalfa)—Continued 

[July 21, 2014] 

Lassen/Plumas/Sierra Counties—23 producers have grazing coverage; six have filed an application for payment for grazing and five of those have been paid. 

Total NAP paid as of today ............................................................................................................ $72,727 

Modoc County—33 producers have grazing coverage; zero have filed an application for grazing 

and zero have been paid 

Shasta County—26 producers have grazing coverage; eight have filed an application for payment for grazing and six of those have been paid. 

Total NAP paid as of today ............................................................................................................ $78,401 

Siskiyou County—200 producers have grazing coverage; 13 have filed an application for payment for grazing and 13 of those have been paid. 

Total NAP paid as of today ............................................................................................................ $99,149 

Tehama County—56 producers have grazing coverage; 39 have filed an application for payment 

for grazing and 34 of those have been paid. 

Total NAP paid as of today ............................................................................................................ $740,854 

LFP for 2012, 2013, and 2014: 

Butte—36 payments ............................................................................................................................... $459,165 

Glenn—60 payments .............................................................................................................................. $1,662,696 

Lassen/Plumas/Sierra—58 payments ................................................................................................... $1,899,892 

Modoc—60 payments ............................................................................................................................. $1,584,807 

Shasta—15 payments ............................................................................................................................. $182,646 

Siskiyou—87 payments .......................................................................................................................... $1,127,861 

Tehama—60 payments .......................................................................................................................... $1,418,689 

CA Statewide FLP Totals: 

2012 Applications—558 Payments ........................................................................................................ $2,651,413 

2013 Applications—1,457 Payments ..................................................................................................... $18,100,517 

2014 Applications—1,539 Payments ..................................................................................................... $26,563,694 

Total Applications—3,554 Total payments ....................................................................................... $47,315,694 

Insert 9 

Mr. LAMALFA. Good. Thank you. Finally, on specialty crops here, we have, in 

California, Mr. Gibson was talking about how important they are up in his 

state. And it is really huge in California, as you know, that the changes involved in the Whole Farm Insurance Program, and that overlaid on top of the 

catastrophic coverage, we are understanding the requirements there might be 

that they are going to have to have duplicate coverage for the same proportion 

of the crop—the amount of crop. I don’t think that would really be the intended 

consequence, but it would make it very, very difficult for specialty crop growers 

to be able to be in both and participate in both, because it is not going to pencil 

out for them. So we don’t think that was the intention in the farm bill, but we 

are getting feedback that that might be the direction the USDA is trying to take 

this. What can you say on that? 

Mr. SCUSE. We will take a look at it. 

USDA sent a response to Rep. LaMalfa’s office on July 29th via e-mail. A copy 

of the response follows. 

RMA is aware of the questions regarding: (1) CAT level insurance with MultiPeril Crop Insurance (MPCI), and (2) the requirement of corresponding coverage levels when underlying MPCI coverage is purchased with Whole Farm Revenue Policy 

(WFRP), as we recently received comments from several of our companies who provided reviews of the WFRP policy. 

These questions refer to the dual insurance provisions that allow an insured to 

buy individual coverage policies under MPCI insurance along with their WFRP insurance. This allows producers to tailor their risk management to still allow individual coverage for a commodity if they so choose without eliminating their ability 

to insure the rest of their commodities under WFRP. When an insured covers their 

farm under both types of crop policies, an adjustment to the WFRP premium is 

made to account for the coverage provided under the MPCI policy. In return, any 

indemnity paid under the MPCI policy is counted as revenue to count and reduces 

indemnity paid under the WFRP policy. RMA is working to assure that the premium adjustments made actuarially sound and accurately reflect the remaining 

risks. Offsetting the individual policy indemnity payments from the WFRP indemnity should ensure that producers do not receive disproportionate benefits. 

RMA is in the process of finalizing the WFRP policy and program materials and 

we are still evaluating these recently identified issues raised regarding coverage 

level requirements. We will be happy to provide an update once this is finalized. 

45 

SUBMITTED LETTER BY TEXAS WHEAT PRODUCERS ASSOCIATION

BRANDON WILLIS, Administrator, 

Risk Management Agency, U.S. Department of Agriculture, 

Washington, DC 20250 

Administrator Willis; 

On behalf of the more than 35,000 wheat growers in Colorado, Kansas, Oklahoma 

and Texas, we are writing to urge you to implement the actual production history 

(APH) adjustment provisions of the Agricultural Act of 2014 in time for the 2015 

crop year. 

In the most recent farm bill debate, producers made great sacrifices and worked 

with decision-makers to implement changes to farm safety net programs that drastically reduced the level of support and predictability traditionally provided by Federal farm programs. Producers were willing to make these sacrifices largely due to 

the ongoing coverage provided by the Federal Crop Insurance Program and key improvements to the program included in the final bill. 

Many of the changes contained in the Agricultural Act of 2014 recognized crop insurance as the center of our modern safety net. Unfortunately, many of our growers 

have been stuck in the worst drought since the Dust Bowl of the 1930s and have 

found their crop insurance coverage diminishing at an alarming pace. Back-to-back 

drought years have reduced producers’ APHs to levels that no longer reflect even 

average production expectations, therefore reducing crop insurance guarantees. Additionally, producers across this region will suffer the effects of this drought for 

years to come as their APHs are continually punished because a one-in-eighty year 

drought is included in their 10 year production history. 

The farm bill was authored at the height of a drought that gripped the Plains 

states. In an analysis using National Agricultural Statistics Service data for Colorado, Kansas, Oklahoma and Texas, we estimate that more than 1⁄2 of the 22 million 

annually planted wheat acres across these four states would be eligible to drop their 

2013 wheat yield due to the severity of the drought. We believe that further analysis 

would reveal even more eligible years of production due to the ongoing nature of 

the current drought. 

Implementing these provisions in time for the 2015 crop year would allow wheat 

producers across this region the opportunity to further protect their farms from the 

effects of drought. While the implementation of these provisions will provide benefits to growers across the country when future adverse weather conditions occur, it 

will make an immediate and lasting impact for our growers who have been operating under extreme drought conditions. We realize that a change to the APH calculation isn’t as simple as flipping a switch. If it is not feasible to implement these 

provisions nationwide for the 2015 crop year, we ask that they be implemented for 

growers in states experiencing persistent drought to provide growers the needed 

benefits of the new provision while not over-burdening your agency. 

Thank you for your consideration, 

Sincerely, 

Colorado Association of Wheat Growers; 

Kansas Association of Wheat Growers; 

Oklahoma Wheat Growers Association; 

Texas Wheat Producers Association. 

SUBMITTED QUESTIONS

Response from Hon. Michael T. Scuse, Under Secretary, Farm and Foreign 

Agricultural Services, U.S. Department of Agriculture 

Questions Submitted by Hon. Frank D. Lucas, a Representative in Congress from 

Oklahoma 

Supplemental Coverage Option 

Question 1. We believe the SCO rule as implemented so far looks good. We would 

note particularly that the wording is cleared up concerning interaction between SCO 

and ARC by determining SCO eligibility by farm number and we believe that this 

is a good solution to what could have been a real implementation problem. Thank 

you. 

We would note one typo and observe one problem on the 2015 wheat deadline to 

drop SCO if a producer elects ARC. The typo is on page 2, in the second column, 

in the sixth line from the top. The reference is 5(a) and it ought to be 6(a). The 

46 

sentence should read: ‘‘Premium for this Endorsement is calculated by multiplying 

your supplemental protection from section 6(a) by the premium rate and any premium adjustment percentages that may apply.’’ Is our understanding correct? 

Answer. The Supplemental Coverage Option (SCO) endorsement released by RMA 

on its website correctly refers to 6(a). The SCO endorsement can be found at the 

following link: http://www.rma.usda.gov/policies/2015/15sco.pdf. 

Question 2. Section 11003 requires that the Supplemental Coverage Option (SCO) 

be available to all producers on all insurable crops. The provision became effective 

on the date of enactment, February 7, 2014, but the statement of managers clarified 

that SCO would be made available in time for the 2015 crop year to allow ample 

time for implementation. However, the Risk Management Agency (RMA) has indicated that SCO will only be available on corn, soybeans, wheat, cotton, rice, spring 

planted barley, and grain sorghum and then only in certain counties. The SCO provision has been in each legislative draft of the farm bill since 2011 giving RMA significant lead time to examine what would be needed to ensure full and timely implementation. 

Answer. RMA has made every effort to make SCO as widely available as possible 

given the time frame between the enactment of the 2014 Farm Bill, the work needed to make sure SCO meets the applicable requirements of the Federal Crop Insurance Act, and contract change dates for the 2015 crop year. When SCO first appeared in earlier drafts of the farm bill, RMA began reasonable planning/development efforts—and is why RMA was able to implement SCO in time for the 2015 

crop year for a number of crops. While the appearance of SCO early in the farm 

bill process allowed time for preparation, there were limits to what could be done 

for a provision that was not yet law. 

The initial crops covered by SCO already had area-based insurance coverage developed, making implementation more straightforward. Expanding SCO beyond 

these crops required significantly more time and development and the process could 

not be undertaken until the farm bill was enacted. 

Question 2a. Please provide specific timelines regarding the following: (a) the 

scheduled availability of SCO in all counties with respect to corn, soybeans, wheat, 

cotton, rice, spring planted barley and grain sorghum; (b) the scheduled availability 

of SCO for all other title I commodities in all counties; (c) the scheduled availability 

of SCO with respect to non-title I commodities. Please explain the reasoning behind 

each timeline. We request such timelines as part of these questions submitted to 

you for the record. 

Answer. On November 19, 2014, RMA published a list of crops that it will analyze 

during the 2015 calendar year to determine if sufficient data exist to offer SCO for 

the 2016 crop year. In addition, RMA is currently looking at expanding availability 

for corn, soybeans, wheat, cotton, rice, spring planted barley and grain sorghum. 

which were first made available in the 2015 crop year for which it previously had 

group risk plans of insurance developed, making implementation more straightforward. 

Question 3. SCO is designed to supplement individual insurance policies (not just 

revenue policies), so delayed implementation of the peanut revenue policy should 

not prevent timely implementation of SCO for peanuts. Why will SCO not be available to peanut producers for the 2015 crop year? 

Answer. RMA first made SCO available for crops covered by existing area-based 

risk plans of insurance making implementation more straightforward. While crop 

provisions were previously in place for a peanut area-based insurance plan, the peanut area coverage was discontinued in December 2009 due to little or no business 

and changes in the peanut industry. For 2016, RMA will strongly consider SCO for 

peanuts. RMA does intend to offer a peanut revenue policy for 2015. 

Question 4. Given that SCO triggers on an area wide basis, to what extent might 

currently uncovered counties be covered by triggering indemnities for producers in 

those counties based on losses experienced by similarly situated covered counties? 

Answer. In counties where there is insufficient data to establish SCO coverage, 

the use of data from the NASS crop reporting district, which includes other counties, was considered and utilized for spring crops. For SCO cotton, RMA has examined the use of data from specific, similarly-situated, counties to establish coverage 

(based on the development efforts for STAX). This approach is planned to be extended to other SCO crops for 2016. 

