[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]




 
        A HEARING TO REVIEW THE EFFICACY OF THE FARM SAFETY NET

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                        GENERAL FARM COMMODITIES
                          AND RISK MANAGEMENT

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 23, 2021

                               __________

                           Serial No. 117-10
                           
                           
     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                      
                           
                           


          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov
                         
                         
                         
                         
                          ______                       


             U.S. GOVERNMENT PUBLISHING OFFICE 
 48-842PDF           WASHINGTON : 2022 
                         
                         


                        COMMITTEE ON AGRICULTURE

                     DAVID SCOTT, Georgia, Chairman

JIM COSTA, California                GLENN THOMPSON, Pennsylvania, 
JAMES P. McGOVERN, Massachusetts     Ranking Minority Member
FILEMON VELA, Texas                  AUSTIN SCOTT, Georgia
ALMA S. ADAMS, North Carolina, Vice  ERIC A. ``RICK'' CRAWFORD, 
Chair                                Arkansas
ABIGAIL DAVIS SPANBERGER, Virginia   SCOTT DesJARLAIS, Tennessee
JAHANA HAYES, Connecticut            VICKY HARTZLER, Missouri
ANTONIO DELGADO, New York            DOUG LaMALFA, California
BOBBY L. RUSH, Illinois              RODNEY DAVIS, Illinois
CHELLIE PINGREE, Maine               RICK W. ALLEN, Georgia
GREGORIO KILILI CAMACHO SABLAN,      DAVID ROUZER, North Carolina
Northern Mariana Islands             TRENT KELLY, Mississippi
ANN M. KUSTER, New Hampshire         DON BACON, Nebraska
CHERI BUSTOS, Illinois               DUSTY JOHNSON, South Dakota
SEAN PATRICK MALONEY, New York       JAMES R. BAIRD, Indiana
STACEY E. PLASKETT, Virgin Islands   JIM HAGEDORN, Minnesota
TOM O'HALLERAN, Arizona              CHRIS JACOBS, New York
SALUD O. CARBAJAL, California        TROY BALDERSON, Ohio
RO KHANNA, California                MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida              TRACEY MANN, Kansas
J. LUIS CORREA, California           RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota               MARY E. MILLER, Illinois
JOSH HARDER, California              BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa                   KAT CAMMACK, Florida
KIM SCHRIER, Washington              MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California            JULIA LETLOW, Louisiana
ANN KIRKPATRICK, Arizona
SANFORD D. BISHOP, Jr., Georgia

                                 ______

                      Anne Simmons, Staff Director

                 Parish Braden, Minority Staff Director

                                 ______

      Subcommittee on General Farm Commodities and Risk Management

                     CHERI BUSTOS, Illinois, Chair

ANGIE CRAIG, Minnesota               AUSTIN SCOTT, Georgia, Ranking 
FILEMON VELA, Texas                  Minority Member
SALUD O. CARBAJAL, California        ERIC A. ``RICK'' CRAWFORD, 
TOM O'HALLERAN, Arizona              Arkansas
AL LAWSON, Jr., Florida              RICK W. ALLEN, Georgia
SANFORD D. BISHOP, Jr., Georgia      DAVID ROUZER, North Carolina
                                     TRACEY MANN, Kansas
                                     MARY E. MILLER, Illinois

              Joshua Tonsager, Subcommittee Staff Director

                                  (ii)
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Bustos, Hon. Cheri, a Representative in Congress from Illinois, 
  opening statement..............................................     1
    Prepared statement...........................................     2
Scott, Hon. Austin, a Representative in Congress from Georgia, 
  opening statement..............................................     3
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................    25

                               Witnesses

Kirwan, Jeff, Owner, Kirwan Farms, New Windor, IL................     5
    Prepared statement...........................................     6
Talley, Brian, President and Chief Executive Officer, Talley 
  Farms and Talley Vineyards, Arroyo Grande, CA..................     7
    Prepared statement...........................................     8
Shannon, Wayne Earl ``Wes'', farmer, Shannon Family Farm, Tifton, 
  GA.............................................................     9
    Prepared statement...........................................    11
Tate, Robert, Crop Insurance Agent, Crop Revenue Consultants, 
  Cannon Falls, MN...............................................    12
    Prepared statement...........................................    14
Schnitkey, Ph.D., Gary D., Full and Associate Professor, 
  Department of Agricultural and Consumer Economics, University 
  of Illinois, Urbana, IL........................................    19
    Prepared statement...........................................    20


        A HEARING TO REVIEW THE EFFICACY OF THE FARM SAFETY NET

                              ----------                              


                        WEDNESDAY, JUNE 23, 2021

                  House of Representatives,
         Subcommittee on General Farm Commodities and Risk 
                                                Management,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 1:12 p.m., in 
Room 1300 of the Longworth House Office Building and via Webex, 
Hon. Cheri Bustos [Chair of the Subcommittee] presiding.
    Members present: Representatives Bustos, Craig, Carbajal, 
O'Halleran, Lawson, Bishop, Austin Scott of Georgia, Allen, 
Rouzer, Mann, Miller, and Thompson (ex officio).
    Staff present: Lyron Blum-Evitts, Prescott Martin III, 
Joshua Tonsager, John Konya, Patricia Straughn, Trevor White, 
Erin Wilson, and Dana Sandman.

  OPENING STATEMENT OF HON. CHERI BUSTOS, A REPRESENTATIVE IN 
                     CONGRESS FROM ILLINOIS

    The Chair. This hearing of the Subcommittee on General Farm 
Commodities and Risk Management entitled, A Hearing to Review 
the Efficacy of the Farm Safety Net, will come to order. 
Welcome, and thank you for joining today's hearing. After brief 
opening remarks, Members will receive testimony from our 
witnesses today, and then the hearing will be open to 
questions. Members will be recognized in order of seniority, 
alternating between Majority and Minority Members, and in the 
order of arrival for those Members who have joined us after the 
hearing was called to order. When you are recognized you will 
be asked to unmute your microphone, and will have 5 minutes to 
ask your question or make a comment. If you are not speaking, I 
ask that you remain muted in order to minimize background 
noise. In order to get to as many questions as possible, the 
timer will stay consistently visible on your screen. In 
consultation with the Ranking Member, and pursuant to Rule 
XI(e), I want to make Members of the Subcommittee aware that 
other Members of the full Committee may join us today.
    Thank you to all of our witnesses, and my colleagues, for 
joining us here today. I am excited to chair this Subcommittee 
this Congress, and to work with my colleagues to dive into how 
weather and economic conditions impact our farmers, and how 
safety net programs are functioning to help them through tough 
times. We have heard time and again how critical crop insurance 
is as a risk management tool for farmers, and how necessary 
title I farm programs are to address market and production 
challenges. We have a great panel of witnesses here today, 
including several farmers who will talk about production and 
weather conditions in recent years, a crop insurance agent who 
will give an overview of how the program works, and an ag 
economist who will give us insight on the state of the farm 
economy, and considerations for the safety net.
    This is an important hearing to get input from you about 
how the 2018 Farm Bill programs are working, and to get a 
better understanding of what is happening in the countryside. 
We are interested to hear more about the considerations given 
in signing up for ARC or PLC, and how changes we made to those 
programs have worked for growers. And in particular we want to 
hear about how crop insurance has kicked in, in times of need.
    Building up to this hearing we have held a series of 
meetings with stakeholders and have led roundtables with this 
Subcommittee to hear Members' priorities, as well as to get 
input from national farm organizations. In addition to hearing 
from this panel today, we intend to hold additional hearings to 
help inform the Subcommittee on the impacts of the dire drought 
conditions affecting much of the West, the Upper Great Plains, 
and the Midwest, as well as to understand how other severe 
weather events this year have affected farmers. The information 
we gather from you today, and in future hearings, is critically 
important in our work to ensure that help is here when times 
are tough, and when disasters strike.
    [The prepared statement of Mrs. Bustos follows:]

 Prepared Statement of Hon. Cheri Bustos, a Representative in Congress 
                             from Illinois
    Thank you to all the witnesses and my colleagues for joining us 
here today.
    I am excited to chair this Subcommittee this Congress and to work 
with my colleagues to dive into how weather and economic conditions 
impact our farmers and how safety net programs are functioning to help 
them through tough times.
    We have heard time and again how critical crop insurance is as a 
risk management tool for farmers, and how necessary title I farm 
programs are to address market and production challenges.
    We have a great panel of witnesses here today, including several 
farmers who will talk about production and weather conditions in recent 
years, a crop insurance agent who will give an overview of how the 
program works and an ag economist who will give us insight on the state 
of the farm economy and considerations for the safety net.
    This is an important hearing to get input from you about how 2018 
Farm Bill programs are working and to get a better understanding of 
what is happening in the countryside.
    We are interested to hear more about the considerations given in 
signing up to ARC or PLC, and how changes we made to those programs 
have worked for growers. And in particular, we want to hear about how 
crop insurance has kicked in, in times of need.
    Building up to this hearing, I've held a series of meetings with 
stakeholders and have led roundtables with this Subcommittee to hear 
Members' priorities as well as to get input from national farm 
organizations.
    In addition to hearing from this panel today, we intend to hold 
additional hearings to help inform this Subcommittee on the impacts of 
the dire drought conditions affecting much of the West, Upper Great 
Plains, and Midwest, as well as to understand how other severe weather 
events this year have affected farmers.
    The information we gather from you today and in future hearings is 
critically important in our work to ensure that help is there when 
times are tough and when disasters strike.
    I'd now like to welcome the distinguished Ranking Member, the 
gentleman from Georgia, Mr. Austin Scott, for any opening remarks he 
would like to give.

    The Chair. I would now like to welcome the distinguished 
Ranking Member, the gentleman from Georgia, Mr. Austin Scott, 
for any opening remarks he would like to give.
    Mr. Austin Scott of Georgia. Thank you, Chair Bustos. This 
is an extremely important hearing to evaluate the importance of 
the farm safety net programs--okay.
    The Chair. We are going to take a brief recess. We have 
some technical issues, and we will resume as soon as we get 
those taken care of.
    [Recess.]
    The Chair. All right, we will come back to order. At this 
point I would like to welcome the distinguished Ranking Member, 
the gentleman from Georgia, Mr. Austin Scott, for any opening 
remarks he would like to give.

