Crop insurance fight goes on
WAWG joins with Oregon, Idaho grower organizations, industry supporters and legislators to ask RMA to waive reporting rule in some low falling number cases
By Trista Crossley
For many producers, finding out they had low falling number wheat was only the first punch in a double whammy. The second blow landed when they brought their elevator receipts to their crop insurance agents. It turns out that those falling number discounts from the elevators were going to be counted against growers’ actual production history, even if no crop insurance claim was made.
“Things are tough in the wheat industry right now,” said Michelle Hennings, Washington Association of Wheat Growers’ (WAWG) executive director. “With the price of wheat so low, many producers are already struggling to stay afloat. Then you add falling number (FN) discounts on top of low prices, plus getting dinged at the crop insurance level, and it hurts. For some farmers, the crop insurance issue might be the last straw because with the possibility of a declining actual production history (APH) from year to year, crop insurance becomes a less effective risk management tool.”
The U.S. Department of Agriculture’s Risk Management Agency (RMA) uses a grower’s APH to set the level of insurance a grower is eligible for. APHs are set by averaging multiple years of a grower’s yield. A lower APH means a grower might not be able to insure his or her crop fully, not to mention that a low APH could stay on a grower’s records for up to 10 years. The fact that the 2016 crop had a falling
number issue came to light almost as soon as Eastern Washington’s harvest started. While low falling numbers has cropped up in pockets of the state before, this year, the problem was widespread. The clamor was loud enough to draw the attention of Congresswoman Cathy McMorris Rodgers (R-Wash.) who held a meeting in Colfax with wheat industry representatives at the beginning of September to discuss the FN issue.
The discussion continued at WAWG’s September board meeting where RMA representatives Rick Williams and Kay Teisle, both from the Spokane regional office, tried to answer growers’ questions about why a quality issue was impacting yield. After much discussion, the WAWG board directed Hennings to draft a letter to RMA Administrator Brandon Willis asking the agency to waive the reporting rule regarding a yield adjustment when no FN claim is made.
While FN discounts have taken the biggest toll in Washington, both Oregon and Idaho have also been hit. Working with the Idaho Grain Producers Association and the Oregon Wheat Growers League, WAWG sent a letter, signed by 36 industry supporters and businesses, to Willis. Other letters from the Washington State Department of Agriculture, the Idaho State Department of Agriculture and 12 members of the Pacific Northwest’s congressional delegation were also sent to Willis in support of the request.
“We had an amazing amount of support,” Hennings said. “We had people sign the letter who have never signed a letter from WAWG before. They did it because they all saw the effect this reporting procedure is having on farmers, and they understood it could put some farmers out of business. It adds another problem to the bottom line, especially since it isn’t a production issue. Production is what a farmer puts into the warehouse. Why is a grower’s production getting hit because of a quality issue?”
In a Sept. 27 conference call facilitated by the National Association of Wheat Growers, Willis denied the group’s request (see below). In a press release, the grower organizations stated, “We are extremely disappointed that RMA offered no other option to address the situation now, when our growers most need the help.” Hennings said WAWG isn’t ready to let the matter drop.
“We are going to sit down with the Idaho and Oregon wheat grower associations and the regional RMA director and talk about the falling number policy and what works and what doesn’t work,” she said. “And then we are going to try to make the changes necessary to protect our growers.”
One of the complaints WAWG is hoping to address with RMA is why their yield adjustments don’t more closely match the falling number discounts given by elevators. RMA sets their adjustment levels for crop insurers far in advance of the harvest season. Elevators, on the other hand, are able to react to market and local crop conditions, setting their own discount levels that may change throughout the harvest season.
“The discount tables are another critical portion of the falling number issue that we need to address with RMA. Some growers are feeling disadvantaged because their elevators are able to react to market pressures and change their discounts tables, but RMA is locked into their discounts, which are established well before harvest,” Hennings said.
Marci Green, WAWG’s secretary/treasurer and a grower from Fairfield, Wash., participated in that conference call. She said she was disappointed but not surprised that RMA wouldn’t waive the reporting rules.
“It would have been nice to get some changes to fix this in the short term,” she said. “I knew it was going to be an uphill battle. It is midyear, and to get them to make changes midyear is always a challenge. I’m optimistic, however, that we can get that rule changed for the future.”
Green’s farm did get hit with some low FN, but not as badly as other growers. In her opinion, the adjustment for FN should go against price rather than yield, which more accurately reflects what is happening at the elevator when low FN is discovered. “You still have the same number of bushels, but they are going to pay you less for them. Crop insurance has those discounts going through yield, which is like saying ‘we are going to take some of your bushels away.’ It doesn’t accurately reflect what happens in real life,” she explained.
Green also had kudos for WAWG’s staff who spent a huge amount of time and effort researching crop insurance and working with other Pacific Northwest industry groups to draft the request to RMA.
“I can’t think of anything WAWG should have done differently,” she said.
To read WAWG’s statement on RMA’s decision and the letters sent to Willis, visit WAWG’s website.
As calls and emails started flooding the Washington Association of Wheat Grower’s (WAWG) office regarding the falling number crop insurance issue, WAWG’s leadership and staff sprang into action. Working with wheat grower organizations in Oregon and Idaho, WAWG sent a letter to U.S. Department of Agriculture’s Risk Management Agency (RMA) Administrator Brandon Willis on Sept. 26 asking him to waive the reporting rules regarding falling number discounts when no claim is filed. That letter was signed by 35 other industry supporters and businesses. Other letters, signed by 12 members of the Pacific Northwest Congressional delegation and several state departments of agriculture, were also sent to RMA in support of WAWG’s request.
During a conference call on Sept. 27 that included Michelle Hennings, WAWG’s executive director, and Marci Green, WAWG’s secretary/treasurer, Willis denied the Pacific Northwest’s request. He explained that the reporting rule is RMA’s policy, and it wouldn’t be fair to exempt a quality issue for wheat when other commodities also experience quality issues. He also said that making changes to policy midyear is difficult.
Willis’ office has been contacted by multiple news organizations, including Wheat Life, for an official comment on his decision. As of press time, they have declined to provide one. To read the letters sent to Willis, visit WAWG’s website at website.