Question 5. The farm bill statement of managers expressed our intent that SCO 

yield and revenue policies be available to hybrid seed crops. What is the status of 

implementation? 

Answer. RMA understands the intent of the Managers and is working to make 

SCO available to the broadest number of crops possible. RMA included Hybrid corn 

47 

and grain sorghum seed on a list published November 19, 2014, of crops RMA will 

analyze to potentially offer SCO for the 2016 crop year. 

Question 6. The farm bill statement of managers expressed the intent that SCO 

be made available on a yield basis for cottonseed. What is the status of implementation? 

Answer. RMA is strongly considering cottonseed for SCO for the 2015 crop year. 

Question 7. The farm bill statement of managers expressed the intent that Area 

Risk Protection Insurance be made available to popcorn producers under written 

agreement until the policy is amended to allow for this. What is the status of implementation? 

Answer. Area Risk Protection Insurance (ARPI) for popcorn was recently approved 

by the Federal Crop Insurance Corporation Board of Directors, and is planned for 

implementation for the 2016 crop year. 

Enterprise Units by Practice 

Question 8. Section 11007 reads as follows: ‘‘Beginning with the 2015 crop year, 

the Corporation shall make available separate enterprise units for irrigated and 

non-irrigated acreage of crops in counties.’’ 

We understand that RMA interprets this text to mean that if a producer elects 

to insure an irrigated crop of a commodity on an Enterprise Unit (EU) basis that 

the producer must also insure the non-irrigated crop of the commodity on an EU 

basis. RMA has offered a number of reasons why the agency arrived at this conclusion. 

The first we understood to be a legal justification that the conjunction ‘‘and’’ in 

the section requires this result. However, had Congress used the conjunction ‘‘or’’ 

RMA might have just as easily maintained that the agency is free to make available 

EU for one practice or the other but is not required to make EU available with respect to both practices. The statutory text states that ‘‘the Corporation shall make 

available separate enterprise units’’ but the text does not require a producer to actually elect EUs with respect to both practices. The producer is free under the text 

to elect EU for both practices or elect EU for only one practice while electing optional or basic units for the other. 

Answer. See response to Question 8a. 

Question 8a. During the hearing, Under Secretary Scuse requested and was granted the opportunity to reply in writing to certain questions of Committee Members. 

In answer to the question regarding this particular issue, the written response of 

RMA was, ‘‘We believe that this section simply allows an existing enterprise unit, 

as currently defined in the crop insurance policy, to be divided into two enterprise 

units, one for irrigated and one for non-irrigated acreage. Since nothing in the section otherwise modifies the existing definition of an enterprise unit, each of these 

units must still qualify as enterprise units as defined in the policy . . . Section 

11007 does not provide RMA authority to define an enterprise unit differently for 

different purposes.’’ With respect, statutory text enacted into law as part of the farm 

bill that amends another act of Congress, the Federal Crop Insurance Act (FCIA), 

is not required to conform to preexisting agency regulations which are subordinate 

to statutory text. Rather, agency regulations are meant to conform to statutory text. 

The statutory text supports, and is certainly not inconsistent with, the Congressional intent that a producer be able to elect an EU for all of a crop in a county 

produced under, for example, a non-irrigated practice without having to elect an EU 

with respect to the same crop in the county produced under an irrigated practice. 

In fact, this flexibility is precisely a part of the objective of section 11007 of the 2014 

Farm Bill. 

Answer. RMA believes the Interim Rule regarding Section 11007 is consistent 

with the statute. RMA is currently evaluating comments provided to the Interim 

Rule that implemented this provision. 

Question 8b. Although the agency relies on the 2008 Farm Bill provisions to support this interpretation, nothing in the statutory text nor the statement of managers 

in that Act supports—much less requires—the agency’s reading of the situation. In 

fact, we are deeply troubled by a paragraph in the answer to the question that reads 

in part: ‘‘The 2014 Farm Bill now allows for EU to be subdivided, which undermines 

the risk reducing effects of combining land together, and reduces the EU discounts. 

The smaller discounts require decreased subsidy rates to equalize the subsidy dollars between EU’s [sic] and optional/basic units.’’ The response continues at some 

length on this point declaring that under certain conditions ‘‘the premium subsidy 

will be commensurately reduced,’’ that the 2014 Farm Bill ‘‘reduces the EU discounts,’’ and ‘‘the EU subsidy rates will resemble those for optional/basic units’’. We 

would stress in the strongest possible terms that the amendment made by the 2014 

Farm Bill in section 11007 does absolutely nothing to change the requirements 

48 

made by the amendments to the Federal Crop Insurance Act made under section 

12011 of the 2008 Farm Bill concerning premium support for EUs. Rather, the 2014 

Farm Bill confers the same premium support on EUs conferred by the 2008 Farm 

Bill but changed how EUs are to be understood. The percentage of premium support 

for EUs is codified and fixed under the 2008 Farm Bill and nothing in the 2014 

Farm Bill changed that percentage. Section 11006 of the 2014 Farm Bill merely 

makes the availability of EUs permanent. The only way the agency could argue differently is if it maintained that the premium support requirements of the 2008 

Farm Bill only applied to EUs as EUs were understood prior to the enactment of 

the 2014 Farm Bill, but this is a wholly unsupportable contention. Congress enacted 

a law to change the manner by which EUs may be elected (i.e., by practice) but Congress did not alter the EU premium support that inures to a producer that makes 

such an election. In fact, the Congressional Budget Office (CBO) charged Congress 

for this change to the law ($533 million) taking into account all of the cost considerations for which RMA now intimates the agency may seek to charge producers. We 

cannot overstate that the Committee will take strong exception to any action that 

results in a lower premium support level for EUs, however they are elected by the 

producer, than what is clearly provided for under section 12011 of the 2008 Farm 

Bill. Moreover, adhering to the premium support requirements of the 2008 Farm 

Bill does not permit an offsetting change in premium support for optional units or 

basic units as the written response of the agency seems to suggest. Nothing in the 

FCIA allows for this. Never was this discussed during farm bill discussions. Please 

clarify if the agency has somehow arrived at a different conclusion. Provided immediately below is the complete body of section 12011 of the 2008 Farm Bill, as amended by section 11006 of the 2014 Farm Bill, as it appears today in the FCIA: 

(5) ENTERPRISE AND WHOLE FARM UNITS.— 

(A) IN GENERAL.—The Corporation may pay a portion of the premiums for 

plans or policies of insurance for which the insurable unit is defined on a 

whole farm or enterprise unit basis that is higher than would otherwise be 

paid in accordance with paragraph (2). 

(B) AMOUNT.—The percentage of the premium paid by the Corporation to 

a policyholder for a policy with an enterprise or whole farm unit under this 

paragraph shall, to the maximum extent practicable, provide the same dollar amount of premium subsidy per acre that would otherwisehave been 

paid by the Corporation under paragraph (2) if the policyholder had purchased a basic or optional unit for the crop for the crop year. 

(C) LIMITATION.—The amount of the premium paid by the Corporation 

under this paragraph may not exceed 80 percent of the total premium for 

the enterprise or whole farm unit policy. 

Concerning the agency’s practical reasons for the inability to allow EU on one 

practice and optional unit/basic unit on the other practice, the agency appears to 

rely on a rating issue. In the example, provided in the written answer to a question 

posed at the hearing, the EU is on the irrigated and the optional unit/basic unit 

is on non-irrigated. The EU on the irrigated should be rated to show the reduced 

risk since all the irrigated acreage is together. The non-irrigated optional unit/basic 

unit is already rated to show its increased risk. So, why would having the EU on 

the irrigated change that? RMA has always published different rates and reference 

yields for irrigated and non-irrigated units so why does having the EU on the irrigated acreage change that? It does not in our view. 

Answer. According to the Federal Crop Insurance Act, the Corporation is required 

to determine premium subsidy rates for enterprise units such that premium subsidy 

per acre would, to the maximum extent practicable, equal that of basic or optional 

units. Given the legislated direction, RMA determined enterprise unit subsidy rates 

based on an analysis of policyholder data that existed at the time. Enterprise unit 

subsidy rates have remained constant since the 2009 crop year implementation. 

Subsequent analysis, based on more recent policyholder data, has yet to support an 

increase or decrease in enterprise unit subsidy. However, if changes in participation 

and premium rates (or premium discounts) consistently alters the relationship between premiums across types of units, then RMA is required to adjust enterprise 

unit subsidy rates. Allowing separate enterprise units for irrigated and non-irrigated acreage does alter this relationship for those making the election. For example, if a producer has a 500 acre enterprise unit consisting equally of irrigated and 

non-irrigated acreage and the producer elects separate enterprise units by irrigated 

and non-irrigated practice, then a smaller premium discount applies to each 250 

acre unit compared to what would be applicable to the 500 acre enterprise unit. This 

is highly contingent upon the distribution of irrigated and non-irrigated acreage 

49 

within existing policies. To the extent acreage is equally distributed, the effect (reduction in subsidy rate) could be more pronounced. To the extent acreage is dominated by one practice over another, the effect could be minimal if at all differentiable. RMA continues to analyze policyholder data to assess whether this election 

alters the aggregate relationship. 

Question 9. Despite significant communication between USDA and the Committees throughout farm bill deliberations, particularly during conference committee, 

there appears to be many misunderstandings on the import of various provisions 

where the provisions were written more generally. In the view of the department, 

would it be useful for Congress to be more prescriptive in future Acts in regard to 

statutory text and statement of managers, including the statutory nullification of 

agency regulations or actions where it is believed such regulations or actions may 

be construed to work to frustrate the requirements of a statutory provision? We are 

reluctant to go in this direction, but if it would help clear up any possible misunderstandings and expedites proper implementation, we would certainly be willing to 

pursue this route in future legislation. 

Answer. RMA strives to interpret the statute in a way that meets congressional 

intent and that provides a working, useful, and actuarially sound product to the producers. While non-ambiguous statutory text reduces the amount of discretionary decisions needed, the nature of crop insurance requires RMA to implement legislation 

within already existing confines of contractual agreements with private insurance 

companies and already existing law such as the requirement that the program remain actuarially sound. Therefore, clear legislative text does not always reduce the 

number of issues RMA must resolve in implementing new programs. 

Question 10. You also state in the interim rule that, ‘‘Enterprise units by irrigated 

and non-irrigated practice will be available for any crop in which enterprise units 

are allowed through the actuarial documents.’’ Please explain the practical implications of this limitation in terms of for what counties and crops producers will not 

be able to access EU by practice. Also, please explain what the agency will do to 

obtain the actuarial documents necessary to ensure all producers have access to EU 

by practice. 

Answer. The statement was intended to clarify that the actuarial documents will 

identify where separate enterprise units for irrigated and non-irrigated acreage are 

applicable since enterprise units are currently not available for all crops. Crops that 

offered enterprise unit coverage for 2014 include barley, canola, corn, cotton, flue 

cured tobacco, fresh market beans, grain sorghum, olives, pecans, rice, soybeans, 

sunflowers, sweet potatoes, and wheat. RMA continues to review crops for enterprise unit expansion, and, has already expanded enterprise units for dry peas and 

grass seed for the 2015 crop year. RMA also expanded enterprise units for dry beans 

and popcorn for 2015. In addition, for crop programs that do allow enterprise units, 

not all counties specify or allow coverage for both irrigated and non-irrigated production. For example, if non-irrigated acreage is currently not insurable in a given 

county due to excessive risk, then non-irrigated coverage will not be available, nor 

will separate enterprise units. Last, the provision to allow separate enterprise units 

for irrigated and non-irrigated acreage will first be available for crops and counties 

that have a November 30 contract change date (spring 2015 crops). 