  OPENING STATEMENT OF HON. AUSTIN SCOTT, A REPRESENTATIVE IN 
                     CONGRESS FROM GEORGIA

    Mr. Austin Scott of Georgia. Yes. Thank you, Chair Bustos. 
I will try to move pretty quick so we can get back on time 
after the technical difficulties. This is an extremely 
important hearing to talk about the farm safety nets from the 
last farm bill, and changes that can be made as we work into 
the new farm bill. Certainly in my state, the State of Georgia, 
after Hurricane Michael we saw the shortcomings of the crop 
insurance program. We have heard a lot about the NAP Program, 
the Noninsured Crop Disaster Assistance Program, and changes 
that can be made there, and look forward to hearing the 
testimony from the farmers on the ground about their 
recommendations, and how we create a better safety net for our 
producers that are important to the food supply of all 
Americans.
    A couple of things that I would like to mention. 
Maintaining a stable and reliable safety net for these farmers 
in the event of natural disasters, or in the event of a 
crippled economy, or collapse in economy prices, need to be 
addressed in the farm bill. The other issue, Communist China. 
In the last decade alone, the Chinese Government has wreaked 
havoc on markets for cotton, sorghum, rice, wheat, corn, and, 
of course, soybeans. Their actions in the markets this past 
week are indicative of who they are as a bad trade partner. I 
also have significant concerns about the Chinese ownership of 
the input, and suppliers of our food processing, and look 
forward to hearing from the producers on the ground about how, 
as we push forward into the farm bill we use not only the USDA 
but the Commodity Futures Trading Commission to protect our 
producers from unfair practices of foreign adversaries. With 
that, I yield back.
    The Chair. Thank you, Mr. Scott. The chair would request 
that other Members submit their opening statements for the 
record so witnesses may begin their testimony, and to ensure 
that there is ample time for questions. I am pleased to welcome 
such a distinguished panel of witnesses to our hearing today. 
Our witnesses bring to our hearing a wide range of experience 
and expertise, and I thank them for joining.
    Our first witness today is Mr. Jeff Kirwan. Jeff is a 
leading edge corn and soybean farmer from the Congressional 
district that I serve in west central Illinois. I have known 
him for several years, and I have appreciated the input he has 
provided me in serving on the Farm Profitability Task Force on 
my Ag Advisory Committee. He is a forward-thinker in his use of 
new technology and his business management skills to enhance 
farm productivity. We appreciate your willingness, Jeff, to 
appear before us today, and we look forward to your testimony.
    To introduce our second witness, I am pleased to yield to 
our colleague on the Subcommittee, the distinguished gentleman 
from California, Representative Salud Carbajal.
    Mr. Carbajal. Thank you, Chair Bustos. It is an honor for 
me to welcome a constituent of mine from the Central Coast of 
California to testify before our Subcommittee today. Brian 
Talley is the CEO of Talley Farms and Talley Vineyards in my 
district. He is a third generation farmer, and second 
generation winegrower, who was born and raised in Arroyo 
Grande, California, and began his career in the family 
business, harvesting vegetables when he was 12 years old. Brian 
went on to earn degrees from UC Berkeley in History and Natural 
Resource Economics. Brian's family farming operation produces 
more than 20 different specialty crop commodities, including 
vegetables, citrus, avocados, and wine grapes. In addition to 
managing his farming operation, Brian also serves as Director 
of Farm Credit West. I look forward to Brian's testimony at our 
Committee today, and encourage all my colleagues to try all his 
excellent wines when you have a chance. Madam Chair, I yield 
back.
    Mr. Talley. Thank you. Thank you.
    The Chair. Thank you, Mr. Carbajal. To introduce our next 
witness today, I am pleased to yield to the Ranking Member, the 
distinguished gentleman from Georgia, Mr. Scott.
    Mr. Austin Scott of Georgia. Thank you, Chair Bustos. It is 
my pleasure to introduce my friend and constituent Wes Shannon. 
He and his wife Rhonda have been farming with their family in 
Tift County, Georgia for 44 years. They have survived the 
1980s, the floods, the droughts, the hurricanes, and everything 
else since then. They know a tremendous amount, and will be 
able to provide a tremendous amount of insight into the 
challenges that our farmers face, including transitioning the 
farm to the next generation. He is a great American, a great 
farmer, a great friend, and so it is my pleasure to introduce 
the Committee to Mr. Wes Shannon.
    The Chair. Thank you, Mr. Scott. To introduce our fourth 
witness, I am pleased to yield to our distinguished colleague 
on the Subcommittee, the gentlewoman from Minnesota, Ms. Craig.
    Ms. Craig. Thank you so much, Chair Bustos, and the Ranking 
Member. I am so pleased to be able to introduce to the 
Subcommittee today Mr. Rob Tate. Mr. Tate is a farmer and crop 
insurance agent from just outside of Cannon Falls, a great town 
in southeastern Minnesota. Mr. Tate has worked as a crop 
insurance agent and crop revenue consultant in Cannon Falls for 
the past 16 years. He is also a farmer, growing corn and 
soybeans on his fifth generation family farm. Mr. Tate's 
comprehensive ag background gives him unique and comprehensive 
insight into issues facing our farmers today, especially when 
it comes to the importance of crop insurance and a strong farm 
safety net. In addition to farming, working as a crop insurance 
agent, and advising farmers in his community, he also serves on 
the Board of the Minnesota Corn Growers' Association, and on 
various civic boards in our community. Mr. Tate and his wife 
Kelly have two sons. Thank you, Mr. Tate, for your work in 
southeast Minnesota, and for taking the time to share your 
thoughts with us today, taking the time to share your thoughts 
with me on what we should be doing here in Congress. And with 
that, Chair Bustos, thank you again for inviting Mr. Tate to 
testify before the Subcommittee today, and I yield back.
    The Chair. Thank you, Congresswoman Craig. Our fifth and 
final witness is Dr. Gary Schnitkey. I am honored that we will 
be able to hear from Dr. Schnitkey today. He is well-renowned 
in the farm policy world for his analysis and his insights. He 
is a Professor in the Department of Agriculture and Consumer 
Economics at the University of Illinois. Much of his work is 
focused on analyzing the profitability of farms and helping 
farmers to mitigate risk. He has developed tools to help 
farmers select commodity programs and crop insurance options, 
and he writes the weekly Farm Economics article, which appears 
every week on the farmdoc Daily website. Dr. Schnitkey, thank 
you for agreeing to join us today, and to share your insights.
    So welcome to all of our witnesses. We will now proceed to 
hearing your testimony. You will each have 5 minutes. The timer 
should be visible to you on your screen, and will count down to 
zero, at which point your time has expired. We will start with 
Jeff Kirwan. Mr. Kirwan, please begin when you are ready.

 STATEMENT OF JEFF KIRWAN, OWNER, KIRWAN FARMS, NEW WINDSOR, IL

    Mr. Kirwan. Good afternoon, and thank you, Madam Chair 
Bustos, Ranking Member Scott, and everyone on the Committee. I 
am Jeff Kirwan, a corn and soybean farmer from New Windsor, 
Illinois that is about 20 miles south of the Quad Cities, and 
about 25 miles east of the Mississippi River. I can tell you 
that the last 3 years have posed a series of major challenges 
for me, my neighbors, and for farmers across the country. Many 
of us are still working through those challenges and trying to 
process what they mean for our industry. In 2018, the previous 
Administration launched a trade war with China, causing prices 
of soybeans to fall dramatically, before they rebounded. In 
2019, we witnessed heavy rains and flooding across much of 
Illinois and the Midwest, causing planting delays, late 
harvests, grain quality, and storage issues.
    Then came 2020, a once in a lifetime pandemic that 
disrupted the ag supply chains across the country in a way that 
we have never witnessed. COVID wreaked economic havoc on our 
industry. Add to that a derecho that caused $4 billion in 
damages to Iowa farms, and millions of dollars' worth of damage 
on our side of the river. Never in recent memory, nor in my 
farming career, has agriculture become so reliant for such an 
extended period on emergency assistance. While we might not 
always express it, farmers greatly appreciate the efforts that 
Congress and the USDA over the past 3 years have done to 
address the magnitude and cumulative impact caused by each of 
these natural and economic disasters.
    Crop insurance is a cornerstone of my operation. Our 
ability to market our grain, manage our risks, and financially 
survive depends on crop insurance. Hundreds of thousands of 
dollars are invested in a growing crop that can be wiped out in 
one weather event, and there are broader impacts on the ag 
economy. Considering what farmers spend on ag inputs, 
machinery, equipment, and crop protection, we must be 
successful for everyone else. That is why crop insurance is so 
critical for our entire industry.
    On top of crop insurance, looking at the recent past, 
whether it was CFAP, WHIP+, or Market Facilitation Program 
payments, the timely emergency assistance that you and the USDA 
provided allowed farmers like me to meet the challenges, pay 
our bills, and continue to produce. Through it all, the farm 
safety net, ARC/PLC, also played a key role in keeping farmers 
afloat. But in the absence of ad hoc disaster assistance, there 
is no question that those programs, and the timing of payments, 
were simply not designed to address extraordinary economic and 
weather-related disasters. There needs to be a review of these 
programs, and farm organizations need to be part of that 
conversation.
    The big picture of the last 3 years has demonstrated that 
the farm safety net, farm programs, and crop insurance 
performed well, but the recent past has also clearly revealed 
that the size of the Commodity Credit Corporation has neither 
kept up with inflation, nor the potential for more frequent 
natural disasters on major production disruptions. As we move 
forward as an industry, that is something that we must be 
taking into account. Illinois farmers have been talking about 
the potential for participating in voluntary carbon markets. We 
are considering what types of government programs exist, and we 
could develop to incentivize soil carbon and reward producers 
with a demonstrated track record of soil health practices that 
sequester carbon. That policy discussion has also highlighted 
what many farmers consider to be a shortage of NRCS technical 
assistance.
    Finally, USDA's recent announcement creating a Pandemic 
Cover Crop Program is welcomed by my fellow Illinois producers, 
many of whom have taken advantage of our $5 per acre crop 
insurance discount offered the last 2 years by the Illinois 
Department of Ag. I would like to thank the Chair, the Ranking 
Member, and Committee for the opportunity to testify, and I 
look forward to your questions. Thank you.
    [The prepared statement of Mr. Kirwan follows:]

 Prepared Statement of Jeff Kirwan, Owner, Kirwan Farms, New Windor, IL
    I'm Jeff Kirwan, a corn and soybean farmer from New Windsor, 
Illinois--that's about 20 miles south of the Quad Cities and about 25 
miles east of the Mississippi River.
    I can tell you the last 3 years have posed a series of major 
challenges for me, my neighbors, and for farmers across our country. 
Many of us are still working through those challenges and trying to 
process what they mean for our industry.
    In 2018, the previous Administration launched a trade war with 
China causing prices of soybeans to fall dramatically before they 
rebounded. 2019 witnessed heavy rains and flooding across much of 
Illinois and the Midwest causing planting delays, late harvests, and 
grain quality and storage issues.
    Then came 2020, and a once-in-a-century pandemic that disrupted 
agricultural supply chains across the country in a way we've never 
witnessed. COVID wreaked additional economic havoc on our industry. Add 
to that, a derecho that caused $4 billion in damage to Iowa farms and 
of millions of dollars' worth of damage on our side of the river.
    Never in recent memory--nor in my farming career--has agriculture 
become so reliant for such an extended period on emergency assistance. 
While we might not always express it, farmers greatly appreciate the 
efforts of Congress and USDA over the past 3 years to address the 
magnitude and cumulative impact caused by each of these natural and 
economic disasters.
    Crop insurance is the cornerstone of my operation. Our ability to 
market our grain, manage risk, and financially survive depends on crop 
insurance. Hundreds of thousands of dollars invested in a growing crop 
can be wiped out in one weather event. And there are broader impacts on 
the ag economy. Considering what farmers spend on ag inputs, machinery, 
equipment, and crop protection, we must succeed for the entire 
industry. That why crop insurance is so critical.
    On top of crop insurance, looking at the recent past, whether it 
was CFAP, WHIP+, or Market Facilitation Program payments, the timely 
emergency assistance that you and USDA provided allowed farmers like me 
to meet each of these challenges, pay our bills and continue producing.
    Through it all, the farm safety net--ARC-PLC--also played a role in 
keeping farmers afloat. But in the absence of ad hoc disaster 
assistance, there's no question those programs--and the timing of 
payments--were simply not designed to address extraordinary economic 
and weather-related disasters. There needs to be a review of these 
programs, and farm organizations must be part of that conversation.
    Big picture--these last 3 years have demonstrated that the farm 
safety net--farm programs and crop insurance--performed well as it 
could. But the recent past has also clearly revealed that the size of 
the Commodity Credit Corporation has neither kept up with inflation nor 
with the frequency of natural disasters and major production 
disruptions. As we move forward as an industry, that's something that 
must be taken into account.
    In Illinois, farmers have been talking about the potential for 
participating in voluntary carbon markets. We're considering what types 
of government programs exist or could be developed to incentive soil 
carbon and reward producers with a demonstrated track record of soil 
health practices that sequester carbon. That policy discussion has also 
highlighted what many farmers consider to be a shortage of NRCS 
technical assistance.
    Finally, USDA's recent announcement creating a pandemic cover crop 
program is welcomed by my fellow Illinois producers, many of whom have 
taken advantage of $5 per acre crop insurance discounts offered over 
the last 2 years by Illinois Department of Agriculture.
    I'd like to thank the Chair and the committee for the opportunity 
to testify and look forward to your questions.

