Ordinarily, coverage is based on a farm’s yields over several consecutive years, known as APH for actual production history. The new farm law allows growers to omit from APH any year in which their county’s average yield is less than 50 percent of its 10-year average.
“We are now paying much higher premiums,” said Lucas, speaking for farmers in his home state of Oklahoma, but the insurable yield on many farms is low because of prolonged drought. Mike Conaway of Texas, also hit by multi-year drought, said USDA, as a disaster relief step, should implement the new yield calculations in 2015 instead of 2016, as now planned. Conaway said it would take growers little time to identify low-yielding years.
“We can’t implement something we don’t have information on,” responded Agriculture Undersecretary Michael Scuse. He said the APH provision was a late addition to the farm bill, so USDA had little time to prepare for it. To make the APH adjustments, he said, USDA has to compute average yields for every crop grown in each county for the past 20 years. Adjustments in APH also could lead to revisions in insurance rates.
To read Scuse’s testimony and comments by Conaway, click here.