Conference: Farm Journal Conferences
Thread: The disaster of the "Disaster Assistance"
Date: March 10, 1999 10:22 PM
Author: Chris Pawelski (firstname.lastname@example.org)
Subject: Comments on Proposed Rules
The onion farmers of Orange County, New York, have been working with the
USDA and specifically the Under Secretary's office, since July on our
crop insurance policy. We were being promised by the USDA, as late as
January, that "Stages" (which is the most outrageous and fraudulent
aspect of our policy) would be removed from the 2000 policy and overall,
our policy would be improved. When we saw the Proposed Rules for the
2000 onion policy in the Federal Register, in February, we were shocked.
Not only did they keep "Stages" and "Production to Count", they made
these features and the policy worse in value. This was done under the
ultimate authority and approval of RMA Administrator Ken Ackerman. So,
though Dan Glickman has repeated dozens of times his concern for and the
need for crop insurance reform, the actions of his Department run
diametrically opposed to what he says. Everything that we suggest for
changes in our policy are under the USDA's jurisdictional authority to
change, if they so choose to. Up until now, they have chosen not to.
These comments were sent as public comment in response to these rules.
Dan Glickman comes across as a complete hypocrite.
I advise everyone to contact the RMA and ask to see the Proposed Rules
for your policy and ask who is responsible at FCIC for it. And then
fight them on it, for I'm sure they will try to screw you like they are
Vegetable Improvement Cooperative Association Inc.
8 Scanlon Avenue
Florida, New York 10924
March 4, 1999
Director, Product Development Division
Federal Crop Insurance Corporation
United States Department of Agriculture
9435 Holmes Road
Kansas City, MO 64131
My name is Christopher Pawelski and I am the Communications Director for
the Orange County, New York, Vegetable Growers Association. As the
Communications Director I represent the 60 to 80 small family farmers in
Orange County, New York, which grow approximately 5,000 acres of onions.
Attached are our comments on the Proposed Rules for the year 2000 onion
policy. We are extremely disappointed in the direction the 2000 onion
policy has taken.
Since the summer of 1996, the onion farmers of Orange County, New York
have been trying to work with the USDA to improve the MPCI policy for
onions. In June of 1998 Michael Hand, Bill Klein and Larry Atkinson were
among members of the USDA who toured our valley, saw our decimated onion
fields and heard first hand from farmers about the short comings of the
MPCI policy. In July of 1998 Under Secretary Schumacher assigned Special
Assistant Butch May to work with us. We have been in constant contact
with Mr. May since then in the attempt to improve our policy. Despite
our efforts, despite the phone calls, despite the evidence we have
presented to the USDA, the Proposed Rules for 2000 have actually made
the MPCI onion policy worse. These Proposed Rules do not reflect any of
the changes we have been working on over the past three years.
At worst we expected no improvement, but for the USDA to suggest changes
that will further decrease the value of the MPCI onion policy is
inexcusable. Especially in a year when Secretary Glickman has repeatedly
emphasized the importance of “stitching a stronger safety net.” We
strongly urge you to implement the changes we have suggested.
736 Pulaski Highway
Goshen, New York 10924
Comments on Proposed Rules for the Year 2000 Onion Policy
(1.) Summary: The rules state “the intended effect of this action is to
modify the existing policy so that it is actuarially sound and better
meets the needs of insureds (sic).” The President, as well as lawmakers
(including House Agriculture Committee Chairman Rep. Larry Combest) have
questioned the “actuarially sound” requirement as a justification to
write valueless policies. Further, these proposed changes certainly do
not meet the needs of insured onion growers.
(2.) Section 2: To allow optional units by section is, in theory, a step
in the right direction. In reality however, few onion farmers, if any,
will be able to take advantage of this change. This is because FCIC
defines a section as 640 acres but the average size onion farm is a
little over 100 acres. In the entire State of New York no one farms 1280
acres of yellow onions. For this change to have a positive effect,
section needs to be redefined for onions. It would be advantageous for
onion farmers to be able to separately insure noncontiguous acreage that
is 1 or more miles apart.
(3.) Section 3 - Staged Production Guarantee: The FCIC kept a Staged
Production Guarantee for onions which, according to the Under
Secretary’s office, only exists in 7 crops. We have been told that the
Regional Service Office (RSO) has discretion to set the length and
percentages of the stages. Though the RSO could continue to set it
differently for New York, as long as the Onion Crop Insurance Provisions
contains a Staged Guarantee and sets the parameters and percentage of
coverage, the RSO can always return to the levels in the onion
provisions. We fundamentally reject a Staged Production Guarantee as
being arbitrary and unfair. It should either be in all policies or
removed from all policies, including ours. It seems that no other onion
growing area has voiced opposition to the Staged Guarantee. Our view is
that most onion growers across the country do not and will not realize
how bad the MPCI policy is, until they suffer a catastrophic loss. Also,
the onion industry does not have the same sort of cohesive and well
financed lobby as the program crops do (wheat, corn, soybean, cotton,
etc...) to alert growers to the problem and to effectively voice
opposition to the USDA in Washington.