    The Chair. Thank you, Mr. Kirwan. Mr. Talley, please begin 
when you are ready.

        STATEMENT OF BRIAN TALLEY, PRESIDENT AND CHIEF 
          EXECUTIVE OFFICER, TALLEY FARMS AND TALLEY 
                  VINEYARDS, ARROYO GRANDE, CA

    Mr. Talley. Madam Chair, and Members of the Committee, 
thank you very much for the opportunity to speak to you today. 
I have participated in the Federal Crop Insurance Program for 
more than 20 years for lemons, avocados, and wine grapes at the 
catastrophic level, which means that we must suffer a loss of 
more than \1/2\ of our crop for a claim to pay off. And during 
our history in the program, we have experienced losses, and had 
claims paid, in all three of our insured commodities. Some of 
these losses have been associated with catastrophic events, 
like the historic freeze of 2007 that affected the entire State 
of California, and resulted in significant frost damage and 
losses in my lemon orchard. More than \1/2\ of my crop either 
fell on the ground or was sent to be juiced with almost no 
return. Other times these have been more subtle events, such as 
in 2017, when El Nino conditions resulted in poor pollination, 
and production of less than \1/2\ of my normal avocado crop in 
2018. In each of these instances, I have been pleased with the 
service that I received to get my claims paid in a timely 
manner, and I consider the role of independent crop insurance 
agents who provide the service, in terms of collection of 
premiums and payment of claims to be one of the strengths of 
the crop insurance program, and I hope that there will always 
be a role for independent insurance agents in the program.
    Moving forward to more recent events, I would like to talk 
a little bit about 2020, when much of the West Coast was 
impacted by devastating wildfires. I am blessed that the crops 
that I grow were largely unaffected, because we had no major 
wildfires in San Luis Obispo County. And though the smoke was 
nearly unbearable for days on end, we did not experience any 
smoke taint in our wines. Other winegrowers were not so 
fortunate, and many will be faced with a total loss of the 2020 
vintage, or a difficult choice between selling a damaged 
product with their name on it, selling off inventory in bulk at 
a loss, or simply dumping it down the drain. A leading expert 
in the California wine industry, John Moramarco, has estimated 
that losses will reach $3.7 billion due to the wildfires of 
2020, and that impacts will be felt into the year 2023. 
Everyone I talk to in the wine industry assumes that this will 
be an ongoing challenge. Scientists and consulting winemakers 
are extremely focused on establishing new protocols to treat 
smoke-tainted wine, but having dealt with smoke-tainted grapes 
in 2015 due to a local wildfire, and comparing notes with 
colleagues recently, I can assure you that the technology does 
not exist to truly fix smoke-tainted wine.
    On a somewhat related note, I would like to share with you 
that just a few weeks ago we learned that Nationwide Insurance, 
who handles the liability insurance for our companies, made the 
decision to exit the California market in many agricultural 
sectors. As I understand it, this decision was largely driven 
by losses due to wildfires over the past 3 years. And I 
recognize that this is not within the purview of this 
Committee, but wanted to make you aware of the challenges that 
farmers in California face as we move forward. And while I am 
not going to dwell on the issues associated with current 
drought conditions, which are extreme, I will tell you that the 
lack of rainfall and insufficient groundwater are just adding 
to the challenges that we face here in California.
    In closing, I want to emphasize that I view the Federal 
Crop Insurance Program to be a fundamental element of the 
safety net that secures the survival of domestic food 
production, which I consider to be of critical national 
importance for all Americans. I hope that any changes 
contemplated to the Federal Crop Insurance Program only serve 
to strengthen it. Thank you very much for taking my testimony 
today.
    [The prepared statement of Mr. Talley follows:]

   Prepared Statement of Brian Talley, President and Chief Executive 
     Officer, Talley Farms and Talley Vineyards, Arroyo Grande, CA
    My name is Brian Talley and I am a third generation farmer and 
second generation winegrower located in the San Luis Obispo Coast 
region of California, Congressional District 24. I operate a 
diversified family farming operation that produces more than 20 
different commodities, predominantly vegetables, citrus, avocados and 
wine.
    I have participated in the Federal Crop Insurance Program for more 
than 20 years for lemons, avocados and wine grapes at the Catastrophic 
level, which means that we must suffer a loss of at least half of our 
crop to file a claim. During our history in the program, we have 
experienced losses and had claims paid in all three of our insured 
commodities. Some of these losses have been associated with 
catastrophic events, like the historic freeze of 2007 that affected the 
entire state of California and resulted in significant frost damage and 
losses in my lemon orchard. More than half of my crop either fell on 
the ground or was sent to be juiced, with almost no return. Other 
times, these were more subtle events, such as in 2017 when El Nino 
conditions resulted in poor pollination and production of less than 
half my normal avocado crop in 2018. In each of these instances, I have 
been pleased with the service I've received to get my claims paid in a 
timely manner. I consider the role of independent crop insurance agents 
who provide the service in terms of collection of premiums and payment 
of claims to be one of the strengths of the crop insurance program, and 
I hope that this will always be the case.
    Moving forward to more recent events, I'd like to talk about 2020 
when much of the West Coast was impacted by devastating wild fires. I 
am blessed that the crops I grow were largely unaffected--we had no 
major wild fires in San Luis Obispo County, and though the smoke was 
nearly unbearable for days on end, we did not experience any smoke 
taint in our wines. Other winegrowers were not so fortunate and many 
will be faced with total loss of the 2020 vintage or a difficult choice 
between selling a damaged product with their name on it, selling off 
inventory in bulk at a loss, or simply dumping it down the drain. A 
leading expert in the California Wine Industry, Jon Moramarco, has 
estimated that losses will reach $3.7 billion due to the wildfires of 
2020, and that impacts will be felt into 2023. Everyone I talk to in 
the wine industry assumes that this will be an ongoing challenge. 
Scientists and consulting winemakers are extremely focused on 
establishing new protocols to treat smoke tainted wine. Having dealt 
with smoke tainted grapes in 2015 due to a local wildfire, and 
comparing notes with colleagues recently, I can assure you that the 
technology does not exist to truly fix smoke tainted wine.
    On a somewhat related note, I would like to share with you that 
just a few weeks ago we learned that Nationwide Insurance, who handles 
the liability insurance for our companies, made the decision to exit 
the California market in many agricultural sectors. As I understand it, 
this decision was largely driven by losses due to wild fires over the 
past 3 years. I recognize that this is not within the purview of this 
Committee, but wanted to make you aware of the challenges that farmers 
in California face, as we move forward. While I won't dwell on the 
issues associated with current drought conditions, I will tell you that 
lack of rainfall and insufficient groundwater are adding to these 
challenges.
    In closing, I want to emphasize that I view the Federal Crop 
Insurance Program to be a fundamental element of the safety net that 
secures the survival of domestic food production, a matter of critical 
national importance for all Americans. I hope that any changes 
contemplated to the Federal Crop Insurance Program only serve to 
strengthen it.

    The Chair. Thank you, Mr. Talley. Mr. Shannon, please begin 
when you are ready.

STATEMENT OF WAYNE EARL ``WES'' SHANNON, FARMER, SHANNON FAMILY 
                        FARM, TIFTON, GA

    Mr. Shannon. Thank you, Congressman Scott, for that 
introduction. Madam Chair, Congressman Bishop, and other 
Committee Members, thank you all for the opportunity to be with 
you today. I am Wes Shannon, a farmer from Tift County, 
Georgia, part of Georgia's 8th Congressional District. My 
grandfather was a farmer, my father was a farmer and 
agricultural researcher with the University of Georgia. 
Throughout my years in the agricultural industry I have been 
active in several groups that advocate for farmers, including 
the Georgia Peanut Commission, National Peanut Board, Georgia 
Farm Bureau, and the National Cotton Council. I have also been 
involved with a peanut buying point and a cotton gin.
    I began working on the farm before I even graduated high 
school. Our farm grew peanuts, corn, soybeans, hogs, and 
cattle. It was in those early days on the farm that I realized 
the importance of a strong farm safety net. My first experience 
with crop failure was in 1977, when our corn crop was 
negatively impacted by drought and aflatoxin. Three years 
later, in 1980, I took out an operating loan from a local bank, 
planted my first peanut crop. Drought and insects caused the 
crop to fail. At the end of that first crop year, I had a 
negative net worth.
    My wife and I were married in 1981. We bought our first 
farm in 1985. In 1990 we purchased an adjoining farm that we 
had been renting. We lived frugally, with a plan to pay those 
mortgages off as soon as possible because we had seen what debt 
had done to so many farmers during those tough times. We were 
set to have our farms paid for by the time we were 40 years 
old, and then came the drought decades of the 1990s. It seemed 
as if every year we were dry, except for 1994, when a tropical 
storm flooded Albany, Georgia, 40 miles west. A storm in 
October of that year, right around peanut harvest time, made 
the field so wet harvest was almost impossible.
    We were able to pay off both farms, but our carryover debt 
by that time was quite large. Then another drought and short 
crop in 2000, we had to refinance both our farms. We were 
basically starting over again. Had to buy the same farms for 
the second time due to natural disasters. We worked through the 
first decade of this century as carefully as we could, while 
trying to raise a son and daughter, pay for our farms all over 
again. Our farms produced pretty well, but there was never 
anything extra left over.
    I am now in my early 60s, and despite the assistance we 
have received from safety net programs, I have had to refinance 
our two farms for the third time. Our dream of having our farms 
paid for continues to evade us. Our stress and anxiety levels 
remain high. I wish I could tell you that our experience is an 
isolated case, but it is not. Many farmers across the South 
could share similar stories. My family's story, and the stories 
of our fellow farmers in the area, are exactly why we need a 
very strong safety net. Crop insurance is a vital tool to 
farmers, and Congress must not do anything to undermine it. I 
do believe the crop insurance program could be improved. I 
would like to see a crop insurance program that better covers 
our cost of production. If we are making \1/10\ of a percent 
profit with a good crop, that is one thing, but if we are 
insured at the 75 percent level, we must lose 25 percent before 
we can even collect indemnities. We simply do not have that 
kind of profit margin.
    Title I programs are another very important tool to 
farmers. For me, the peanut and seed cotton programs are a 
must. These programs should be continued at a level that will 
allow me to service my farm debts during tough times. 
Increasing references prices or the percentage of base acres on 
which farmers can collect would be ideal. Congress should also 
maintain the separate payment limit for the peanut program. 
Peanuts are a unique, cost-intensive crop which require 
equipment that cannot be used for any other purpose on our 
farm. I have heard that Chairman David Scott would like to 
establish a permanent disaster program. I believe this is an 
idea a lot of farmers in our state could get behind. Though a 
new program couldn't come at the expense of the existing safety 
net, having a standing program in place would remove the 
political challenge associated with ad hoc disaster bills, and 
hopefully get assistance to where it is needed in a more timely 
manner.
    Family farms have always been, and hopefully will continue 
to be, the backbone of rural economies in this country. It is 
our job as farmers to provide food, fiber, and shelter to the 
American people, and others across the world. I urge you all to 
do everything in your power to help farmers continue the 
important work we do. Thank you again, Mr. Scott, for the 
invitation and introduction. Madam Chair and Committee Members, 
thank you all for the time and attention today. I would be 
happy to answer any questions. Thank you.
    [The prepared statement of Mr. Shannon follows:]