Actual Production History Adjustment 

Question 11. Section 11009 allows a producer to exclude certain yields from the 

APH of the producer. The section amends the Federal Crop Insurance Act and the 

provision became effective upon enactment, February 7, 2014. However, RMA maintains that the provision requires agency implementation and that such implementation will take nearly 2 years, making the provision first eligible with respect to the 

2015 fall planted crop. Please explain in detail why any agency implementation is 

necessary to carry out what we crafted as a self-executing provision and why such 

a long delay is also necessary? Please also explain why the provision cannot be implemented for the 2015 spring planted crop or partially implemented for this fall 

with respect to hardest hit regions of the country or crops where the provision is 

needed the most. 

Apart from any other considerations, has RMA evaluated the feasibility of implementing the APH adjustment for 2015, for the fall or spring planted crops, and 

found that it is technically feasible but that there are other considerations that 

make implementation for the 2015 crop undesirable from an agency or departmental 

policy perspective? Or does RMA or the department maintain that implementation 

for 2015, fall or spring, is infeasible? 

Answer. To implement the APH adjustments provided for in section 11009, substantial programming modifications must be made to the core foundation of RMA’s 

business support systems to validate and accept the APH yield exclusions impacting 

50 

insurance guarantees and associated premium costs submitted by Approved Insurance Providers (AIPs). These adjustments include modifications to be able to determine those producers who may qualify for the yield exclusion, for what years, what 

crops, what practices, and tracking the producer’s elections. Furthermore, RMA’s 

Policy Acceptance Storage System Yield and Yield History processing records have 

to be modified to validate proper eligibility for which years can and cannot be substituted. This will be accomplished by reprogramming RMA’s Actuarial Filing System to develop a new actuarial processing standard to detail which years are eligible 

for exclusion appropriately for each crop and county. 

These modifications must be made to reasonably ensure that the threats of fraud, 

waste, or abuse to the Federal Crop Insurance Program are detected, deterred, mitigated, and addressed. Without these verifications, FCIC could be in violation of the 

Improper Payments Elimination and Recovery Improvement Act of 2012 which requires us to limit fraud, waste, and abuse of the program and ensure that improper 

payments do not occur. 

Another significant task will be determining which counties and historical years 

will qualify for the yield exclusion. The yield exclusion applies if the county yield 

is less than 50 percent of the simple average of the per planted acre yield of the 

agricultural commodity in the county during the previous 10 consecutive crop years. 

This is not a single one year calculation. The 10 year county average must be calculated for each year that may be in the producer’s APH database. For example, 

to identify whether crop year 2012 qualifies for exclusion for irrigated corn in 2012, 

yield data must be compared to crop years 2001–2011, 2011 must be compared to 

2000–2010 and so forth. These calculations must be done in all counties and for all 

crops where crop insurance is available. 

RMA must also make these calculations on an irrigated and non-irrigated practice 

basis. In many instances, the requisite number of years of past history is not consistently available for all crops by practice and location. At a minimum, to assess 

qualifying years back to 2001 requires consistently reported county yield data from 

1991 to present for irrigated and non-irrigated practices. Therefore, RMA must establish procedures for how to address sporadic and limited yield histories outside 

of the primary growing regions to determine qualifying years for APH adjustments. 

This will require imputation or substitution of missing years or alternative approaches, if allowable, in order to make the option widely available. For example, 

crop level wheat estimates for certain counties were not published in 2008 or 2013. 

In addition, practice specific (irrigated vs. non-irrigated) estimates have not been reported since 2007 for certain counties. Before the Actual Production History adjustment in section 11009 can be implemented, RMA will have to develop policies on 

these and other issues and these policies will have to be implement in a manner 

and on a timetable consistent with the obligations RMA and Federal Crop Insurance 

Corporation have under the Federal Crop Insurance Act and by agreement. 

Thus, RMA does not believe that individual producers, nor crop insurance agents 

are able or authorized to make these determinations themselves unless offered in 

the actuarial documents, and hence ‘‘self-execute’’ when a yield may be excluded. 

As for when Section 11009 (Yield Exclusion) will be implemented, RMA has determined that Yield Exclusion will be implemented for the following 2015 spring crops: 

corn, soybeans, wheat, cotton, grain sorghum, rice, barley, canola, sunflowers, peanuts, and popcorn. APH Yield Exclusion is not available for crops offering both winter/fall and spring types of coverage with a June 30, 2014 contract change date. The 

2015 crops were chosen for two reasons. First, they are crops with revenue coverage. 

This allows RMA to leverage the Information Technology (IT) applications that compute the insurance guarantee, premium costs, and data validations for these crops. 

This already existing IT infrastructure also includes the premium rating methodology appropriate to account for the increase in insurance guarantee as similarly 

used for yield trend adjustment, another program that provides for higher guarantees. Second, RMA conducted significant analysis and computation of county based 

production data to help FSA implement Agricultural Risk Coverage/Price Loss Coverage, and that same information can be leveraged to implement APH. 

RMA has always been working to implement all parts of the farm bill as quickly 

as possible. At the time RMA set implementation priorities, the agency felt that 

there were not enough agency and IT contract resources to implement Yield Exclusion for the 2015 crop year without significant program integrity risk. However, 

since that time, two key events have occurred that have allowed the agency to move 

Yield Exclusion implementation forward to the 2015 crop year. 

First, RMA and its IT contractors have been able to successfully implement the 

farm bill planned priorities on schedule and in multiple occasions ahead of schedule, 

preliminary work estimates creating an opportunity to pursue this important initiative. For example, RMA and its contracted IT resources are now expected to deliver 

51 

the premium estimator over two months ahead of schedule to support the upcoming 

Whole Farm Revenue Protection program, while still adding Enterprise Units and 

Coverage Levels by Practice to the 2015 crop year implementation schedule. 

Second, since July, RMA has worked on the development of a county yield dataset 

(based on crop insurance data) to support FSA’s ARC and PLC programs, and the 

associated educational tools developed by contractors. This work can be leveraged 

to provide the data needed to implement Yield Exclusion for major crops in the 2015 

crop year. 

RMA will not be able to offer Yield Exclusion for 2015 winter wheat because, as 

described above, up until October 2014 RMA’s resources were fully devoted to implementing other key farm bill initiatives, including broad availability of SCO and 

STAX, offering separate enterprise units by practice, offering separate coverage levels by practice, beginning farmer and rancher provisions, correction of error procedures, administrative relief for debt, native sod procedures, whole farm revenue, and 

Conservation Compliance. In order to offer Yield Exclusion for winter wheat, the 

necessary changes would have needed to be made by late summer, which also was 

prior to completion of the work to support ARC/PLC. RMA simply did not have the 

human resources to implement the provision at that time without significant program integrity risk, and failure to timely implement and support other key farm bill 

initiatives. 

While RMA fully appreciates why winter wheat growers would want to take advantage of Yield Exclusion, there are two main reasons why RMA is not in a position to offer Yield Exclusion for winter wheat. First, the necessary work required 

to be able to offer Yield Exclusion to winter wheat growers would not be completed 

for several months. After this time, in many areas, winter wheat would have already been planted, which means that insurance would have already be in effect. 

To allow coverage levels to be changed after insurance has become effective, would 

open the program up to significant program integrity issues since producers would 

be more likely to know early crop conditions and whether a loss is expected. 

Second, allowing Yield Exclusion for winter wheat would violate current existing 

risk sharing agreements between the USDA and the Approved Insurance Providers 

(AIPs). By the time winter wheat producers would be able to elect Yield Exclusion, 

the AIPs would have already decided how much risk they want to share with the 

USDA for these policies and changing the risk level after the fact would open up 

the companies to risk they did not anticipate. 

Question 12. At the hearing, Under Secretary Scuse left open the possibility for 

a partial implementation. We greatly appreciate Under Secretary Scuse’s willingness to work with us on this extremely important issue. Is the agency examining 

ways to achieve this objective? 

Answer. RMA has determined that Yield Exclusion will be implemented for the 

following 2015 spring crops: corn, soybeans, wheat, cotton, grain sorghum, rice, barley, canola, sunflowers, peanuts, and popcorn. APH Yield Exclusion is not available 

for crops offering both winter/fall and spring types of coverage with a June 30, 2014 

contract change date. The 2015 crops were chosen for two reasons. First, they are 

crops with revenue coverage. This allows RMA to leverage the Information Technology (IT) applications that compute the insurance guarantee, premium costs, and 

data validations for these crops. This already existing IT infrastructure also includes the premium rating methodology appropriate to account for the increase in 

insurance guarantee as similarly used for yield trend adjustment, another program 

that provides for higher guarantees. Second, RMA conducted significant analysis 

and computation of county based production data to help FSA implement Agricultural Risk Coverage/Price Loss Coverage, and that same information can be leveraged to implement APH. 

Question 13. In regard to written responses to questions on APH posed at the 

hearing, we submit the following follow-up questions. We apologize for the specificity of the questions, but we had no opportunity to pursue these issues fully at 

the hearing. Due to the complexity of the issues, the Under Secretary properly recommended a thorough written explanation of the issues involved. We submit these 

follow up questions in hopes that they may assist in pursuing a more timely implementation. 

RMA response on APH: ‘‘There is a significant amount of administrative work involved in not only determining which counties will qualify, but also which historical 

years will qualify for the yield exclusion.’’ Question: Could this work be contracted 

out? If not, why? Is a staged implementation possible by crop or region? If not, why? 

It seems to us that this would be the easiest part of the process for major crops. 

Answer. RMA has already contracted out some of the actuarial analysis for this 

endeavor under the authority of an existing contract and will be working with the 

52 

contractor to make determinations when data is limited. In addition, RMA already 

contracts out the automated systems programming of the business support systems 

underlying the Federal Crop Insurance Program. Adjustments to APH requires substantial programming modifications to the core foundation of RMA’s business support systems to validate and accept the APH yield exclusions impacting insurance 

guarantees and associated premium costs submitted by Approved Insurance Providers (AIPs). These adjustments include modifications to be able to determine those 

producers who may qualify for the yield exclusion, for what years, what crops, what 

practices, and tracking the producer’s elections. 

Furthermore, RMA’s Policy Acceptance Storage System Yield and Yield History 

processing records have to be modified to validate proper eligibility for which years 

can and cannot be substituted. This will be accomplished by reprogramming RMA’s 

Actuarial Filing System to develop a new actuarial processing standard to detail 

which years are eligible for exclusion appropriately for each crop and county. 

In addition, AIPs are required to follow RMA published policy, procedure, calculation requirements, and data processing requirements outlined in the Standard Reinsurance Agreement. RMA has to identify and then verify that the years excluded 

are eligible for exclusion and that the resulting insurance guarantees and associated 

policy premium charged are correct. The need to verify that the years excluded are 

eligible is needed to provide reasonable assurance that the threats of fraud, waste, 

or abuse to the Federal Crop Insurance Program are detected, deterred, mitigated, 

and addressed. Without these verifications, the Federal Crop Insurance Corporation 

could be in violation of the Improper Payments Elimination and Recovery Improvement Act of 2012 which requires us to limit fraud, waste, and abuse of the program 

and ensure that improper payments do not occur. 