The effect of a Staged Production Guarantee is that it increases the
loss threshold. The statute requires a 50% loss to qualify for CAT
coverage. With a staged guarantee, if you suffer a loss in Stage 1 the
loss requirement is 82.5%. If you suffer a loss in Stage 2 the loss
requirement is 65%. Example: Our APH is 316; our production guarantee is
50% x 316=158; our second stage production guarantee is 70% x 158=110.6.
Since we will only receive a payment from the policy if our production
falls below 110.6 cwt/acre, we must sustain a loss greater than 65% to
collect. How is this legally justified?
(4.) Section 3 (b)(1)(i): Stage one has been extended to the 4th leaf
with the percentage of coverage remaining at 35%. This is worse than the
1998 policy, the first stage has been increased, in growth time, from 3
to 4 leaves. This ignores our onion production realities. As was
explained to William Klein and other RMA officials in person here in New
York, onions are a very expensive, front-end loaded investment. This is
one reason why a Staged Production Guarantee is totally inappropriate
for onions in New York. This proposed change worsens an already bad
facet of this policy.
(5.) Section 3(b) (2): The rule reads that “the second stage extends,
for all onions, from the end of the first stage until the acreage has
been subjected to topping and lifting or digging.” In New York, the
third stage exists for approximately 3-4 days in August when the onions
are drying briefly before they are harvested. No farmer lifts and tops
his onions when it looks like its going to rain/storm since this would
completely defeat the purpose of this farming technique. As a result it
can safely be said that New York onion farmers will NEVER collect 100%
of this policy, whether a CAT or Buy-Up policy. This violates both the
statutory language and the intent of the program.
(6.) Section 13: Section 13(d) states that “when damage to onion
production exceeds the percentage shown in the Special Provisions but
the production from that unit is sold, the quantity sold will be
included as production to count on a pound-for-pound basis regardless of
the quality.” In other words, the policy will now deduct, consider as
production to count, your production below U.S. #1, including your
undersize onions. This is despite the fact that undersize or lesser
quality onions are sold for a substantially lower price. It will be more
advantageous for the grower to dump lesser quality or undersize onions
versus selling them.
Production to Count is one of the fundamental problems with this policy.
It violates the statutory language and eviscerates the value of the
indemnities. Though Production to Count is in all MPCI policies, no
other insurance policies that we are aware of, whether private crop
insurance policies, or insurance for your home, property, etc...,
contain a feature like Production to Count, which subtracts what the
policy is not covering from what it is covering. In these proposed
rules, not only does Production to Count continue to exist, it has
actually gotten worse.
Short-term solution: Either return to only using U.S.#1 for Production
to Count or add a Quality Adjustment Factor to temper including
undersized and lesser quality onions. If you sold onions at less than
the price election, the volume of those onions would be reduced by a
quality adjustment factor which would equal $/cwt the onions were sold
for divided by the established market price. Example: If you salvaged
250cwt and sold them for $6/cwt, instead of deducting 250cwt from your
Production Guarantee, as is now proposed, you would deduct 143cwt
(assuming the current established market price of $10.50). (250cwt x
Final long-term solution: Revise the section entitled Production
Included in Determining Indemnities to the following. The Production
Guarantee plus any Salvaged Production* cannot exceed 100% of the
approved APH yield. Example: If a farmer has 65% coverage, only salvaged
production above 35% of the farmer’s APH would be deducted from his
The advantage of this final solution is that it is possible for the
farmer to reach his APH in a disaster year. Depending on the extent of
damage and the amount of coverage selected, the farmer still might not
reach his APH in a disaster year but at least it was possible. Expenses
for growing onions consume a minimum of 50% to 60% of a farmers’ gross.
With expenses so high, the crop insurance policy must count damage
towards the insured portion of the crop first. This way the farmer can
be assured that if he suffers a loss he will at least be able to cover
all or a portion of his expenses. The farmer can then assess how much
risk he is willing to accept in the remainder of his crop and living
expenses. A policy of this nature would be a truly valuable tool for
The current crop insurance policy guarantees a minimum loss if the
farmer collects on his insurance. This is the result of Production to
Count which requires that any salvaged production be deducted from the
Production Guarantee. With expenses so high and prices so low, farmers
do not need crop insurance that starts out by guaranteeing a loss.
This might mean that the higher levels of coverage may be too expensive
to offer but I think you would find farmers much more willing to accept
the possibility of loss from the weather rather than a guarantee of loss
from the government.
(7.) Adjustment to Approved APH Yield: If a county has been officially
declared a disaster, farmers in that county should be allowed to use
their county average instead of their actual yield. Also, when there is
a disaster designation, the county average should not be allowed to drop
below 10% of the prior year county average. This would lessen the
detrimental effect of successive disaster years. With the current method
the farmer’s APH continues to drop drastically and precludes the farmer
from being able to purchase adequate insurance.
*Guidelines for salvaged production would be the same as for total
production to count.
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