   Prepared Statement of Wayne Earl ``Wes'' Shannon, Farmer, Shannon 
                        Family Farm, Tifton, GA
    I am Wayne Earl Shannon (``Wes''), a farmer from Tift County, 
Georgia, which is in Georgia's 8th Congressional District. I grew up on 
a small farm in the southwest part of Tift County. My grandfather was a 
farmer. My father was also a farmer and a researcher at the University 
of Georgia's Coastal Plains Experiment Station in Tifton.
    Throughout my years in the agriculture industry, I have been active 
with several groups that advocate for farmers, including the Georgia 
Peanut Commission, the National Peanut Board, Georgia Farm Bureau, and 
the National Cotton Council. I have also been involved with peanut 
buying points, cotton gins, and PB2 peanut butter.
    I began working as a farmer before even graduating from high school 
in 1977. On my first farm, we grew peanuts, corn, soybeans, hogs, and 
cotton. It was in those early days on the farm that I realized the 
importance of a strong farm safety net. My first experience with crop 
failure happened in 1977, when our family corn crop was negatively 
impacted by a drought. Aflatoxin was also a problem that crop year. In 
the end, we could feed the corn to the market hogs but not the breeding 
stock.
    Three years later, in 1980, I took out an operating loan from a 
local bank and planted my first peanut crop. Drought and insects caused 
the crop to fail. At the end of my very first crop year, I had a 
negative net worth. Loans from the Small Business Administration (SBA) 
helped a little, but it took me a few years to get over that initial 
setback.
    My wife and I were married in 1981, and we bought our first farm in 
1985 using owner financing. In 1986, we built a small house on our 
farm. We lived frugally with the plan to pay those mortgages off as 
soon as possible after seeing what debt had done to so many farmers 
during tough times. In 1990, we purchased an adjoining farm that we had 
been renting, also using owner financing.
    We were set to have our farms paid for by the time we were forty 
years old, and then came the drought decade of the 1990s. It seemed as 
if every year was dry--except for 1994, when a tropical storm flooded 
Albany, Georgia, 40 miles to our west. A storm in October of that year, 
right around peanut harvest time, made the fields so wet harvest was 
almost impossible. During the storm, the dam on our farm pond broke, 
which made matters even worse.
    In the end, we were able to pay off both farms that were owner 
financed, but our carry over debt was quite large. After another 
drought and short crop in 2000, we had to refinance both of our farms. 
We were basically starting over again, having to buy the same farms for 
a second time due to natural disasters.
    We worked through the first decade of this century being as careful 
as we could, while trying to raise a son and daughter and pay for our 
farms all over again. Our farms produced pretty well over those years 
but never seemed to deliver any extra money.
    Our son was strongly encouraged to go to college and find an 
easier, more stable way to make his living. He graduated high school 
and had interest in building farm equipment, which led to him working 
at a farm machinery manufacturing company in Tifton following 
graduation. He then entered college and had thoughts of pursuing an 
engineering degree.
    After a few years of college and working at the farm equipment 
plant, our son decided he wanted to farm. Things looked promising for 
production agriculture at that time, and we worked to expand our 
operation to accommodate him. We were in a steady growth pattern until 
Hurricane Hermine in 2016, Hurricane Irma in 2017, and Hurricane 
Michael in 2018. Three hurricanes, back-to-back-to-back.
    Our son and his wife had their first child in 2018, right before 
Hurricane Michael hit. He decided to use his education, rather than try 
to continue farming, so that he did not have to borrow money for 
expenses only to lose it all on account of a natural disaster. We 
certainly encouraged him to do that if he could.
    I am now in my early sixties, and despite the assistance we 
received from the Wildfire Hurricane Indemnity Program (WHIP) and other 
safety net programs, I have had to refinance our two farms for a third 
time. Our dream of having our farms paid for continues to evade us, and 
our stress and anxiety levels remain high. I wish I could tell you all 
that our experience is an isolated case, but it is not. Many farmers 
across the south could share similar stories.
    My family's story--and the stories of our fellow farmers in the 
area--are exactly why we need a very strong farm safety net. There are 
times when farmers need help repaying debts left over after short 
crops--short crops that occur through no fault of the farmer. We cannot 
control the weather, and we do what we can to mitigate the risk. But a 
there is only so much we can do.
    Crop insurance is a vital tool for farmers, and Congress must not 
do anything to undermine it. That said, I do believe the crop insurance 
program could be improved. I would like to see a crop insurance program 
that better covers our cost of production. If we are making a ten 
percent profit with a good crop, that is one thing. But, if we are 
insured at seventy-five percent, we must lose twenty-five percent 
before we can even collect indemnities. We simply do not have that kind 
of profit margin.
    Title I programs are another very important tool for farmers. For 
me, the peanut and seed cotton programs are a must. These programs 
should be continued at a level that will allow me to service my debts 
and make the necessary payments on my farms, which I have refinanced 
for the third time due to natural disasters, not poor management. 
Increasing reference prices or the percentage of base acres on which 
farmers can collect would be ideal. Congress should also maintain the 
separate payment limit for the peanut program, as peanuts are a unique, 
cost-intensive crop, which require specialized equipment that cannot be 
used for any other purpose on the farm.
    I have heard that House Agriculture Committee Chairman David Scott 
(D-GA) would like to establish a permanent disaster program. I believe 
this is an idea a lot of farmers in my state could get behind, though a 
new program should not come at the expense of the existing safety net. 
So many of us waited a very long time to receive WHIP assistance after 
the hurricanes I mentioned earlier, and even when that assistance 
finally arrived, it was insufficient for some. Most farmers found a way 
to continue their operations, but many others could not make the math 
work and had to shut down their farm. Having a standing program in 
place would remove the political challenges associated with ad hoc 
disaster bills, and hopefully get assistance to where it is need in a 
more timely manner.
    Family farms have always been, and hopefully will continue to be, 
the backbone of rural economies in this country. It is our job as 
farmers to provide food, fiber, and shelter to the American people and 
others across the world. I urge you all, as Members of the House 
Agriculture Committee, to do everything in your power to help farmers 
continue the important work we do!

    The Chair. Thank you, Mr. Shannon. Mr. Tate, please begin 
when you are ready.

 STATEMENT OF ROBERT TATE, CROP INSURANCE AGENT, CROP REVENUE 
                 CONSULTANTS, CANNON FALLS, MN

    Mr. Tate. Chair Bustos, Ranking Member Scott, and Members 
of the Subcommittee, thank you for holding this hearing today. 
My name is Rob Tate. I am a farmer, crop insurance agent, and 
crop revenue consultant, which means I work with fellow farmers 
to help them develop comprehensive risk management strategies 
for their farms. I am also a Board member of the Minnesota Corn 
Growers' Association. My wife Kelly is a healthcare worker, 
providing palliative care, and we raise two boys, Logan and 
Johnathan, just outside of Cannon Falls, Minnesota, where we 
are represented by Angie Craig, who I know had something to do 
with my invitation to testify today. Thank you, Congresswoman. 
I grew up in Farmington, a Twin Cities suburb, but now I live 
in Cannon Falls, on a family farm that my ancestors homesteaded 
generations ago. We love living and working on our fifth 
generation family farm, and as a crop revenue consultant, I 
look at the whole financial picture of farmers. I help with, 
and today I mainly want to focus on, crop insurance.
    A strong farm bill safety net and the ad hoc relief that 
you have provided over the past several years have been vital 
to the survival of farm families. MFP, CFAP, WHIP+, and the 
Pandemic Assistance for Producers Initiative have not been 
perfect, but I would not want to imagine what farm country 
would look like without them. American agriculture has been in 
an economic ditch for about 7 years before we started to re-
emerge earlier this year. Thanks to the rising global demand 
and higher commodity prices, it is a relief. The overreaching 
theme in my testimony this morning, or, excuse me, this 
afternoon, is that Federal crop insurance is an absolute 
mainstay for the rural Minnesotan farm families like mine. If 
Washington does anything on farm policy, it should first do no 
harm to crop insurance. Second, for producers in regions and 
crops where the program is not working optimally, I would urge 
Congress and USDA to work with producers to address these 
situations through the 508(h) process, research and 
development, and pilot programs, which are all authorized under 
the statute.
    Farming is a very risky business, and the stakes keep 
getting higher and higher. Crop insurance is not only vital to 
producers in recovering from natural disasters, but it is also 
essential in securing credit. The best way to help beginning 
farmers, socially disadvantaged farmers, or other producers 
who, like me in my early years, may not have a lot of capital 
at their disposals to help these producers manage their risk 
through Federal crop insurance. We mainly grow corn and 
soybeans in my area, though we have had a good crop mix in 
Minnesota, dairy and livestock as well. For years livestock and 
dairy were underserved by crop insurance, but now roughly 35 
percent of the milk market in the United States is insured 
under crop insurance. Over 700,000 head of cattle are insured 
under the LRP, or Livestock Risk Protection. These are two 
great precedents about what can be done for underserved 
producers using policy development authorities under crop 
insurance.
    The innovations that built the successful crop insurance 
program began in 1980, when Congress turned the sales and 
servicing of insurance over to the private-sector. Now an 
indemnity is usually received within 30 days of a finalized 
claim. This is incredibly efficient, especially when compared 
to disaster programs, which can take years. In 1994 and 2000 
Congress increased the premium discount for farmers to 
encourage producer participation in crop insurance at higher 
coverage levels. These innovations achieved great success, and 
largely eliminated the need for ad hoc disaster until the first 
WHIP Program in 2017. And, finally, another innovation is Dr. 
Art Barnaby's development of the revenue coverage products. 
These innovations have caused Federal crop insurance to take 
off over the last 41 years.
    Importantly, there are more premiums paid into the system 
than indemnities paid out. Farmers have skin in the game. One 
area where there is room for improvement is on deductibles. A 
farmer has a deductible on the face of his policy. If he has a 
75 percent coverage, he has to lose 25 percent of his crop 
before he can collect indemnity beyond that. The other is a 
hidden deductible when the APH, the amount that he can insure 
based upon past yields, lags behind what they can actually 
produce. Trend adjusted yields and yield exclusions are 
examples where Congress, RMA, and private-sector development 
have worked hard to tackle a problem, but there is still room 
for improvement.
    As we continue to work to improve crop insurance, I 
appreciate Chairman Scott's interest in a standing disaster 
program as a potential bridge that complements, rather than 
undermines, crop insurance, that does not result in lower crop 
insurance participation or coverage levels. Finally, I hope to 
steer you away from a couple of things as policymakers. There 
have been proposals in the past that would undo every success 
of crop insurance and return it to the days of when it did not 
work for farmers. Cutting premium discounts, eliminating the 
Harvest Price Option, private-sector delivery, undermining 
producer confidentiality, and imposing pay limits and AGI 
testing are proposals that would be extremely harmful. Thank 
you, and I hope my testimony has been helpful, and I look 
forward to answering your questions.
    [The prepared statement of Mr. Tate follows:]

