Thousands of farmers in Ohio the focus of farm bill crop insurance provision

first_imgShare Facebook Twitter Google + LinkedIn Pinterest By Ty Higgins and Matt ReeseFarmer-owners of Sunrise Cooperative are going to want to pay close attention to some fine print in the upcoming farm bill.For over 15 years the Ohio-based co-op has been able to sell crop insurance and divvy out patronage checks at the end of every year, when profits are available. When the crop insurance program was created in 2000, the thought process was since co-ops work directly with farmers (the only people who would be buying crop insurance) the co-op system would be an obvious fit to market the plans.Since then, private industry has been brought into the crop insurance mix and has made the argument that co-ops like Sunrise shouldn’t be able to sell crop insurance because laws state that crop insurance profits may not be rebated, even in the form of patronage paid by a cooperative.“Federal Crop Insurance is a critically important tool for farmers and must be protected. The Sunrise issue has nothing to do with patronage dividends or co-ops’ ability to provide quality services to farmers. Rather it is about one co-op’s ability to offer rebates or kickbacks on the sale of crop insurance that would be illegal for any other co-op, farm credit or independent agent operating in Ohio or the region,” said Tom Sell, with the Crop Insurance Professionals Association. “It is this special advantage that causes concern. Crop insurance has always operated on a level playing field where all farmers have the option to purchase products at published rates and prices regardless of who you choose to do business with. This promotes competition based on quality of service, which we believe is in the best interest of all farmers over the long term and as a matter of public policy.”The first real battle on this issue arose during work on the 2008 Farm Bill.“At that time, Congress said that any entities that had been selling crop insurance and paying out patronages properly in 2005, 2006 and 2007, could continue,” said George Secor, CEO of Sunrise Cooperative. “That included us, an entity in Georgia and another one in Florida and onward we went.”Through two mergers in 2007 and 2009, Sunrise continued with business as usual. Then in 2016, Trupointe merged into Sunrise and more pushback was given about crop insurance and patronages.“Private industry came out and said that we were now a different entity and we could no longer be a part of the exemption from the 2008 Farm Bill,” Secor said. “We had the same Federal I.D. and the same territory of Ohio and Michigan, but when we got a letter from Federal Crop Insurance stating that we had to stop paying patronage, we knew we had to fight it.”That fight traveled all the way to the Sixth Circuit Federal Court of Appeals back in July, where all three judges sided with Sunrise and, again, it was business as usual. After that heavy expenditure of time, effort and resources, Sunrise execs and farmer-owners thought that the decision made by one of the highest courts in the land would be an end to the questions of how they do business. They thought wrong.Sunrise Cooperative’s lawyers recently found out about a sentence added into what could be the next farm bill, which is currently being worked on in committee. The committee includes Michigan Senator Debbie Stabenow, Congressman Collin Peterson from Minnesota, Pat Roberts, a Senator from Kansas and Congressman Mike Conaway from Texas.“I was notified that Congressman Conaway has dropped a line in the new farm bill proposal vacating our victory in Federal Court earlier this year,” Secor said. “I thought after all of that time and money was spend to defend ourselves, how could this happen? It turns out that Congress has the authority to override a Federal Court decision.”The last sentence of Title X—Crop Insurance language on page 251 of the Agriculture and Nutrition Act of 2018 is: “The Committee commends RMA’s May 2016 interpretation of entity for purposes of 7 U.S.C. 1508(a)(9)(B) as wholly consistent with Congressional intent and a plain reading of the statute and vital to maintaining the integrity of crop insurance.”The 1508(a)(9)(B) described in the farm bill sentence refers to the following from the USDA’s Risk Management Agency in 2016:Except as provided in subparagraph (B), no person shall pay, allow, or give, or offer to pay, allow, or give, directly or indirectly, either as an inducement to procure insurance or after insurance has been procured, any rebate, discount, abatement, credit, or reduction of the premium named in an insurance policy or any other valuable consideration or inducement not specified in the policy.(B) Exceptions Subparagraph (A) does not apply with respect to—(i) a payment authorized under subsection (b)(5)(B);(ii) a performance-based discount authorized under subsection (d)(3); or(iii) a patronage dividend, or similar payment, that is paid—(I) by an entity that was approved by the Corporation to make such payments for the 2005, 2006, or 2007 reinsurance year, in accordance with subsection (b)(5)(B) as in effect on the day before the date of enactment of this paragraph; Word of this provision has Secor, along with attorneys representing the co-op and the National Council of Farmer Cooperatives, working feverishly to figure out how to make this right with their over 7,000 farmer-owners again.“Our stance is the same as it was in 2002,” Secor said. “If there is money left over after Federal Crop Insurance, why would we not give it back to the farmers that purchased it? It still doesn’t make sense to me.”Since the first patronage check was cut in 2003, Sunrise has paid $4.7 million back to the farmers who purchased crop insurance.“At some point, that farm bill will have to come out of committee and all four members will have to sign off on it,” Secor said. “We are waiting to hear back from the other three members to see if they are supportive of Congressman Conaway doing this to us and taking patronage away from our farmers.”If the farm bill does come out of committee with this provision attached, Secor said it would then be up to farmer-owners to make their voices heard in Washington.“We have two Senators and 16 House members representing Ohio and we will go to all of them and let them know what might be happening to the people they represent,” Secor said. “Would they want to take these patronages away from their constituents in a time right now when we have some of the lowest farm prices we have had in quite some time?”Why would a Congressman from Texas quietly drop a sentence into the farm bill that would impact a cooperative in Ohio?“That is a great question,” Secor said. “Why would he would want to come to the state of Ohio, explicitly carve out Sunrise Cooperative and take patronages away from farmers and not give them money back on a product that they are the only ones buying? I would love to hear his answer on that. It bothers me to think that one Congressman has that kind of power and can use it against the farmers in a state that is miles away from his own.”Although Secor doesn’t know if private crop insurance companies are behind the move by Congressman Conaway, he does know that letters are being sent out from those organizations still insisting that the Sunrise merger with Trupointe should have voided the practice of paying patronages for crop insurance.Only time will reveal if the controversial sentence with significant Ohio implications makes it into the final version. The farm bill work continues behind-the-scenes, but will move forward as the year winds down and may be passed before the New Year begins.last_img

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