Question 14. RMA: ‘‘RMA must establish procedures for how to address sporadic 

and limited yield histories outside of the primary growing regions to determine 

qualifying years. This will require decisions regarding imputation, substitution or 

other legal alternatives of missing years and data for counties in order to make the 

option widely available.’’ Question: Might contiguous county eligibility resolve much 

of the problem in this regard? Where it does not, could you use RMA data? 

Answer. To determine contiguous county eligibility one must first determine the 

initial qualifying county which is where the sporadic and limited data may exist. 

RMA is not aware of any authority or ability to interpret the APH provisions of the 

2014 Farm Bill to allow it to use contiguous county data to make the determination 

for an initial qualifying county. 

Question 15. RMA: ‘‘For example, the National Agricultural Statistics Service 

(NASS) did not publish crop level wheat estimates for Roger Mills County, Oklahoma in 2008 or 2013. In addition, practice specific (irrigated vs. non-irrigated) estimates have not been reported since 2007.’’ Question: Importantly, this has not prevented RMA from changing the t-yields for Roger Mills County a number of times 

since 2001 (four times for irrigated and three times for dryland, meaning the agency 

probably looked at both four times in that timeframe). The t-yield is essentially a 

5 year yield per planted acre number while the proposed APH adjustment compares 

to a 10 year yield per planted acre. This suggests the agency has historical t-yield 

data for insured crops and at the appropriate practice levels in order to satisfy the 

types of coverage by practice offered. If so, might RMA use the dataset used to calculate the 5 year averages (augmented with RMA data, as necessary) in order to 

arrive at the 10 year APH adjustment benchmarks? If so, this would indicate that 

the agency has the individual years of data to compare to the average in order to 

establish which years can be excluded. Is this correct? 

Answer. For determining T-yields in areas where data are sparse, RMA has the 

flexibility to look at information from other counties and other practices; which is 

not an option for this APH provision. Unlike T-yields, the analysis for this APH provision requires analysis to determine if each individual year for every county by irrigated and non-irrigated practice, for every year back to 2001, was less than 50 percent of the 10 year average. 

Question 16. RMA: ‘‘RMA is establishing a framework to address these situations 

with the implementation of STAX. RMA intends to use lessons learned from STAX 

in the implementation of Section 11009 (as well as further refinement and expansion of SCO in 2016 to more effectively align the coverage with practice (i.e., irrigated vs. non-irrigated).’’ Question: Could RMA use the county data already compiled for STAX/SCO to calculate the counties eligible for APH adjustment? Could 

RMA deal with missing county data using its own data or the contiguous county 

provision? 

Answer. Yes, RMA can use the county data already compiled for STAX/SCO to calculate the counties eligible for APH adjustment; however, additional analysis is reVerDate Mar 15 2010 14:29 Dec 18, 2014 Jkt 041481 PO 00000 Frm 00056 Fmt 6621 Sfmt 6621 I:\DOCS\113-17\88810.TXT BRIAN
53 

quired to determine if each individual year for every county with an irrigated and 

non-irrigated practice, for every year back to 1995, was less than 50 percent of the 

10 prior year average. Additionally, as stated in the response to Question 15, RMA 

is not aware of any authority that allows it to use contiguous county data to determine an individual qualifying county. RMA plans to use its data along with NASS 

data in the analysis of qualifying counties in an attempt to deal with missing county 

data. 

Question 17. RMA: ‘‘While the data compiled for SCO could be utilized for Section 

11009, this data is largely at the county level and does not reflect or differentiate 

between irrigated and non-irrigated acreage. RMA intends to utilize crop insurance 

data for SCO beginning with 2016 that allows for more offers at the practice specific 

level, at which time APH yield exclusions can also be appropriately aligned.’’ Question: Is data compiled for SCO practice-specific already for counties that offer coverage by practice? In cases where it is not, is it an all-crop offer where eligibility 

for the APH adjustment would be determined on that basis? 

Answer. With the exception of cotton, practice-specific data has been compiled for 

SCO where such data is available from NASS. In cases where it is not, it is an allcrop offer where eligibility for the APH adjustment will be determined on that basis. 

SCO for cotton will be based on yield data reported to RMA from insured growers 

and is under development. 

Question 18. RMA: ‘‘This complexity also carries over to the IT systems and with 

the effort involved in SCO and STAX there simply isn’t the manpower to get this 

up and running this year.’’ Question: Doesn’t RMA have the ability to contract some 

of this out? Could RMA contract out the data analysis/compilation portion and focus 

in-house activities in this regard on the programing changes? 

Answer. RMA already contracts out the programming of the business support systems underlying the Federal Crop Insurance Program. For the 2016 crop year, RMA 

has contracted out additional data analysis to assist in reviewing and expanding 

more crops. 

Question 19. RMA: ‘‘RMA’s Actuarial Filing System (an RMA Mission Essential 

Function) has to develop an entirely new actuarial processing standard to detail to 

AIPs and producers which years are eligible for exclusion appropriately for each 

crop and county.’’ Question: Could the eligible years be stated in the Special Provisions? 

Answer. The eligible years could be stated in the Special Provisions, but that significantly complicates the Approved Insurance Provider’s and RMA’s ability to absorb the information and properly calculate insurance guarantees and associated 

policy premiums. The Special Provisions are hard copy documents that do not provide for an automated means to portray fluid information, process the information 

and validate information, but are used primarily for conveying regional underwriting rules or constraints, which is why Special Provisions are not the most efficient means to handle this provision. RMA’s Policy Acceptance Storage System Yield 

and Yield History processing records have to be modified to validate proper eligibility for which years can and cannot be substituted. This can only be accomplished 

by reprogramming RMA’s Actuarial Filing System to develop a new actuarial processing standard to detail which years are eligible for exclusion appropriately for 

each crop and county. 

Question 20. RMA: ‘‘RMA, AIP, and Agent automation tools that include quoting 

software changes must be made to accommodate all the various choices of yield exclusions and substitutions impacting the overall guarantee and policy premium so 

producers can make informed buying decisions.’’ Question: Can AIP software be 

modified to allow automatic or manual exclusions? Some AIPs may already have the 

ability to do this manually. The key is RMA being able to verify that the years excluded are in fact eligible to be excluded and obtaining the resulting APH calculation once the database with the county name and eligible years is created, isn’t it? 

Answer. AIPs are required to follow RMA published policy, procedure, calculation 

requirements, and data processing requirements outlined in the Standard Reinsurance Agreement. The changes necessary to deliver this coverage may have varying 

degrees of complexity and success across AIPs being able to deliver associated IT 

changes. Regardless of whether a given AIP delivers this manually or systematically, as noted, RMA has to identify and then verify that the years excluded are in 

fact eligible to be excluded and that the resulting insurance guarantees and associated policy premium charged are correct. This is to provide reasonable assurance 

that the threats of fraud, waste, or abuse to the Federal Crop Insurance Program 

are detected, deterred, mitigated, and addressed. Without these verifications, FCIC 

could be in violation of the Improper Payments Elimination and Recovery ImproveVerDate Mar 15 2010 14:29 Dec 18, 2014 Jkt 041481 PO 00000 Frm 00057 Fmt 6621 Sfmt 6621 I:\DOCS\113-17\88810.TXT BRIAN
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ment Act of 2012 which requires us to limit fraud, waste, and abuse of the program 

and ensure that improper payments do not occur. 

Question 21. Given that section 11009 was made effective on February 7, 2014 

and the provision is self-executing, is RMA concerned about the potential for litigation by producers who would be denied the relief the law provides to them? For example, the disclaimer in RMA’s Common Crop Insurance Policy reads: ‘‘AGREEMENT TO INSURE: In return for the payment of the premium, and subject to all 

of the provisions of this policy, we agree with you to provide the insurance as stated 

in this policy. If there is a conflict between the Act, the regulations published at 

7 CFR chapter IV, and the procedures as issued by FCIC, the order of priority is: 

(1) the Act; (2) the regulations; and (3) the procedures as issued by FCIC, with (1) 

controlling (2), etc. . . . The disclaimer in the SRA similarly reads: ‘‘Unless specifically provided for in this Agreement, if there is a conflict between a provision of the 

Act, the regulations, or FCIC procedures with the terms of this Agreement, the 

order of precedence will be: (1) the provisions of the Act; (2) the regulations; (3) this 

Agreement; and (4) FCIC procedures, with (1) controlling (2) and (2) controlling (3), 

etc.’’ (emphasis added). If a producer files a lawsuit seeking the relief that section 

11009 was intended to immediately provide them and both the policy and the SRA 

(naturally) declare that the statute controls where there is any conflict between the 

statute and a policy or a contract, etc., how does the agency intend to prevail in the 

event of such a lawsuit when the law, the policy, and the SRA are all opposed to 

the agency’s position? Please provide a detailed explanation. 

Answer. RMA cannot speculate on the outcome nor discuss any potential legal 

strategy of any potential lawsuit; however, as indicated above in FFAS 17 above, 

RMA does not believe section 11009 is self-executing. 

Question 22. Finally, we have heard at least some rumbling that the agency may 

choose to set rates for producers that wish to exercise their right under this provision at so high a level that the producer would not elect to exclude any yield. We 

trust the agency would not set rates artificially high to frustrate the laws of Congress. Does RMA intend to have proposed rates for the APH adjustment and other 

provisions peer reviewed by actuarial experts to ensure their appropriateness? If 

not, what assurance can the department provide to Congress that rates are being 

set appropriately? 

Again, we greatly appreciate Under Secretary Scuse’s willingness to look into 

ways to partially implement this extremely important provision. 

Answer. RMA establishes premium rates based on the risk of loss, and does not 

set rates high to dissuade certain buying decisions or actions by producers. RMA 

is commissioning an external review of the application of the premium rating methodology approach to be used for the APH adjustment. As required by the Federal 

Crop Insurance Act, 7 U.S.C. 1506(n), RMA must operate in an actuarially sound 

manner. 

Specialty Crops 

Question 23. We understand that the Whole Farm Revenue Protection product 

was recently approved to combine the AGR and AGR-Lite policies. While the intent 

is good, we are hearing concerns about two specific changes that were apparently 

made. The first change is the disallowance of CAT as an underlying policy. The second change is that the Whole Farm Buy-up level has to be the same as the underlying coverage. We believe these changes need to be dropped or risk crop insurance 

taking a major step backward for specialty crops. Can you provide details on how 

the agency is implementing the Whole Farm Revenue Protection product, specifically in regards to these two issues? 

Answer. RMA has changed the requirement for similar coverage levels to simply 

require producers who choose to have an underlying policy to choose any level of 

additional (buy-up) insurance. Allowing the use of a fully subsidized CAT level 

MPCI insurance policy to offset the cost of the WFRP policy effectively increases the 

overall subsidy rate for WFRP coverage. In addition, CAT coverage has not been offered as an option for any other revenue product—once again due to its being fully 

subsidized. Therefore, RMA plans to maintain the restriction on purchasing a CAT 

policy with WFRP. 