 Prepared Statement of Robert Tate, Crop Insurance Agent, Crop Revenue 
                     Consultants, Cannon Falls, MN
    Chair Bustos, Ranking Member Scott, Members of the Subcommittee, 
thank you for holding this hearing and for inviting me to testify.
    My name is Rob Tate and I am a farmer, a crop insurance agent, and 
a crop revenue consultant--which means I work with fellow farmers to 
help them develop comprehensive risk management strategies for their 
farms.
    I am also a new member of the Minnesota Corn Growers Association 
Board.
    My wife, Kelly, is a full-time health care social worker, providing 
palliative care in our area so she has a very demanding job in addition 
to her helping on the farm.
    Together, we raise two boys, Logan and Johnathan.
    We live outside of Cannon Falls, which is a small town in 
southeastern Minnesota, about a half hour south of Saint Paul and about 
the same distance from the Mississippi River and the Wisconsin border.
    We are represented in Congress by Rep. Angie Craig who I know had 
something to do with my being invited to testify today.
    Thank you, Congresswoman Craig.
    I actually grew up in Farmington, which is a suburb of the Twin 
Cities.
    But, my grandparents owned and operated the family farm that my 
ancestors homesteaded generations ago.
    I fell in love with the place and, at the age of 16, I actually 
planted and harvested my first corn crop by myself when my father was 
unable to help due to health issues.
    Although I've worked as a lender in the Farm Credit System and now 
also work as an agent and crop revenue consultant, my family's first 
love is living and working on our fifth-generation family farm.
    Our boys are in 4-H and they are excited to show steers and heifers 
at the county fair this year now that COVID restrictions have been 
relaxed.
    So, we're all in on farming and life in a great rural community and 
I very much appreciate you holding this hearing on the value of the 
farm safety net because it is important to families like mine.
    I'm going to largely defer to my fellow producers on the panel to 
discuss in more detail the importance of the farm bill's safety net 
provisions in order to focus my comments on Federal crop insurance.
    As a crop revenue consultant, I do look at the whole financial 
picture of the farmers I help in terms of risk management, including 
farm bill programs, but I want to go a bit deeper into the weeds on 
crop insurance as an agent and as a former lender.
    That said, I do want to emphasize that a strong farm bill safety 
net is extremely important as has been the ad hoc relief that you have 
provided farm families over the past several years to help mitigate the 
harsh impacts of trade disruption, the pandemic, and severe natural 
disasters affecting many regions of the country.
    The Market Facilitation Program, the Coronavirus Food Assistance 
Program, the Wildfire and Hurricane Indemnity Program (WHIP) Plus, and 
the Pandemic Assistance for Producers may not have been perfect in 
their design or implementation, but I would not want to imagine what 
farm country would look like in Minnesota or elsewhere without the 
help. Farm bills and crop insurance are not designed to handle all of 
that at once.
    American agriculture had been in an economic ditch for about 7 
years before we started to reemerge earlier this year, thanks to rising 
global demand and higher commodity prices. It's a welcome relief.
    Seven tough years is a lot to dig out from under and our doing so 
still hinges on global demand and prices continuing to improve and 
Mother Nature's cooperation, but there is a hopefulness in the 
countryside despite the growing concerns over the drought gripping many 
places, including parts of Minnesota.
    With all of this as a backdrop, if I had an overarching theme in my 
testimony before you this morning, it is this: Federal crop insurance 
has been an absolute mainstay for rural Minnesota and farm families 
like mine.
    If Washington does anything on farm policy, it should first, do no 
harm to crop insurance.
    And, second, for producers, regions, or crops where the program is 
not working optimally, I would urge Congress and USDA to work to work 
with these producers to address those situations through the 508(h) 
private policy development and submission process, research and 
development, and pilot programs which are all authorized under statute.
    Crop insurance is, hands down, the most highly regarded component 
of the farm safety net in the estimation of Minnesota farmers.
    And the numbers speak for themselves.
    In Minnesota, 97 percent of row crops are insured at an average 
coverage level of 78 percent.
    84 percent of total Minnesota acreage is insured under Federal crop 
insurance.
    We have about $8 billion in liability protection in force and have 
a loss ratio in the state of just 0.57, meaning we are paying more 
premium in comparison to the indemnities that we receive--but that is 
how insurance is supposed to work.
    It's not about receiving a payment--although an indemnity is 
certainly appropriate if a farmer suffers a loss--but it is all about 
managing risk.
    I know it sounds cliche because it's said so often, but farming is 
a very risky business--and the stakes just keep on getting higher and 
higher.
    We long ago reached the point where crop insurance is not only 
vital to producers in recovering from a natural disaster, but it is 
just as essential in securing credit to plant a crop in the first 
place.
    This is especially true for farmers who may not have a lot of 
capital, like me when I first started out as a beginning farmer in 
1991.
    The best way to help beginning farmers, socially disadvantaged 
farmers, or other producers who, like me in my early years, may not 
have a lot of capital at their disposal, is to help these producers 
manage their risk through Federal crop insurance.
    And if the menu of policies available out there does not address a 
unique peril for a producer, a crop, or a region, let's encourage the 
development of effective policies to get the job done using the 
authorities under the Federal Crop Insurance Act to make it happen.
    We are a heavily corn and soybean area in my part of the country, 
though we do have a good crop mix in Minnesota and certainly dairy and 
livestock, as well.
    For years, livestock and dairy were underserved by Federal crop 
insurance--partly due to a legal limitation on their participation that 
Congress thankfully got rid of recently.
    And, now, just a few short years later, about 35 percent of all 
milk marketed in the United States is insured under Federal crop 
insurance and the number of livestock crop insurance policies is 
climbing rapidly, with about 706,000 head of cattle insured under 
Livestock Risk Protection so far this year.
    Livestock has really never had much in the way of a safety net and 
the farm bill safety net for dairy has been all over the board over the 
past 25 years and disappointing to many producers.
    But, crop insurance has begun to flip the script. Now, livestock 
and dairy producers can buy effective crop insurance coverage and, by 
doing so, take greater control over their operations in terms of risk 
management.
    These are two great precedents about what can be done for 
underserved producers and commodities using policy development 
authorities under the Crop Insurance Act.
    The successes in crop insurance have been a long time in the 
making.
    From 1938 to 1980, the program barley limped along, and was often 
mothballed. There were even calls for its repeal.
    But, a few events changed all of that and helped build the success 
story we have today.
    First, in 1980, Congress turned the sales and servicing over to the 
private-sector, to companies, agents, and adjustors to deliver 
insurance.
    This has been huge.
    Remember, the first thing a farmer will ask when he gets hit by a 
disaster is, when will I receive an indemnity to cover my losses?
    The answer to that question under Federal crop insurance is usually 
within 30 days of a loss claim being finalized.
    When a loss event occurs, the farmer calls the agent. Once the 
agent turns in the notice of loss an adjustor is sent to the field, an 
adjustment is made, and the loss claim is processed, all in accordance 
with the Risk Management Agency's Loss Adjustment Manual.
    Now, compare this to the time it has taken producers to receive a 
payment under the WHIP+ program.
    I know that Chairman David Scott has expressed his concern with 
aspects of the WHIP+ program and Ranking Member Austin Scott worked 
hard to secure disaster aid funding, only to be disappointed in its 
administration.
    Producers certainly share a lot of the same frustration. They 
cannot count on an ad hoc disaster program being passed. They cannot 
secure credit on the possibility that it might be. Once passed, they 
cannot count on it being fully funded, nor can they control the details 
as it relates to their farming operation.
    These shortcomings bring into relief the benefits of crop insurance 
where farmers pay a premium for certain protection that is tailored to 
their farms which they and their lenders can be confident in. The 
uncertainties and inequities of politics are removed.
    Now, to be clear, my aim here is not to criticize the Farm Service 
Agency and the important work they do, including with respect to WHIP+.
    They've had a lot of programs to carry out in addition to the farm 
bill and they've had strained conditions due to the pandemic.
    But, the simple fact is that after a loss, Federal crop insurance 
has quickly delivering indemnities to producers down to a science--
which is one of the reasons why crop insurance was called on to deliver 
the so-called ``top up payments'' under the WHIP+ disaster program's 
prevented planting provisions.
    A second cause for crop insurance's current success is smart, 
bipartisan legislation, both in 1994 and again in 2000, where Congress 
stepped in to increase the premium discount for farmers to encourage 
producers to participate in crop insurance--and at much higher coverage 
levels.
    The legislation went a long way in achieving both objectives and, 
in addition to that, largely eliminated the need for ad hoc disaster 
for roughly a decade until the first WHIP program in 2017.
    Some might find fault in crop insurance that WHIP and WHIP+ became 
necessary, but this fails to take into account that the existence of 
property and casualty insurance for homes and businesses has not 
totally obviated the need for disaster relief when hurricanes, 
wildfires, and some other natural disasters of seemingly Biblical 
proportion have hit parts of the country, and seemingly with greater 
severity and frequency.
    My strong policy preference is to continue to improve and expand 
crop insurance with the tools we have to optimize the program for all 
producers, but I also understand why the WHIP programs were needed and 
appreciate the fact that Congress and USDA worked to ensure that these 
programs complemented, rather than undermined crop, insurance.
    And, finally, a third factor in crop insurance's success is Dr. Art 
Barnaby's development of revenue coverage for producers. That was a 
game changer and another example of private-sector innovation to 
address a unique peril for farmers.
    Again, these innovations have caused Federal crop insurance to take 
off over the last 41 years, as measured by any number of metrics, 
including acres insured, liability protection in force, and coverage 
levels, as the illustrations below indicate.
Crop Insurance Acreage

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Liabilities
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Average Coverage Level
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Actuarially, the program is also sound, with more premiums paid 
into the system than indemnities being paid out, as required by law.
    Farmers having skin in the game is extremely important and Congress 
has done a good job of making certain that premium discounts are enough 
to encourage participation and the purchase of higher coverage levels 
but not so great as to encourage moral hazard.
    However, one area where there may be room for improvement is on the 
issue of deductibles.
    A farmer has a deductible on the face of his policy. For example, 
if the producer insures his crop at a 75 percent coverage level, he has 
to lose 25 percent of his crop before he begins to collect an indemnity 
on any losses beyond the 25 percent.
    However, the farmer often has another, hidden deductible, when his 
actual production history (APH)--the amount he can insure based on past 
yields--lags behind what he can actually produce because it's not kept 
up with technological advances or because of severe, frequent weather 
anomalies that depress his APH and therefore what he is able to insure.
    Trend adjusted yields and Yield Exclusion are a couple of examples 
where Congress, USDA's Risk Management Agency, and private-sector 
development have worked to tackle the issue, but there is still some 
work to do as evidenced by Chairman David Scott's interest in 
establishing a standing disaster program to complement Federal crop 
insurance.
    The Supplemental Coverage Option--which is essentially an area wide 
policy that can ride on top of individual yield protection--was 
authorized by Congress back in the 2014 Farm Bill to help in this 
situation but the program does not have much allure in Minnesota 
because our producers prefer buying coverage that is tailored to their 
specific farming operations. This is because their risks may not 
entirely align with the risks of an entire area.
    In any case, while I do believe that the best thing we can do to 
help producers is make for certain they have a crop insurance policy 
that works for them, I appreciate the Chairman's interest in a standing 
disaster program as a bridge that complements, rather than undermines, 
crop insurance, and that does not result in lower crop insurance 
participation or coverage levels--and perhaps that even encourages 
greater participation and coverage.
    Finally, there are a couple of things I would hope to steer you 
away from as policymakers.
    The first is a number of proposals that have been offered in years 
past that would undo every success of Federal crop insurance and return 
the program to the days prior to 1980 when the program simply did not 
work for anyone: Proposals to cut premium discounts that would put crop 
insurance out of reach for farmers. Proposals to eliminate the Harvest 
Price Option which is basically replacement cost insurance for farmers, 
so farmers are indemnified for the true value of the crop they lose. 
Proposals to cut private-sector delivery again when it was cut deeply 
back in 2011. Proposals to undermine producer confidentiality. 
Proposals to impose pay limits and AGI means testing on crop insurance 
under the mistaken notion that this might help small and mid-sized 
farmers. These are all really bad ideas. For example, the average size 
farm that I serve is 419 acres. If we drive good farmers out of crop 
insurance by imposing pay limits or AGI means testing, or otherwise 
cause them to reduce their participation, we adversely impact the risk 
pool, driving premiums up for producers left in the pool, including my 
small and mid-sized producers. That triggers even less participation 
and lower coverage levels. That's going backwards, not forward.
    The second is avoiding the linkage of crop insurance with climate 
change initiatives. Even though agriculture accounts for a small 
percentage, only about nine or ten percent, of greenhouse gases, and 
agriculture already does a great deal to reduce carbon, through things 
like no till, the planting of cover crops, the use of methane 
digesters, and through biofuels, farmers are willing to do more to help 
sequester and reduce carbon if given the right tools. Voluntary, 
incentive-based approaches are what will motivate farmers, as we have 
seen under the conservation programs of the farm bill. This approach is 
the right track to go down to effectively sequester or reduce carbon. 
But, conditioning a producer's eligibility for crop insurance or the 
premiums they pay on participation or performance in greenhouse gas 
reduction efforts will not work, not because producers are not 
interested in helping but because agriculture is so diverse that what 
may work for some producers will not work for others. I appreciate that 
the Biden Administration has recognized this and called for voluntary, 
incentive-based efforts and that a number of Members of Congress have 
looked to increased funding for conservation programs as the most 
effective means of recruiting innovative farmers to help in 
sequestering or reducing carbon.
    I hope my testimony has been helpful and I look forward to 
answering any questions that you may have.

    The Chair. Thank you, Mr. Tate. Dr. Schnitkey, our final 
witness for today, please begin when you are ready.

        STATEMENT OF GARY D. SCHNITKEY, Ph.D., FULL AND 
 ASSOCIATE PROFESSOR, DEPARTMENT OF AGRICULTURAL AND CONSUMER 
              ECONOMICS, UNIVERSITY OF ILLINOIS, 
                           URBANA, IL

    Dr. Schnitkey. Chair Bustos, Members of this Subcommittee, 
I thank you for the opportunity to address you today. I am a 
professor in farm management, and work with farmers in Illinois 
and the Midwest as they make their farm management and risk 
management decisions. As has been mentioned a number of times, 
the last 5 years have been tumultuous in agriculture, with many 
detrimental end paths. The trade disputes in 2018 caused 
commodity prices to fall, weather and agricultural disasters 
occurred, including hurricanes, wildfires, and wet weather. In 
the Midwest heavy rainfall in the latter half of 2018 through 
2019 caused flooding, and widespread delays, and prevented 
planting. In 2020 the coronavirus and its attendant control 
measures led to severe supply chain issues, particularly for 
livestock and dairy producers.
    According to the ERS, the net farm income in the United 
States fell from a high of $140 billion in 2012 to an average 
of $74 billion from 2016 to 2019. Incomes projected--or 
rebounded to a forecast of $123 billion in 2020, but the trade 
disputes, weather issues, along with high yields, contributed 
to abundant supply, led to these lower incomes. Without the 
Federal safety net, farm incomes would have been much lower. 
Payments from farm safety net programs and net insurance 
payments were 20 percent of net income in 2018, 33 percent in 
2019, and 59 percent in 2020. Traditional farm safety net 
programs, and that would include the commodity title and crop 
insurance programs, did provide support from 2018 to 2020, 
however, a great deal of the support came from three additional 
sources. First were Congressionally passed disaster 
legislation, leading to the WHIP and WHIP+ programs. The 
Administration had instituted Market Facilitation Program 
payments to counter adverse impacts of trade disputes, and the 
CFAP Program to counter COVID-19 control measures. Finally, the 
Small Business Administration programs, including the Paycheck 
Protection Program and EIDL programs provided support.
    One hopes that the worst of the trade disputes and COVID 
control measures are behind us, but there is no guarantee of 
that. Still, the justification for the MFP and CFAP programs 
may have exposed weaknesses to the existing commodity title 
programs. Many commodities, including corn and soybeans, had 
low prices in recent years, including 2018 and 2019. For 
example, market year average prices for soybeans were $8.48 per 
bushel in 2018 and $8.57 in 2019, their lowest levels since 
2006. In both 2018 and 2019 those soybean prices did not 
trigger PLC payments, and ARC payments were at a relatively 
modest level of $563 million for soybeans in 2019.
    WHIP+ provided relief for many producers, and included 
additional payments for crops protected by federally regulated 
crop insurance programs and national Noninsured Crop Disaster 
Assistance Program. In addition, prevent plant payments in 2019 
were increased either 15 or 10 percent, and those additional 
payments made prevent plant more equal to the support provided 
by the MFP payments for planted crops. These program payments 
perhaps signaled needed changes to strengthen existing crop 
insurance programs, such that additional ad hoc programs are 
less needed in the future.
    Revisiting payment rating issues may aid in the process as 
well. From 2015 to 2018 the loss ratio on all Federal products 
averaged .67, well below target ratios. Corn and soybeans had 
lower ratios, respectfully, at .52 and .53. Many commodities 
have had higher prices since late summer 2020, and income 
looked better in 2021. This more robust outlook differs from 
what many, myself included, would have expected last year at 
this time, and that just illustrates how situations can change 
abruptly in agriculture. The Committee's evaluation of the 
efficacy of the programs is timely, as the safety net will 
continue to come into play into the future.
    [The prepared statement of Dr. Schnitkey follows:]

  Prepared Statement of Gary D. Schnitkey, Ph.D., Full and Associate 
     Professor, Department of Agricultural and Consumer Economics, 
                   University of Illinois, Urbana, IL
    Chair Bustos and Members of the Subcommittee on General Farm 
Commodities and Risk Management, I thank you for the opportunity to 
address this committee on the topic of a ``Review of the Efficacy of 
the Farm Safety Net.'' I am a Professor in farm management at the 
University of Illinois. I have worked with Illinois and Midwest 
farmers, helping those farmers to understand how farm programs impact 
the risk situations of their operations and make decisions relative to 
the Federal safety net.
    The last 5 years have been tumultuous in agriculture, with events 
occurring that were detrimental to agriculture. Trade disputes in 2018 
caused commodity prices to fall, resulting in low incomes, particularly 
for crop farms. Weather and agricultural disaster occurred, including 
hurricanes, wildfires, and wet weather. In the Midwest, heavy rainfall 
in late the latter half of 2018 through 2019 caused flooding and 
widespread delays and prevented planting in 2019. In 2020, the 
Coronavirus and its attendant control measures led to severe supply 
chain issues, particularly for livestock and dairy producers, initially 
leading to sharp declines in prices of agricultural commodities.
    According to the Economic Research Service, net farm income U.S. 
fell from a high of $140 billion in 2012 to an average of $74 billion 
from 2016 to 2019. Incomes rebounded to a forecast of $123 billion in 
2020. Trade disputes, weather issues, along high yields contributing to 
abundant supply led to these lower incomes. Without the Federal safety 
net, farm incomes would have been much lower. Payments for farm safety 
net programs and net insurance payments were 20% of net income in 2018, 
33% in 2019, and 59% in 2020.
    Traditional farm safety net programs--the commodity title and crop 
insurance programs--provided support from 2018 to 2020. However, much 
of the support came from three additional sources:

  1.  Congressionally passed disaster legislation leading to the 
            Wildfire Hurricane Indemnity Program (WHIP) and WHIP+ 
            programs.

  2.  Administration instituted Market Facilitation Program (MFP) to 
            counter adverse impacts of trade disputes and the 
            Coronavirus Food Assistance Program (CFAP) to counter 
            COVID-19 control measure.

  3.  Small Business Administration (SBA) programs including the 
            Paycheck Protection Program (PPP) and Economic Injury 
            Disaster (EIDL) programs.

    One hopes that the worst of the trade disputes and COVID control 
measures are behind us. Still, the justification for MFP and CFAP 
programs may have exposed weaknesses in the existing commodity title 
programs. Many commodities, including corn and soybean, had low prices 
in recent years including 2018 and 2019. For example, market year 
average (MYA) prices for soybeans were $8.48 per bushel in 2018 and 
$8.57 in 2019, their lowest levels since 2006. In both 2018 and 2019, 
those soybean prices did not trigger PLC payments. ARC payments were at 
a relatively modest level of $563 million for soybeans in 2019.
    WHIP+ provided relief for many producers and included additional 
payments on crops protected by federally-regulated crop insurance 
programs and the Noninsured Disaster Assistance (NAP) program 
administered by the Farm Service Agency (FSA). In addition, prevent 
plant payments in 2019 were increased either 15% or 10%, additional 
payments that offered support that was being provided on planted crops 
by MFP. These programs perhaps signal needed changes to existing crop 
insurance programs. Revisiting rating issues may aid in this process. 
From 2015 to 2018, the loss ratio on all Federal products averaged .67, 
well below target ratios. Corn and soybeans had lower loss ratios, 
respectively, at .52 and .53. These loss ratios include 2019, which had 
relatively large prevent plant payments.
    Many commodities have had higher prices since late summer 2020, and 
income looks good in 2021. This more robust outlook differs from what 
many--me included--would have expected last year at this time, 
illustrating how situations can change abruptly in agriculture. The 
committee's evaluation of the efficacy of the programs is timely as the 
safety net will come into play in the future.