Crop Insurance Implementation Funding 

Question 24. Section 11021 of the farm bill provides a substantial amount of new 

funding every year for the department to implement crop insurance provisions of the 

farm bill, including $70 million over FY 2014–FY 2018 for information technology 

and an additional $9 million per year for, among other things, reimbursing expenses 

incurred for the operations and review of policies, plans of insurance, and related 

materials. Regarding the additional $9 million per year, the Secretary was given 

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added discretion in allocating those funds. Can you tell us how much of the funding 

made available for FY 2014 has been spent and exactly how that funding has been 

spent? Also, can you tell us how the agency intends to spend future dollars required 

to be made available under this section. 

Answer. First, I want to express appreciation to Congress for providing funding 

that will enable the Risk Management Agency (RMA) to hire additional staff and 

contract resources. The additional staff and contract resources will allow RMA to 

implement the program changes included in the 2014 Farm Bill, maintain current 

and new programs, and to improve program integrity. RMA intends to use all of the 

$9 million per year to improve program integrity and to aid in program maintenance and farm bill implementation in FY 2015. Due to the time needed to recruit 

and hire employees, all of the money was not allocated for FY 2014. However, these 

funds have already allowed RMA to hire new employees to improve RMA’s program 

integrity efforts, and to implement programs from the 2014 Farm Bill. For FY 2014, 

RMA has obligated approximately $5.3 million of the $9 million made available from 

Section 11021. RMA has used these funds on SCO implementation and for program 

integrity efforts. Specifically, RMA entered into contracts for additional work that 

allow a significant expansion of SCO crops for 2016 and to address backlogged arbitration awards and settlements. RMA also entered into an agreement to improve 

improper payments and update program integrity processes. In addition, in an effort 

to improve the integrity of the tobacco crop insurance program, RMA partnered with 

the Agricultural Marketing Service to implement a tobacco crop insurance grading 

system. 

RMA plans to hire approximately 60 employees once RMA’s hiring plan is complete. These employees will be focused upon operation and day to day maintenance 

of farm bill programs and issues related to program integrity. While RMA was not 

able to bring on board all the employees in FY 2014, many are now arriving and 

are on board. Starting in FY 2015, RMA expects the full $9 million to be obligated 

annually. 

Peanut Revenue Coverage 

Question 25. Will the new peanut revenue policy be available in time for the 2015 

crop year as required by section 11018 of the farm bill and as indicated by both the 

agency and the department? Does the peanut revenue policy provide a possible roadmap for producers of other crops where such crops are primarily sold under contract 

and not publicly traded on an exchange? 

Answer. On September 18th, 2014 the FCIC Board approved a peanut revenue 

policy. The peanut revenue policy will be it available for the 2015 crop year. While 

it is premature to know whether the peanut revenue can be used as a roadmap, experience with peanut revenue will provide insights into whether it is a possible 

roadmap for other crops that are not publicly traded on an exchange. 

Information Sharing and Authority to Correct Errors 

Question 26. Section 11019 reads in relevant part: ‘‘. . . the Corporation shall establish procedures that allow an agent or an approved insurance provider . . . at 

any time, to correct electronic transmission errors that were made by an agent or 

approved insurance provider, or such errors made by the Farm Service Agency or 

any other agency of the Department of Agriculture in transmitting the information 

provided by the producer for purposes of other programs of the Department to the 

extent an agent or approved insurance provider relied upon the erroneous information for crop insurance purposes.’’ 

The background in the interim rule similarly states, ‘‘Lastly, electronic transmission errors, such as transpositions, committed by the insurance provider, agent 

or any agency within USDA can be corrected by the insurance provider at any time 

the error is discovered.’’ 

However, in the actual amendments to the regulations, the interim rule states, 

‘‘At any time, any incorrect information if the incorrect information was caused by 

electronic transmission errors by us or errors made by any agency within USDA in 

transmitting the information provided by you for purposes of other USDA programs.’’ 

We are concerned that the actual amendment is not consistent with the background in the interim rule nor, more importantly, with the statutory text. The correction of transmission errors that are made by an agent or approved insurance provider is not confined to the correction of errors ‘‘caused by electronic transmission 

errors by us [the Risk Management Agency] or errors made by any agency within 

USDA in transmitting the information provided by you for purposes of other USDA 

programs.’’ This limitation applies only to ‘‘such errors made by the Farm Service 

Agency or any other agency of the Department of Agriculture.’’ If Congress had 

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meant to subject the correction of electronic transmission errors made by an agent 

or approved insurance provider to this limitation we would have drafted the language as follows: ‘‘. . . the Corporation shall establish procedures that allow an 

agent or an approved insurance provider. . . at any time, to correct electronic transmission errors that were made by an agent, approved insurance provider, the Farm 

Service Agency, or any other agency of the Department of Agriculture in transmitting the information provided by the producer for purposes of other programs of the 

Department to the extent an agent or approved insurance provider relied upon the 

erroneous information for crop insurance purposes.’’ 

We appreciate that there was opposition to this section within the Department 

and we have no doubt that the opposition was motivated to protect program integrity which we also strongly support. However, we worked with the Department to 

arrive at an acceptable provision, taking into account these concerns. To administratively unravel what was agreed to in the legislative process would be a breach of 

the agreement we all worked hard together to reach in order to arrive at an outcome 

acceptable to all parties. Is the Department committed to adhering to what was 

agreed to during the farm bill as it is expressed in the statutory text and explained 

in the background of the interim rule as opposed to the actual amendment which 

does not reflect the agreement reached? 

Answer. The preamble to the Common Crop Insurance Policy Basic Provisions, 

published at 7 CFR § 457.8, provides, in pertinent part, that throughout this policy, 

‘‘you’’ and ‘‘your’’ refer to the named insured shown on the accepted application and 

‘‘we,’’ ‘‘us,’’ and ‘‘our’’ refer to the insurance company providing insurance. This preamble is similarly applied to other regulations that were impacted by the interim 

rule. Therefore, the limitations of who can correct an error is not limited to just 

RMA or any other USDA agency, but also includes the AIP. Additionally, consistent 

within the crop insurance program, references to the AIP, also include the agent or 

AIP representative who does business on behalf of the AIP. This is consistent with 

the farm bill provision which articulates that electronic transmission errors committed by the insurance provider, its agent, RMA, or any other USDA agency may 

be corrected at any time to the extent an agent or approved insurance provider relied upon the erroneous information for crop insurance purposes. 

Conservation Compliance 

Question 27. This excerpt from the Interim Final Rule has generated considerable 

concern: ‘‘This means that an insured who is determined to be non-compliant on 

June 1, 2015, (2015 reinsurance year) will, unless otherwise exempted, be denied 

premium subsidy effective July 1, 2015, the start of the 2016 reinsurance year, and 

will not be eligible for any premium subsidy for any policies during the 2016 reinsurance year. Even if the insured becomes compliant during the 2016 reinsurance 

year, the insured will not be eligible for premium subsidy until the 2017 reinsurance 

year starting on July 1, 2016.’’ 

Chairman Conaway, in his opening remarks, and Rep. Noem, during questioning, 

raised this issue during the hearing. Rep. Noem specifically inquired whether a producer found to be out of compliance in 2015 would then be ineligible for crop insurance premium support during the 2016 reinsurance year and not be eligible for reinstatement of such support until the 2017 reinsurance year even if the producer had 

acted in good faith (i.e., without intent to violate compliance requirements) and 

came back into compliance for 2016. To this question, Under Secretary Scuse affirmed that a producer in such a circumstance would, in fact, be denied premium 

support in the 2016 reinsurance year but then stated several times that the producer would have a period of time to come back into compliance so as not to lose 

premium support for the 2016 reinsurance year. The Under Secretary stated that 

the amount of time permitted to the producer to come back into compliance would 

be established under the rule. Can the Department assure us that Under Secretary 

Scuse, and not the excerpt from the Interim Final Rule, is correct? Nobody that we 

are aware of intended that a producer who acts in good faith and who comes back 

into compliance should still be penalized by losing premium support. Should the Interim Final Rule be correct, it would not only harm producers relying on crop insurance but also conservation efforts on the farm. We predict this would also result in 

the repeal of the conservation compliance provision in fairly short order. 

Answer. It is important to distinguish between failure to certify compliance and 

a substantive violation of wetland or highly erodible land (HEL). Producers that do 

not certify compliance with WC and HEL by June 1, 2015, which means not having 

an AD–1026 on file with FSA by June 1, 2015, will not be eligible for premium subsidy for the 2016 reinsurance year. As for substantive violations of wetland and 

HEL, as in the producer planted on HEL without a conservation plan or converted 

a wetland and planted an agricultural commodity, the producer may have one or 

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more reinsurance years to come back into compliance before losing premium subsidy. The 2014 Farm Bill provides extra time for producers that are new to compliance, acted in good faith, have access to a new crop insurance policy, or are unable 

to comply due to the actions of their landlord. These exemptions will be explained 

in a regulation to be published by USDA early next year. 

Question 28. Chairman Conaway inquired whether a producer who is in compliance with conservation requirements today for purposes of title I eligibility would 

be in compliance for purposes of crop insurance conservation compliance under this 

section of the farm bill provided the producer took no action to fall out of compliance. Under Secretary Scuse stated that such a producer would in fact be in compliance with conservation compliance requirements for crop insurance purposes. Chairman Conaway further inquired whether the goalposts for conservation compliance 

would be moved to put such a producer out of compliance and Under Secretary 

Scuse stated that, no, the goal posts would not be moved and the producer would 

be good to go, in Chairman Conaway’s words. Is the Committee correct in understanding that if a producer is considered in compliance for purposes of title I for 

the 2014 crop year that the producer, absent any action by the producer to affect 

compliance, would be considered in compliance for purposes of the crop insurance 

conservation compliance provision? 

The AD–1026 appendix indicates that; ‘‘Producers obtaining federally reinsured 

crop insurance will not be eligible for any premium subsidy paid by the Federal Crop 

Insurance Corporation (FCIC) for any policy or plan of insurance if the producer has 

not filed a completed Form AD–1026 with FSA certifying compliance with HELC and 

WC provisions OR is not in compliance with HELC and WC provisions.’’ 

Answer. Yes, a person who participates in Title I programs for 2014 and is in compliance with the conservation compliance provisions for purposes of 2014 program 

benefits under Title I that are subject to the provisions is also in compliance with 

the provisions for purposes of eligibility for Federal crop insurance premium subsidy, absent any action by the person that would change that status. 

Question 29. The 2014 Farm Bill states that producers who are not planting an 

‘‘agricultural commodity’’ (defined as one requiring annual tilling of the soil) are exempt from the conservation compliance mandate. By definition, exempted crops are 

in compliance with HELC and WC provisions since none exist. Therefore, it is unnecessary for producers not planting an ‘‘agricultural commodity’’ (as defined in statute) and only growing an exempted crop to do anything other than certify that they 

are not planting an ‘‘agricultural commodity’’ (or certify that they are growing only 

exempted crops). Why is it necessary for the AD–1026 form to require any additional information be filed for those crops or for USDA to require/undertake any additional action? 

Answer. The 2014 Farm Bill does not ‘‘exempt’’ any producer from the conservation compliance provisions. Section 1221(c)(3)(E) of the Food Security Act of 1985 

as amended by section 2611 of the 2014 Farm Bill, requires any producer receiving 

premium subsidy for crop insurance to certify that they are in compliance with 

HELC and WC provisions. 

Question 30. The production practices within the specialty crop industry vary by 

commodity. In many cases, exempted commodities engage in regular replanting of 

new trees, vines, shrubs, etc. to keep an orchard healthy. In other cases, 

phytosanitary issues or lack of adequate water may require acreage to be placed in 

an idle state temporarily. It is our understanding that permanent crop acreage that 

is replanted or made temporarily idle will remain in its exempt status, so long as 

an exempted crop is intended to be planted there in the future. Is this an accurate 

understanding? 

Answer. The 2014 Farm Bill does not exempt any producer or land from the conservation compliance provisions. USDA does not consider a perennial growers’ rotation practices as constituting an annually tilled crop. Therefore, generally, leaving 

land idle with no agricultural commodity planted or produced on the land is not a 

violation of the provisions. Producers are encouraged to contact their local USDA 

Service Center to obtain information and assistance regarding their specific farming 

operation situation. 

Question 31. Does the mere filing of an AD–1026 form require NRCS to make site 

visits on farms to verify the type of activity (exempt or covered) that is occurring 

there? If not, how will the information be confirmed? 

Answer. No, filing the form does not automatically result in a NRCS site visit. 

NRCS may visit a farm or ranch if the producer indicates ‘‘yes’’ in any of the boxes 

in Part B, HELC/WC Compliance Questions or when the producer’s farm or ranch 

is selected for quality assurance purposes. When a producer’s farm or ranch is seVerDate Mar 15 2010 14:29 Dec 18, 2014 Jkt 041481 PO 00000 Frm 00061 Fmt 6621 Sfmt 6621 I:\DOCS\113-17\88810.TXT BRIAN
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lected for a spot check NRCS will verify the accuracy of the certification, which may 

require a site visit. 

Question 32. Many specialty crop producers are involved in diversified operations 

that may include both exempt and covered crops. Assuming that these are affiliated 

entities where crop insurance has been purchased for each individual crop, if such 

a producer becomes out of compliance on a covered crop, how will that status affect 

their ability to purchase crop insurance for the exempt crops that are part of his/ 

her operation? 

Answer. As required in the 2014 Farm Bill, a producer found to be in violation 

of the conservation compliance provisions will not be eligible for premium subsidy 

on any crop insurance policy. This approach is consistent with FSA’s current rules 

which applies a violation to all farms not just the farm where the violation occurs. 

The 2014 Farm Bill did provide for a tenant exemption, which would limit the impact of the provision in certain cases. USDA will publish rules explaining the tenant 

exemption as well as other exemptions in early 2015. 

Question 33. For diversified operations involving affiliated entities that comprise 

both exempt and covered crops where the producer has elected NOT to purchase 

crop insurance on their covered crops (or if no policy is available), how will that status affect their ability to purchase crop insurance on their exempt crops? Will their 

covered crops be required to be compliant, even if they receive no benefit via the 

Federal crop insurance subsidy? 

Answer. The conservation compliance provisions do not effect what crops may be 

insured or a person’s ability to obtain Federal reinsured crop insurance. The Food 

Security Act of 1985 requires the conservation compliance provisions apply to all 

land in which the person has an interest, not just the land or crops for which the 

person is seeking program benefits or crop insurance. Therefore, a person must be 

in compliance with the conservation compliance provisions on all their land in order 

to be eligible for Federal crop insurance premium subsidy. This approach is consistent with FSA’s current rules, which applies a violation to all farms not just the 

farm where the violation occurs. 

APH Issue for Peaches 

Question 34. The farm bill statement of managers expressed the intent that downward trending adjustments be discontinued with respect to perennial crops including peaches. The 2008 Farm Bill required a study on this issue. USDA conducted 

a study and found that using a shorter APH period of 4–6 years was adequate to 

reflect the lower yield expectation in the earlier years of a perennial crop. Regional 

offices on the East Coast discontinued the downward trending adjustment for 

perennials, including peaches, from Maine to North Carolina and west to Michigan. 

South Carolina and Georgia peach farmers, however, have remained subject to this 

unnecessary penalty that exacerbated their losses from the spring freeze of this 

year. Amendments to agriculture appropriations were introduced in both Chambers 

and would have been adopted had the bills not been pulled from floor consideration. 

The amendments continue to enjoy strong, bipartisan support and the Committee 

remains committed to their inclusion in the final appropriations measure. Will the 

relief sought by Rep. David Scott and others for Georgia and South Carolina peach 

producers be granted by RMA? 

Answer. After considerable consultation and outreach with producers, RMA released a Manager’s Bulletin on October 15, 2014, addressing this issue. 

Policy Development and Approval Issue for Grain Sorghum 

Question 35. The farm bill statement of managers expressed the intent that high 

priority be placed on the approval of a specialized irrigated grain sorghum policy 

that establishes improved rates and t-yields based on a certain high level of crop 

management. What is the status of implementation? 

Answer. RMA has discussions with private parties working on such a policy; however, as of December 10, 2014, no submission has been submitted under Section 

508(h) of the Act. If the private parties do not prevail in developing such a policy, 

RMA will consider contracting for a feasibility study and developmental efforts if 

warranted. 

Administration—FSA County Office Closings 

Question 36. Please update the Committee on the Central, Branch and Satellite 

office structure and describe the criteria being used to determine office closures? In 

addition, does your agency plan to close any county offices before the end of calendar 

year 2014? 

Answer. No office closure plan has been approved at this time and the Agency has 

not developed a list of offices to close. FSA recognizes that overall reductions in 

59 

funding limit the ability to staff field offices to levels as in the past. FSA offices traditionally have used a one-size-fits-all model, with each of its 2,124 locations processing the full array of FSA programs. With overall staffing levels down by roughly 

20 percent since FY 2010, many FSA offices now are staffed inadequately or aligned 

improperly with program activity level. 

FSA is working on a service center structure concept to realign workforce and invest in technology to improve quality customer service to the full range of FSA programs, including expanded customer flexibility and options in program delivery, 

while serving as a referral gateway to other agricultural and rural services. 

The concept will establish a more flexible footprint in each State to best use staff 

resources, improve program outreach to new and current customers and enhance 

cross training of FSA employees. 

Consistent with provisions of the Food, Conservation, and Energy Act of 2008 

(P.L. 110–246), FSA will hold public meetings in each impacted communities. Following the public meetings, UDSA will issue notification to Congress at least 90 

days before any closure is approved by USDA. 

Question 37. The Committee understands that FSA periodically conducts workload 

analysis to determine state and county specific staffing levels. How does the agency 

determine these staffing recommendations? 

Answer. FSA determines staffing allocations in part based on workload. FSA programs, including assumptions for new programs (i.e., ARC/PLC and Disaster programs) and FSA program activity files are used as a basis for measuring the time 

required to support FSA customers and program implementation activities in county 

offices. The measurement of work associated with the actual units (i.e., number of 

farms, producers and program participation in each state) with a standard time 

component applied to each unit, provides a projection of our overall staffing needs. 

The estimated total workload is factored against our available resources for distribution to state and county offices. 

Questions Submitted by Hon. Collin C. Peterson, a Representative in Congress from 

Minnesota 

Crop Commodity + Disaster Programs—FSA 

Question 1. Have you started training your field staff on the details of the ARC 

and PLC options as well as the base and yield update opportunities for landowners? 

Answer. National ARC/PLC training for FSA staff is planned for later this summer and will occur before the implementation of the ARC/PLC programs. Also later 

this summer, FSA plans to provide producers with written information on their current base acres, yields and 2009–2012 planting history, and offer them an opportunity to verify this information with their local FSA office, in preparation for later 

this fall, when producers will have the opportunity to update yields and reallocate 

bases. 

Question 1a. In your testimony you also mention that Extension specialists will 

be trained by late summer. How are these trainings being held? 

Answer. The universities developing the tools have agreed to conduct in-person 

training, which may be attended by extension specialists, or, if preferred by extension, the training will also be available by webinar. 

Question 2. Has USDA calculated how many minutes or hours it will take producers to go through the various options available to them, starting with the base 

and yield update decisions, plus then sign-up for either ARC or PLC? 

Answer. It is difficult to estimate the amount of time that it will take owners and 

producers to explore the various options, including electing and enrolling in ARC/ 

PLC, because it depends on the complexity of the operation and the owner’s or producer’s knowledge of the program. USDA is working to ensure that owners and producers will have the information, education, and time that they need to become fully 

prepared to make these decisions. A large part of this preparation will include access to the online tools and learning opportunities through the extension services. 

Question 2a. And can landowners or their tenants do any of the work online or 

via a website? Or do they have to come in to the local office? 

Answer. Owners and producers may use the online tools to make their reallocation 

and yield update decisions before visiting the County Office. However, owners and 

producers must visit the County Office to reallocate base acres and update yields; 

elect PLC, ARC County Option (ARC–CO), or ARC Individual Option (ARC-IC); and 

then enroll in ARC/PLC. They will also be able to use the online tools to prefill 

forms before visiting the County Office. 

Question 3. The livestock disaster programs were made permanent in the last 

farm bill, which is a very good thing. There has been significant flooding in some 

60 

parts of the country, so which livestock disaster program do producers apply for if 

they have lost their feed source due to flooding and how does that program work? 

Answer. The Emergency Assistance for Livestock, Honeybees and Farm-Raised 

Fish Program (ELAP) provides emergency assistance to livestock, honeybees and 

farm-raised fish producers that have suffered eligible losses due to an eligible adverse weather event or loss condition, including floods. The following type of livestock feed losses are considered eligible if incurred due to a flood: 

• purchased and mechanically harvested forage or feed stuffs that is damaged or 

destroyed 

• additional livestock feed purchases above normal quantities required to maintain the livestock until additional feed becomes available 

• Costs associated with transporting livestock feed to eligible livestock including, 

but not limited to, costs associated with equipment rental fees for hay lifts and 

snow removal. 

Payments for eligible grazing losses are calculated based on a minimum of 60 percent of the lesser of: 

• the total value of the feed cost for all livestock owned by the eligible producer 

based on the number of days grazing was lost, not to exceed 150 days of daily 

feed costs for all livestock; or 

• Grazing lost for eligible livestock based on the normal carrying capacity of the 

eligible grazing land for the number of grazing days lost, not to exceed 150 days 

of lost grazing. 

Payments for eligible livestock feed losses are calculated based on a minimum of 

60 percent of the producer’s actual cost of livestock feed damaged/destroyed, additional costs incurred for transporting livestock feed, and additional cost of purchasing additional livestock feed above normal. 

ELAP signup deadline for 2014 losses, losses incurred from October 1, 2013, 

through September 30, 2014, ends November 1, 2014. To apply for ELAP, producers 

must submit, to their local FSA service center, an application for payment before 

November 1, 2014, and a notice of loss within 30 days of when the loss is apparent. 