    The Chair. Thank you, Dr. Schnitkey. At this time Members 
will be recognized for questions in order of seniority, 
alternating between Majority and Minority Members. You will be 
recognized for 5 minutes each in order to allow us to get to as 
many questions as possible. Please keep your microphones muted 
until you are recognized in order to minimize background noise. 
I will recognize myself for 5 minutes. And just so our 
witnesses know, we have been called for votes over on the House 
floor, so I will be going in and out of the chair here, and Mr. 
Carbajal will be filling in for me. Mr. Scott went over to 
vote. He will be back. So, we just want to make sure that our 
witnesses knew that.
    I am going to start out by saying thank you very much to 
all of you for your testimony. It is obviously clear that we 
have a lot of agricultural production represented here, and 
different impacts and challenges that you have faced in the 
recent years. I very much appreciate the perspective that all 
of our witnesses have provided for us today, and look forward 
to discussing several issues with you. I am going to start out 
with my line of questioning to Dr. Schnitkey.
    The drought obviously has absolutely ravaged the West 
Coast, and the Upper Plains, and now we are starting to see it 
creep into the Midwest. In my Congressional district, the upper 
four counties in my Congressional district are beginning to see 
that impact. I am wondering, Dr. Schnitkey, what are the 
measurable economic impacts that we have seen so far, and what 
do you see going forward?
    Dr. Schnitkey. Yes. Again, there is widespread drought in 
the western part of the country, and again we will see those 
areas suffer from a yield standpoint. And, we could again see 
that particularly now in Iowa, and western Illinois. Hopefully 
that will break in the future, but one never knows that. The 
attendant yield losses associated with those situations can 
result in harm to those operations, and crop insurance will aid 
in covering those losses, particularly for commodity-type 
agriculture.
    The Chair. So what does the participation in crop insurance 
look like in the West Coast and the Upper Plains, and how does 
that compare to the Midwest?
    Dr. Schnitkey. I don't have specific knowledge of what the 
West Coast participation would look like. In the Midwest, corn 
and soybeans is federally insured right at the 90 percent mark. 
My understanding is that that would be less than that in the 
western part of the country.
    The Chair. Can you talk a little bit, Dr. Schnitkey, about 
how the University of Illinois's Farm Program Decision Tool was 
developed, and what sort of factors are incorporated into the 
recommendations that are made to farmers?
    Dr. Schnitkey. Yes. Our tools work across the United 
States, and were developed with the aid of funding from the 
Federal Office of Chief Economist several farm bills ago now, 
but what we do is make projections of prices, at the point of 
time at which farmers have to make those decisions, provide 
farmers a comparison between PLC and ARC accounting for the 
particular crops in every county in the United States. The 
farmers, again, obviously projections are what they are, and 
are made at a time when we don't know what prices or yields 
will be. For example, we made projections prior to the March 15 
deadline for the current sign-up year.
    Many of the farmers find those useful not only from giving 
an expectation of payments for the coming marketing year, but 
also for looking at how those items will impact risk. And 
obviously that varies over time, as prices change, and ARC-
County benchmark prices change as well as we move through time.
    The Chair. All right. Thank you, Dr. Schnitkey. I am going 
to switch over to Jeff Kirwan. Jeff, again, thank you very much 
for taking the time to be one of our witnesses here today. I 
wanted to ask you how the risk management tools, like crop 
insurance, have worked for you. And the reason I am asking, 
Jeff, is that, as this Subcommittee conducts oversight of the 
2018 Farm Bill implementation, and we are also looking to lay 
the groundwork for the 2023 Farm Bill, how can we make the 
tools work better?
    Mr. Kirwan. They are very successful now. I look back at my 
farming career, and the importance of crop insurance as I was a 
young, undercapitalized farmer. It allowed me access to credit. 
It allowed me to market my products while we had an opportunity 
to do that at a profitable level. If anything it is to keep 
where we are at and build on it, and I would say anything that 
we can do to increase the amount of coverage, whether that is 
top-up type programs, or the additions to get into those higher 
percentages of an insured crop--or insuring the crop would be a 
real benefit.
    The Chair. All right. Thank you very much again, Jeff. I 
really appreciate you being here. I am out of time, so at this 
point I will yield to Mr. Rouzer, the gentleman from North 
Carolina, for 5 minutes.
    Mr. Rouzer. Thank you, Madam Chair, and I appreciate the 
panelists for being with us today, although I wish we were all 
here in person. I am still trying to get used to all this Zoom. 
But hopefully here in the near future things will be back to 
normal in Congress.
    Southeastern North Carolina, and this is true all across 
the country, you have disasters. In southeastern North Carolina 
we get hit with hurricanes, early freezes, too much rainfall 
just due to a regular thunderstorm that ends up flooding my 
district. There are obviously disasters of all types that 
happen all over the country. This question is for the entire 
panel, basically, or whoever wishes to chime in, but I would 
like to know what you think has worked well with the ad hoc 
disaster programs that have been put in place, and, granted, 
oftentimes they come late in the game. There will be a 
disaster, and it takes Congress a while to figure out exactly 
how we want to handle it. But in those times when we have put 
ad hoc disaster programs in place, whether it is related to the 
pandemic, or directly disaster related, I would be curious what 
you think has worked well and what you think has been a real 
obstacle that Congress just never seems to get right. I will 
just throw that open for anyone and everyone that wants to 
weigh in.
    Dr. Schnitkey. I would weigh in on that, the MFP, the CFAP 
Program, and WHIP+ Program did provide needed support during 
these last 3 years when things were up in the air. It is often 
difficult for farmers and economists--for farmers to make 
decisions as those are formulated, and one of those key times 
was during the 2019 prevent plant decisions, but the difficulty 
in making decisions when you don't know what the programs are 
is always something to consider. And, knowing what the policy 
is always, in my opinion, a good thing.
    Mr. Rouzer. Anybody else have an opinion?
    Mr. Shannon. The MFP money moved pretty fast, and that was 
one thing we appreciated about that. If we qualified for it, we 
got it. It came in a hurry. The WHIP money maybe not so much, 
and we might qualify for some money, and then get factored 
down, and then the timeliness of it coming. Many farmers had 
already made some other arrangement before that WHIP money got 
to us. Thank you all for everything you have done for us.
    Mr. Talley. If I could, and I don't have as much experience 
with crop insurance, as some of my fellow farmers on the panel; 
but, I am a big advocate for involving the private-sector. As I 
said in my comments, I think independent insurance agents play 
a vital role, and for us PPP was a huge benefit, and being able 
to deal directly with the bank, or banks to secure that support 
was critical. So the private-sector plays an important role.
    Mr. Kirwan. So I would chime in that--a little bit to what 
Dr. Schnitkey had said, that--I can tell you that in 2019 I was 
in an area that was severely affected by the flooding and 
drought--or the flooding and prevent plant, and those were very 
tough decisions to make, not knowing. And really crop insurance 
isn't bound until you plant the crop, so not having the crop 
planted, and facing deadlines, and trying to make decisions 
with that. Certainty is important, and the faster and easier 
that you can make it in helping us through those decisions--and 
I sure can't complain through the implementation of some of the 
other programs, but that is a stressful time in a farm, when 
you have situations like that.
    Mr. Tate. I would have to agree with the other panelists 
here. Obviously crop insurance serves very well in many of 
these cases, but these extra programs have been extremely 
beneficial. Me personally, on my farm, I applied for a WHIP 
payment, and it took a long time to get that WHIP payment. And, 
in fact, it was on my 2018 crop, and I didn't get it paid until 
just recently. So there is a long lag time in there, I guess, 
would be my only complaint.
    Mr. Rouzer. Thank you, Ms. Chairman. My time has expired.
    Mr. Carbajal [presiding.] Thank you. Ms. Craig, are you 
here? I know you went to go vote. Not hearing from Ms. Craig, I 
will recognize myself. Mr. Talley, my questions will be 
directed to you.
    Over the past decade California has become more prone to 
weather extremes, and the Central Coast is no exception. Our 
community has felt the climate crisis in a multitude of ways. 
More severe droughts, increasing frequency of heat waves, and 
record-setting wildfires. Unfortunately, we are likely to see, 
and are already seeing, another active year-round wildfire 
season and extreme drought conditions. Mr. Talley, could you 
talk about current drought conditions, how they are affecting 
your operations, and other farmers in California, and what you 
expect to happen to the crops if the situation doesn't improve?
    Mr. Talley. Well, thank you, Congressman Carbajal, both for 
the question, and for the opportunity to talk to folks today. 
Speaking of wildfires, right now just to the north of us there 
is a fire that is already impacting air quality in the Bay 
Area. And, that is one of the real issues with wildfire in the 
West now. It is not so much that we fear that our structures 
will be burned down, or that kind of thing, at least right 
where we are located. But the air quality, which has such 
deleterious effects on both people and, in some cases, on the 
crops that we grow. And, that is really what my comments were 
about with respect to smoke taint in wine.
    In terms of the drought, it does appear that we are headed 
into--or we have already, according to the National Drought 
Monitor, we are in severe drought at this time. And I can tell 
you the decisions that we are making right now are about 
fallowing ground where we have insufficient groundwater to 
basically support the crops that we would normally grow. And so 
it is a real challenge, going forward, and I am not quite sure 
what else to say other than that.
    Mr. Carbajal. Thank you, Mr. Talley. Continuing, wine 
grapes are the second largest value crop in my district, which 
is why I have continuously advocated for critical disaster 
assistance for growers who are impacted by smoke taint. Mr. 
Talley, as a producer, can you talk about the impact of smoke 
on the quality of grapes, and what it means for the price a 
farmer may receive?
    Mr. Talley. Well, again, as I pointed out in my testimony, 
it is really a wide-ranging effect. And even though we had days 
here where we were just completely inundated by smoke, we, 
quite frankly, were blessed to have none of our wines actually 
affected by smoke taint. Again, wine growers just to the north 
of us in Monterey County--I mean, I know people personally who 
will have zero revenue from their operations associated with 
the 2020 vintage. They either made the decision not to harvest 
the crop, or, in some cases, harvested the crop, produced wine 
that they then determined was completely unsalable.
    And, this is becoming a problem all over the world. I mean, 
it started in Australia probably more than a decade ago, and 
there are a lot of folks that are putting a lot of effort into 
trying to figure out how to cure this problem. And, having 
dealt with it once personally, I can tell you that the 
remediation of the problem is severe. It requires very invasive 
filtration of the wine, and even after we go through that 
process, which is also expensive, there is really no guarantee 
that what we are going to get is actually a salable product. 
And so, again, it is a challenge that we are basically trying 
to resolve with technology at this point.
    Mr. Carbajal. Mr. Talley, just to continue on that point, 
in your testimony you mentioned how scientists are looking to 
establish new protocols to treat smoke tainted wine, and I 
think you touched on that briefly. Can you further explain why 
efforts to treat smoke tainted wine have been unsuccessful?
    Mr. Talley. Well, because, again, the only solution that we 
have now is this filtration process, and unfortunately it 
strips the wine of more of the character that we want than the 
deleterious effects.
    Mr. Carbajal. Thank you very much, Mr. Talley. I am out of 
time, and I will now recognize Ranking Member of our larger 
Committee, Mr. G.T. Thompson.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    Mr. Thompson. Well, Mr. Carbajal, thank you so much. I 
appreciate it. I want to say thank you to Chair Bustos, and 
Ranking Member Scott, and thank you to all of the witnesses 
that are here to offer their unique perspectives on the farm 
safety net. When I was selected to be Republican leader on the 
Agriculture Committee, I made it clear that my number one 
priority was to rebuild a robust rural economy, that starts at 
the farm gate. If farmers and ranchers can be profitable in the 
good years, then our rural communities will thrive. 
Unfortunately, the good years seem to be few and far between, 
and our producers face risks and challenges that are 
unfathomable to most Americans.
    Farming has always been a risky enterprise, but it sure 
seems to be even more volatile than ever before, whether it be 
a natural disaster that can wipe out a crop at a moment's 
notice, a foreign government that interferes with a market, or 
a pandemic that disrupts the entire supply chain, producers are 
in for a constant battle to remain viable. And that is why a 
strong safety net is a critical piece of rebuilding a robust 
rural economy. Chairman Scott has made several comments about 
needing to work on disaster assistance for our producers, and I 
agree with him. The past several years have shown us how costly 
and inefficient ad hoc assistance can be. Rather than wait for 
an Act of Congress, farmers need reliable assistance that only 
a standing program can provide, and there is no better example 
of a program that responds quickly when needed than crop 
insurance. And above all else, we must first do no harm to the 
existing safety net.
    I have three guiding principles for any potential standing 
disaster program. Number one, it must complement, not compete, 
with crop insurance. Number two, it should be easy to 
implement. And number three, it should be reliable, and respond 
quickly, to disaster events. If Chairman Scott is willing to 
work within those three principles, I really very much look 
forward to working with him to craft the best policy possible. 
No Member or single party has ever had a monopoly on good ideas 
here in Washington, and working together to achieve a common 
goal will undoubtedly render a better outcome.
    So while we are on that subject, I was hoping that those of 
you that have experience with participating in the WHIP 
Disaster Program could provide your brief thoughts on the 
effectiveness of that program, and, if continued, how it should 
be modified to better meet the needs of your operation? I leave 
that open to whatever the witnesses would--might like to weigh 
in on that first.
    Mr. Tate. If I could speak to that, Ranking Member 
Thompson, my personal experience with it on my farm, and even 
seeing with some of my insureds, all the data is there on the 
WHIP Program to be able to implement that through the crop 