Question 4. Where do things stand with the agencies under your mission area in 

regard to streamlining two sets of data on the same farm? I believe you streamlined 

some aspects already, including crop reporting, but can the agencies readily share 

information with each other? 

Answer. FSA and RMA continue to finalize data element definitions to make them 

consistent between agencies to support the Acreage Crop Reporting and Streamlining Initiative (ACRSI) as mandated under the 2014 Farm Bill. Regular weekly 

meetings are being held on this. The agencies have been sharing basic producer, 

acreage, production, and loss data for several years under the Common Information 

Management System (CIMS); however, the goal under ACRSI is to support one-stop 

acreage and production reporting that can be used by both agencies. The agencies 

are developing an acreage reporting pilot project expected to be rolled out in 2015. 

The agencies have authorized an outside third party using standardized data elements to participate in this pilot alongside traditional acreage reporting channels. 

Question 5. In your testimony you said that producers who have LGM-Dairy contracts through 2015 will be allowed to participate in the new margin protection program once their contract is up. Some of these producers entered into these contracts 

before the ink was dry on the farm bill. What if producers would like to end their 

contract early in order to participate in the margin program when it is ready in September? Is this something RMA would consider given the uncertain timeline for the 

farm bill? 

Answer. Because the LGM-Dairy plan of insurance is a legal contract between the 

insurance provider and the insured, RMA and the Farm Service Agency worked together to develop a transition period for producers currently enrolled in LGM-Dairy. 

This transition period will allow producers to switch over to the MPP-Dairy program 

once they have fulfilled the LGM-Dairy plan of insurance contract requirements. 

RMA released these guidelines at the end of June. 

Question 6. When will USDA start publishing margin numbers for dairy producers? I believe this is something that doesn’t have to wait until all the rules are 

written. I understand that it currently takes a full month for USDA to calculate and 

release price information. Is there any way USDA can get this information out on 

a timelier basis? Is this something USDA is looking to improve? In this electronic 

day and age it seems we should be able to quickly provide price information to producers. 

61 

Answer. The statute provides that the calculations used in MPP-Dairy be made 

as soon as practicable using the full-month price of the applicable reference month. 

Full month prices are available a month after the applicable reference month. 

Therefore, there will be at least a 30 day delay in monthly price announcements. 

Question 7. The way that this year’s growing season is turning out, there is likely 

the potential need for large scale grain drying. The ability to store larger amounts 

of propane obtained during non-peak periods is one of the few tools that producers 

have to deal with the spot shortages experienced during previous harvests. 

Can producers who finance the installation of grain bins under the Farm Storage 

Facility Loan Program include the cost of new or additional propane tanks as part 

of their loan? If not, can you explain the reasoning? 

Answer. Farm Storage Facility Loan (FSFL) provisions were recently amended to 

make liquefied petroleum (LP) tanks to fuel dryers are eligible. 

Question 8. Where do things stand with getting guidance to the field regarding 

a landowners’ ability to prepare their expiring contract acreage, TIP acres, or early 

out CRP acreage for planting for the 2015 crop prior to the October 1st contract expiration? In other words, can all three types of landowners do ‘‘early land prep’’, and 

if so, when are you going to notify them of that ability and let the county offices 

know how to answer those landowners’ questions? 

Answer. USDA restarted the CRP Continuous Signup and Transition Incentives 

Program last month and is currently working to clarify policy on early land preparation. In the upcoming weeks, policy will be issued to Farm Service Agency State and 

County office staff, providing them guidance regarding all three issues. 

Crop Insurance—RMA 

Question 9. The Livestock Gross Margin (LGM) program has been successful in 

the dairy industry but has had limited success with the other livestock sectors. 

What outreach have you done with the beef and pork industry to make this LGM 

product something they will utilize? Could we expect changes to any of these programs in the near future? 

Answer. RMA continues to work with various organizations, including the National Pork Producers Council to create awareness of programs like the Livestock 

Gross Margin (LGM) program. RMA also provides feedback received from producers 

about potential changes to the plans of insurance to the private entities that own 

the products. 

Moreover, the Risk Management Education and Community Outreach Program 

will award 16 projects specifically directed to promote livestock insurance education 

this year. Since these are privately developed products, any changes would have to 

be considered by the owner’s, go through a review process and be approved by the 

FCIC Board. 

At this time, RMA is not aware of any upcoming changes to these programs. 

Question 10. Is there a way to make an LGM product that would be helpful to 

hog producers that are dealing with PEDv? 

Answer. The Livestock Gross Margin Insurance Plan for Swine (LGM-Swine) provides price protection using Chicago Mercantile Exchange Group futures contracts. 

However, the owner of the LGM-Swine product never intended to cover loss of livestock due to death or diseases. 

Question 11. What is the status of meeting the farm bill requirement for price 

elections for organic crops by the 2015 crop year? Is RMA working with other USDA 

agencies on sharing data that may be collected already on organic and directly marketed crops? 

Answer. RMA has made significant progress in the development and implementation of organic price elections for Federal crop insurance programs. RMA has separate organic price elections, projected prices, and harvest prices are currently available for 16 crops: almonds (California), apricots (fresh—Washington), apples (fresh 

and processing—Washington), avocados (California), blueberries (California, Oregon, 

and Washington), corn, cotton, fresh stonefruit: freestone peaches, nectarines, and 

plums (California), grapes for juice (Washington), mint (peppermint), oats, pears 

(Oregon and Washington), processing tomatoes (California) and soybeans. For the 

2015 crop year, RMA will add ten more crops with organic prices elections, which 

brings the total to 26. The crops to be added for 2015 are as follows: millet, figs, 

walnuts, flax, popcorn, corn silage, hybrid seed corn, grain sorghum, silage sorghum, 

and hybrid sorghum seed. RMA has started analyzing crops to be added for the 

2016 crop years. 

Price elections are developed whenever adequate organic price data is available 

that allow us to meet statutory mandates to be actuarially sound. We have also developed viable alternatives that increase the amount of organic coverage provided. 

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These options include price coverage under the Contract Price Addendum, the Actual Revenue History plan of insurance, and the Whole Farm Revenue Protection 

plan of insurance. 

To gather organic price data and information, RMA has also funded research 

studies and organic price and production surveys. RMA will again contract with 

NASS to collect organic acreage, production and sales data from certified organic 

growers for the 2014 crop year. NASS will survey all producers who identified themselves as producing some amount of organic production in the 2012 Census of Agriculture, making the survey the most complete form of data collection RMA is able 

to obtain. The NASS data from this survey, combined with data from the earlier 

surveys, will provide three non-sequential years of organic price data during a seven 

year span. 

RMA will continue to pursue opportunities for the acquisition of additional organic price data and information. We will also continue to work toward developing 

crop-specific organic price elections consistent with our data quality requirements. 

RMA has also been working with AMS and FSA to explore what information may 

be available to be shared between Agencies to offer additional coverage for organic 

crops. 

Question 12. The FSA released an updated AD–1026 Form which I understand 

all producers who are participating in crop insurance have to fill out by June 1st 

of next year. However, I noted that on the actual form, it mentions the original 

Swampbuster date of December 23, 1985 in regard to drainage work. For producers 

who haven’t previously been subject to compliance, they are only subject to penalties 

if they take action to drain or alter a wetland after February 7, 2014, correct? 

Do you think it is confusing to those producers, many of whom may have never 

seen an AD–1026 Form before, to only include the 1985 date on the actual form? 

Answer. The 2014 Farm Bill states that eligibility for Federal crop insurance premium subsidy is not lost due to wetlands conversions prior to February 7, 2014. 

However, such conversions do result in ineligibility for Title I program benefits subject to the conservation compliance provisions. USDA has used Form AD–1026 since 

the 1980’s to have producers certify compliance with the provisions. The 2014 Farm 

Bill states that the Secretary shall use existing processes and procedures for certifying compliance. Therefore, the form accommodates certification of compliance for 

programs that are subject to different dates. The question on Form AD–1026 regarding wetland conversions includes an entry for producers to identify the year the conversion activities took place. The Form AD–1026 Appendix, which is provided to 

every producer certifying compliance, has additional information about the dates applicable to the different programs. In addition, the USDA Service Center staff where 

the producer files Form AD–1026 is available to assist the producer to ensure they 

understand the form and answer any questions the producer may have. 

Question 13. Your testimony and the FAQs for the RMA Interim Rule indicate 

that any producer who receives a premium subsidy under crop insurance is subject 

to the conservation compliance provisions included in the 2014 farm bill. However, 

in the Background portion of the Interim Rule, it discusses the definition of ‘‘agricultural commodity’’ in Section 1201 of the 1985 Food Security Act. This definition only 

includes commodities ‘‘planted and produced in a state by annual tilling of the soil, 

including tilling by one-trip planters or sugarcane.’’ There is also a mention of these 

new provisions being applied ‘‘unless specific exemptions apply.’’ 

Can you clarify whether any producer who receives a premium subsidy, regardless 

of the type of crop, forage or livestock that they produce, is covered by the 2014 compliance provisions? 

What are the ‘‘specific exemptions’’ that apply? 

Answer. The 2014 Farm Bill did not exempt any producer or crop from conservation compliance provisions. To be eligible for a premium subsidy for the 2016 reinsurance year and to be in compliance with HELC and WC provisions, a completed 

and signed form AD–1026 must be on file with FSA by June 1, 2015. The 2014 

Farm Bill provided several exemptions that are applicable only to eligibility for Federal crop insurance premium subsidy, such as tenant relief and good faith exemptions for wetland violations only, persons subject to the conservation compliance for 

the first time because of the 2014 Farm Bill, when certain crop policies become 

available for the first time, and an exemption to pay an equitable amount instead 

of mitigating certain wetland conversions. Also, there are exemptions that apply to 

eligibility for both Federal crop insurance premium subsidy and Title I program 

benefits, such as tenant relief and good faith exemptions for high erodible land violations, and an exemption for noncommercial production of agricultural commodities 

on highly erodible acres of 2 acres or less. USDA will publish a regulation in early 

2015 that will provide further details about these exemptions. 

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Question 14. You mentioned the $9 million provided in the farm bill to address 

program maintenance and integrity. Can you tell us what this funding will be used 

for? 

Answer. First, I want to express appreciation to Congress for providing funding 

that will enable the Risk Management Agency (RMA) to hire additional staff and 

contract resources. The additional staff and contract resources will allow RMA to 

implement the program changes included in the 2014 Farm Bill, maintain current 

and new programs, and to improve program integrity. RMA intends to use all of the 

$9 million per year to improve program integrity and to aid in program maintenance and farm bill implementation in FY 2015. In fact, these funds have already 

allowed RMA to hire new employees to improve RMA’s program integrity efforts, 

and to implement programs from the 2014 Farm Bill. For FY 2014, RMA has obligated approximately $5.3 million of the $9 million made available from Section 

11021. RMA has used these funds on SCO implementation and for program integrity efforts. Specifically, RMA entered into contracts for additional work that allow 

a significant expansion of SCO crops for 2016 and to address backlogged arbitration 

awards and settlements. RMA also entered into an agreement to improve improper 

payments and update program integrity processes. In addition, in an effort to improve the integrity of the tobacco crop insurance program, RMA partnered with the 

Agricultural Marketing Service to implement a tobacco crop insurance grading system. 

RMA plans to hire approximately 60 employees once RMA’s hiring plan is complete. These employees will be focused upon operation and day to day maintenance 

of farm bill programs and issues related to program integrity. While RMA was not 

able to bring on board all the employees in FY 2014, many are now arriving and 

are on board. Starting in FY 2015, RMA expects the full $9 million to be obligated 

annually. 

Question 15. I hear from producers in my district that RMA’s APH transfer policy 

has allowed more established producers to come in and outbid younger producers 

on land rents. I also understand that the APH transfer policy is what led in part 

to the call for the Sodsaver provision in some parts of the country. Did RMA examine their policy and how you have impacted land conversion in the countryside? 

Answer. RMA’s procedures allow insured producers who add land to their existing 

operation within a county to use the simple average of their own actual production 

history for the crop in that same county to establish their insurance yield for the 

added land. Simple average transitional yields (SA T-yields) are available for use 

by any producer with one or more years of experience in the county to establish the 

yield for an added land Actual Production History (APH) database when the average 

of their yield experience in the county is greater than the applicable county T-yield 

published by RMA. 

RMA has implemented Section 11016 of the Agricultural Act of 2014 (2014 Farm 

Bill) which provides enhanced benefits for Beginning Farmer and Ranchers (BFRs). 

Benefits include exemption from paying administrative fees, an additional ten percentage points of premium subsidy, and expanded use of the production history of 

farming operations BFRs were previously involved in the decision making or physical activities of a farm or ranch operation, and an increase from 60 to 80 percent 

of the applicable T-Yield for Yield Adjustment when replacing a low actual yield due 

to an insured cause of loss. 

The SA T-Yield does not apply to native sod acreage that would fall under the 

Sodsaver provision (native sod). On native sod acreage the producer’s reduced yield 

is applied using the T-Yield published in the actuarial documents, and the producer 

of native sod acreage is required to use the published T-Yield for the reduction regardless if the producer is established or a beginning producer. By reducing the 

yield guarantee, the reduction is carried out uniformly for all producers. 

With the constantly changing market conditions affecting land conversions, RMA 

has taken steps to determine if/how crop insurance plays a role in these conversions. 

RMA enacted procedures to identify land that has been converted to cropland from 

acreage that has never been in crop production before (native sod); identify land 

that has been converted to cropland from acreage that has previously been in crop 

production, but has been idle for several years (new breaking); and to identify land 

that has been in USDA programs (such as the Conservation Reserve Program) for 

several years and is being converted to cropland acreage upon the expiration of the 

program contract. In addition to identifying the acreage, the yield guarantee for this 

acreage has been reduced for native sod (a maximum yield guarantee of 65 percent 

of the T-Yield published in the actuarial documents) and new breaking acreage (a 

maximum yield guarantee of 80 percent of the T-Yield published in the actuarial 

documents). As these procedures have been in effect for only a few years, the full 

impact of crop insurance on land conversion is not known at this time. 

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Various parties have conducted studies regarding land conversion in the countryside, including the Economic Research Service; however, no study has concluded 

that the RMA procedures for added land contribute to such conversion. 

Question 16. What new technologies is RMA looking at to enhance efficiencies in 

administering the Federal Crop Insurance Program? 

Answer. RMA is enhancing its technology platform on several levels to increase 

efficiencies within the program. It is currently re-engineering and modernizing some 

internal processing systems, particularly its accounting and reporting systems, to reduce costs, increase transparency, and add flexibility to business process improvements. Additionally, RMA is taking part in the Department’s Acreage Crop Reporting Streamlining Initiative (ACRSI) with FSA to reduce the producer burden of filing reports to the government. In particular, RMA is upgrading the Common Information Management System (CIMS) to facilitate real-time data sharing between 

RMA and FSA used in reporting and reconciliation. These changes will also allow 

Approved Insurance Providers (AIPs) quicker access to the producer data to which 

they are entitled to better serve those customers. Finally, RMA has developed an 

educational tool to aid producers in purchasing decisions of key farm bill products 

like SCO and STAX. This tool is currently available as a web application and as 

a mobile app for iOS and Android. 

Question 17. Could new technologies, such as those delivered by unmanned aerial 

systems, help RMA to improve accuracy of field mapping and crop loss monitoring, 

and ultimately save Federal resources? 

Answer. RMA continually evaluates new technologies that may increase efficiencies in the Federal Crop Insurance Program. Unmanned Aerial Systems (UAS) 

are one of the new technologies that RMA is monitoring. UAS have a host of applications applicable to agriculture, and some may be directly applicable to the delivery 

and servicing of crop insurance risk management tools. Currently, there are a wide 

diversity of UAS platforms (the ‘flight vehicle,’ e.g., multirotor, helicopter, and fixedwing unmanned aerial vehicle (UAV)) and a diversity of sensor payloads (the camera or remote sensing instrument mounted on the UAV). Each UAV/sensor combination has a distinct use-case as applied to field mapping and crop loss monitoring. 

In addition, RMA is currently following the development of regulations related to 

UAS technology, how early case studies document the benefits of their use, and how 

producer privacy concerns weigh into the application of these technologies. 

Question 18. Section 11024 of the 2014 Farm Bill adds the purpose of improving 

the analysis tools regarding crop insurance compliance to the existing partnerships 

program. How will the RMA be reaching out to third parties to carry out this new 

purpose? Will there a specific request for proposals? Or are individual entities welcome to approach the Agency with their ideas? 

Answer. RMA has not determined how it will implement this provision. 

Question 19. I understand that you are working with the barley industry on a 

malting barley policy, which will be of great importance to the growers in my district. Will the malting barley policy be available for the 2015 crop? 

Answer. No, the new policy will not be available for the 2015 crop. A new Malting 

Barley Revenue policy has been approved by the Federal Crop Insurance Corporation Board of Directors. However, the private submitter is still in the process of finalizing all the relevant policy materials and has advised that they will not have 

completed their work in time to implement the new policy for the 2015 crop year, 

and have therefore requested the policy be implemented for the 2016 crop year. 

Question 20. The RMA fact sheet on Sodsaver implementation indicates that producers will have to bring proof that the land to be insured was ‘‘previously tilled’’ 

to their approved insurance provider. Was the crop insurance industry consulted on 

the best way to handle the certification? 

Answer. Yes, the crop insurance industry was consulted and given the opportunity 

to review the draft procedures developed by RMA for the native sod provisions. 

Administration—FSA County Office Closings 

Question 21. Are the computer systems in the FSA county offices up to the job 

of handling another round of base and yield updates as well as the multiple options 

that were set up by the final commodity title provisions? 

Answer. Yes, the computer systems in the FSA county offices are up to the job. 

FSA incrementally provided information to the farmers and software to the FSA 

County Offices to update base and yield information in order to make a final election. All software to support the base acre reallocation and yield update has been 

provided, with election capability to be provided later this year. 

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Question 22. How does FSA plan to utilize the $120 million that the Committee 

made available for administrative costs? What is the breakdown between staffing, 

computer programming, and other expenses? 

Answer. FSA will use the $100 million that was made available in FY 2014 and 

FY 2015 for implementation of Title I programs for cost for developing software, hiring temporary employees, training field office staff and producer outreach and education. FSA and RMA are working collaboratively to develop a plan for implementing ACRSI at which time a spending plan for the $20 million ($10M in FY14 

& $10M in FY15) will be determined. 

Below is the breakout between FY 2014 and FY 2015 of cost by category for the $100 million: 

Item FY 2014 FY 2015 1 Total 

Staffing $2,470,000 $27,037,000 $29,507,000 

Computer Programming $8,978,000 $20,370,000 $29,348,000 

Other Expenses $4,437,122 $31,827,390 $36,264,512 

Total $15,885,132 $79,234,390 $95,119,522 

1FY 2015 is reduced for sequestration. 

Question 23. Are you planning on utilizing temporary employees to get through 

the initial heavy workload from now until early next calendar year? And are there 

temporary folks still available out in the countryside or are you having to train new 

folks? I have the feeling that many of your former temporaries may have taken permanent positions from county office staff that retired since the last farm bill. 

Answer. FSA is committed to delivering new farm bill programs and policies in 

an efficient and timely manner. The use of temporary employees is critical to achieving successful program implementation and FSA plans to have temporary employee 

resources in the field during both FY 2014 and FY 2015. During the last quarter 

of FY 2014, FSA had more than 650 full-time temporary employees on board and 

approximately another 900 intermittent (hourly) temporary employees on the roles 

and available for program and customer support. Many of these same employees 

may be extended into FY 2015, as FSA has made available to States, FY 2015 1st 

and 2nd quarter temporary staffing levels of 830 FTEs. These initial FY 2015 FTEs 

will carry FSA through peak farm bill workload as the Agency continues to assess 

temporary staffing needs and available resources for FY 2015. 

Question 24. The Administration’s FY15 budget submission indicated that you 

were looking at closing 250 FSA field offices. Do you have more details to share with 

the Committee yet on these plans? Are you still planning to not close any offices 

before October 1st of this year? 

Answer. No offices will be closed before October 1, 2014. Moreover, no office closure plan has been approved at this time and the Agency has not developed a list 

of specific offices to close. 

Question 25. It is my understanding that your budget submission did not take into 

account possible farm bill workload. Has the Farm Service Agency done a recent 

workload analysis that takes into account the potential workload for state and county offices with the new crop and dairy programs to administer? Can you share with 

the Committee for the record the most recent analysis and what it shows for staffing 

levels by state? 

Answer. The Farm Service Agency has developed a data driven workload analysis 

that included reoccurring activities that the agency performs to administer farm and 

farm loan programs. The new programs as a result of the Agricultural Act of 2014 

such as the Agricultural Risk Coverage/Price Loss Coverage, Dairy- Margin Protection, Livestock Disaster, and new portions of the Non Insured Assistance program 

were not implemented at the time FSA’s workload analysis was completed. Assumptions were made as to the potential workload that could be derived as the new programs are implemented and therefore, an updated analysis would need to be made 

once the new programs were implemented. Similarly, the Stacked Income Protection 

Plan (STAX) for cotton has now shifted some FSA workload to RMA. The new program workload assumptions were not totally inclusive in the recent workload analysis. Since further review of new program participation must be conducted to adequately determine how they will affect the distribution of staffing for states and 

counties, the workload analysis was only used a guide to allocate staffing to the 

states. Once this review and update is completed, the agency will have a more comprehensive analysis that can provide a more comparative and qualitative distribution of staffing in the future. 

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Question 26. Is the same true that your FY15 budget submission also did not take 

into account staffing needs and that’s part of the reason for the reduction of 815 

FTE (Full Time Equivalent) positions? Does the Department still feel there is a need 

for this reduction? 

Answer. The FY 2015 budget submission was developed well before the enactment 

of the 2014 Farm Bill. Certain assumptions regarding staffing requirements were 

made based on the information available at the time; however, there was much 

about the final farm bill that simply was not known. The Department believes that 

there remain opportunities to streamline and right-size Farm Service Agency operations. The Farm Service Agency has developed a data driven workload analysis 

that includes reoccurring activities that the agency performs to administer farm and 

farm loan programs. This analysis must be revised and updated based on the new 

workload requirements of the 2014 Farm Bill. 

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