insurance industry, maybe a little bit quicker than the folks 
at the Farm Service Agency. They have been inundated with a lot 
of programs, and have done exceptionally good with that, don't 
get me wrong, but they have a lot of other work to be done, and 
maybe the crop insurance industry could implement that a little 
quicker.
    Mr. Thompson. Very good. Thank you. Would any other 
witnesses like to weigh in on that? Any experience with the 
WHIP Program?
    Mr. Shannon. WHIP was pretty important to south Georgia, 
especially after Hurricane Michael, but that was the third of 
the hurricanes in a row that we had dealt with. And, like some 
of the panelists had mentioned, we waited quite a while, months 
into years, before we got some of that WHIP money. If we could 
get something that is set in stone, that you have a disaster 
and you could get some money moving quicker, that would be 
wonderful. To the three things you mentioned, yes, yes, yes, we 
would love something like that. Hermine in 2016, Irma in 2017, 
and Michael in 2018, and after Hurricane Michael in 2018, I 
have to say thank you to Congressman Scott and Congressman 
Bishop for coming to the table and working on that together in 
the bipartisan way that got some money to Georgia that was 
definitely needed. If it hadn't been, it would have been 
devastating to the rural economy. Thank you all.
    Mr. Thompson. Well, I know after working with the Ranking 
Member for a number of years, I understand and share his 
frustration with relief not being timely. And sometimes, with 
the reliability and the delay of it, people, unfortunately, are 
out of their farming practices until help arrives. With the few 
seconds I have left, any comments or any input from any of the 
other witnesses?
    Mr. Kirwan. Yes. I would just concur with the fellow from 
Minnesota, the fact that the timeliness of it could have been 
better, and it was a fairly complex formula, so something 
easier and more of a design program would be better.
    Mr. Thompson. All right, very good. And, Mr. Chairman, my 
time has expired. Thank you so much.
    The Chair [presiding.] Thank you, 5 minutes to 
Congresswoman Angie Craig from Minnesota.
    Ms. Craig. Thank you much, Chair Bustos and Ranking Member 
Scott, and thank you, Representative Carbajal, for doing such a 
great job in her stead. Thanks so much for calling this hearing 
to focus on the farm safety net. It really couldn't come at a 
better time as we transition out of the COVID pandemic response 
and into what we all hope will be a period of more 
predictability for our farmers and producers. Thank you to all 
of the testifiers today. It is clear, based on your testimony, 
and the conversations I have been having with folks in 
southeastern Minnesota, that the farm safety net and specific 
risk management tools, like crop insurance, are more important 
than ever.
    Federal crop insurance has been a success story because it 
is actuarially sound, and consistently works for farmers. Its 
timelines and parameters are predictable, and it enables 
farmers to plan risk management strategies that best suit their 
operations. As Mr. Tate mentioned, it has been a vital tool for 
him as he helps Minnesota farmers in my district navigate the 
intense volatility of these past few years. From beginning 
farmers planting their first crop, to farmers like Mr. Tate, 
who is planting his 30th, crop insurance is a vital tool.
    With that focus in mind, I would like to follow up with 
you, Mr. Tate, on a few points I am hoping you can expand on. 
First of all, I am hoping you can speak more about revenue 
protection. In your testimony you mention that revenue 
protection policies had become the most popular crop insurance 
policy type, and can offer protection from market price 
decreases. However, in years where there are low spring and 
fall prices for a commodity, a revenue policy would not trigger 
a loss based on price declines. Are there crop insurance 
products out there that protect against long periods of low 
prices? Would it be helpful if USDA looked into new insurance 
products to address this risk?
    Mr. Tate. Thank you, Congresswoman Craig. Yes, so the 
revenue protection policy is very common in our area. In fact, 
I would say, probably, almost, if not 100 percent, probably 95+ 
percent of my customers have a revenue type protection 
insurance product. With that being said, are there some 
limitations to that product in the years where the spring price 
is low and the fall price is low? Yes, there is. And I think 
that is part of the reason where Congress, in the farm bill, 
had developed the ARC and PLC Program to deal with the systemic 
losses that may happen over multiple years. It would be 
beneficial if we could develop something on the Federal crop 
side that would deal with those issues as well, and maybe top 
up those payments.
    The one thing I guess--and I don't mean to jump ahead or 
jump around on your question too much, but when we are dealing 
with the volatility of the markets, and what has been going on 
here, and then also in our area, as you know, we have also 
experienced a fair amount of dryness, having the Harvest Price 
Option, where we get that protection when prices are higher, is 
very important to us as well. So I hope that answers your 
question?
    Ms. Craig. Rob, thank you so much, that answered my 
question, and it also took my second question for you, so maybe 
I will just ask you, are there any other--given uncertainty 
over weather events, dry season, commodity prices, trade 
uncertainty, all of these things, how do you help farmers 
navigate the various options they have for managing risk, and 
how does crop insurance typically fall within that list?
    Mr. Tate. Well, as we have been talking about, crop 
insurance provides a predictability to what the income stream 
is for the farmers. Having that initial base price--spring 
price to set the floor for the minimum amount of coverage is 
great, and then when--a lot of the farmers I work with will 
sell against that guarantee to help manage the price risk as 
well. And so that program has done very well to manage that 
risk, and the one area you are pointing out in your first 
question is, if we get multiple years of that, can that be 
problematic? And yes, it can be, but right now this year, as I 
talk to many of my clients, I mean, yes, we know we have some 
challenging production issues, but given the backdrop of crop 
insurance, and the predictability it provides, most of my 
clients feel pretty good about things right now.
    Ms. Craig. Well, thank you so much for your work, thank you 
all for our testimony, and, with that, Madam Chair, I yield 
back.
    The Chair. Thank you, Congresswoman. I now recognize the 
gentleman from Georgia, Ranking Member Austin Scott.
    Mr. Austin Scott of Georgia. I want to ask Mr. Shannon a 
question, but I want to first follow up with Mr. Tate, since he 
is a crop insurance agent. And my question, Mr. Tate, gets to 
production and the average yields. Any suggestions on how we 
can do more to help beginning and young farmers, those who are 
starting out? And then in years where we have these natural 
disasters, like we had with Hurricane Michael, where we have 
widespread total losses, suggestions on how we handle that 
yield of zero that goes in there? I guess you can put the 
county average in there, but if you are a good farmer your 
yield is historically significantly higher than the county 
average in many cases. Any suggestions on how we deal with 
production yields for beginning and young farmers, and in the 
cases of the disasters where we have total losses?
    Mr. Tate. Yes, actually. We do have ways of dealing with 
that, not just on young beginning farmers, but on all 
producers, where they can substitute in a T-yield for that 
county in those years where you have a widespread loss, and 
maybe you have to take a zero in your APH database. That helps 
support that coverage. In terms of helping out the young 
beginning farmers, we have an additional premium subsidy that 
is there, and I have several young farmers that I work with 
that have taken advantage of that, and that is been very 
helpful to them as well.
    Mr. Austin Scott of Georgia. Well, thank you for that. I 
guess it is just being insured for the average yield simply 
won't, in most cases, cover your cost. Mr. Shannon, you 
mentioned the disaster. Ranking Member Thompson took my 
question for the most part, but I am glad that you recognized 
my colleagues Congressman Bishop, and David Scott, and I. As 
you know, the original estimate from USDA was $1 billion. The 
estimates that we had from the extension agencies in the state 
significantly exceeded what we were able to end up with, with 
the $3 billion. Could you speak again to the shortcomings that 
you noticed in the WHIP Program, and what we developed in what 
we call the WHIP+ Program, and how we could improve it if we 
were to make it a permanent program? And do you have any 
thoughts--I know that that particular year, especially on our 
dryland cotton, our yields were significantly higher than the 
averages--on whether or not we should allow a farmer to step up 
their coverage based on the crop that is actually above the 
ground before it is harvested?
    Mr. Shannon. Yes, sir. Starting out with that, timeliness 
was the real problem with the WHIP Program. Most folks had made 
some other arrangements by the time they got WHIP money. Others 
didn't get WHIP money. Maybe had gotten some other assistance 
and didn't qualify for it, or they qualified for money that got 
factored down and was not there to help. State of Georgia came 
through with some loans that helped a lot of folks. That 
happened in a very short period of time. Hadn't been for that, 
there probably would have been a lot of other guys, farmers, 
men and women, families, went out of the farming business, and 
it would have terribly affected businesses all over southwest 
Georgia.
    Anything new? Certainly would be something that--we have 
the disaster, and within a short period of time the money is 
already moving. We saw some things last year that moved real 
well with the market assistance money. It didn't take long to 
get out. It got done, it was simple. I think something along 
some of those lines would work well. You seem to continue to 
burden our FSA offices--or our people working there with more 
and more programs that just are complicated. The simpler we can 
make it to get the money moving is a good thing.
    Mr. Austin Scott of Georgia. So, for people who aren't from 
the Southeast, what happened in Georgia with Hurricane Michael, 
our state legislature--and correct me on this if I am wrong, 
Mr. Shannon--our state legislature actually went into a special 
session and created a loan program that actually helped some of 
our farmers get through until the payments from the disaster 
relief were made available. Is that correct?
    Mr. Shannon. That is correct. They went into session, and 
within just a few days they had something hammered out. Within 
a month or so people were qualifying for it, but now let us 
remember this was any of the loan--I have one of those too--
that is being paid back, and has to be paid back.
    Mr. Austin Scott of Georgia. My time is about to expire, 
but the key aspect of this that I want to make sure people 
understand is that farmers have to pay off their notes, their 
operating notes, before they are able to borrow the money again 
for the next crop year, and so one of the reasons that I 
advocate, as Chairman Scott does, for some type of disaster 
program, or better crop insurance program, for our farmers is 
when these things like Hurricane Michael happen, we need to get 
the payments to the farmers significantly, significantly faster 
than what happened after Hurricane Michael. And, with that, 
Madam Chair, I appreciate you indulging me for the 25 seconds 
that I ran over.
    The Chair. Thank you, Mr. Scott. I now recognize the 
gentleman from Florida, Mr. Lawson.
    Mr. Lawson. Thank you, so much, Madam Chair, and to you 
Ranking Member Scott for holding this very important hearing. 
And I can tell you that there is no doubt, I guess, all of us 
know that climate change is threatening our industry for 
farmers and ranchers. Sadly, it has--Congressional district 
that voters--Congressman Scott. From hurricane and floods, the 
challenge that we have had from Hurricane Michael and Irma. I 
heard--and I won't try to bring it back again, all of the 
situation about the WHIP Program, and how critical it has been 
to farmers, but there seemed to be some recommendation that 
need to be made--how slow the process is, and hearing about the 
state legislature.
    Sometimes we think that government has too much 
interference on programs and stuff, but I would hate to think, 
like, up in Georgia, if it hadn't been for the government 
meeting, as Mr. Tate said, to iron out some problem so just 
some of the disaster relief money could actually set in. And 
this question would be to everyone. The Farm Service Agency, 
FSA is essential to agricultural community, especially in the 
aftermath of natural disaster. Can you all discuss the ways 
that you believe the FSA can improve its response to the 
communities that have been affected by natural disaster? And 
that is to the whole panel. Mr. Shannon, I think we can start 
off with you.
    Mr. Shannon. Yes. One thing probably my local office would 
like to have was some more help--ladies and gentlemen have been 
working overtime as much as possible to get these programs 
done, this Quality Loss Assistance Program that they were 
working on when they were not supposed to be working maybe, so 
to speak. They were not even in the office, but they were still 
working.
    Some help to some of those offices would be great.
    Mr. Lawson. Well, that is a good recommendation. Anyone 
else?
    Mr. Kirwan. Yes, I definitely would agree. I know our 
office was short-staffed through a lot of this, and we have had 
a lot of turnover, so anything that we can do to add more staff 
to help. And then I would also encourage relationships within 
the other agencies in that office at USDA, NRCS and FSA to work 
together better to implement these programs.
    Mr. Lawson. Anyone else want to respond? That is great.
    Mr. Tate. I will make a couple more comments on it. First 
off, the FSA office is an area I guess we are all looking 
forward to when they can open up and we can physically go into 
them again. That will be a good day, when we get the pandemic 
behind us. But probably more importantly, when you are talking 
about the WHIP Program, I have to think that there is a way to 
implement that through the crop insurance program. Most of that 
data that is used to calculate it is there. The insurance 
industry could certainly help out with that, and take some of 
the workload off of FSA.
    Mr. Lawson. Okay. That is great. Mr. Tate, I know you are 
involved in--you had mentioned in 1938 when we established--
Congress as having the crop insurance program, and the WHIP 
Program came in about--maybe 2017. As long as you have been 
involved--and I am involved in the insurance business myself, 
have you seen any significant improvement in the crop insurance 
program, or will you recommend any other significant 
improvement?
    Mr. Tate. To me, and, of course, it is a little bit because 
of my age, but the biggest improvement was the revenue products 
that we have. And, I mean, my area is primarily corn and 
soybean production, but to me that was a big jump up in terms 
of participation, and then also the increased subsidies. Those 
two things have really helped out a lot. Obviously, if there 
were ways to get higher levels of coverage, I think that would 
be great. I think that would be very welcome from the industry, 
as well as from the farmers' perspective. So that may be some 
areas that could be improved upon.
    Mr. Lawson. Okay. Thank you. Madam Chair, I yield back.
    The Chair. All right. Thank you very much, Mr. Lawson. So 
we are at a point where our Members have gone back to the House 
floor to vote. Ranking Member Scott has to go vote right now. I 
am going to go ahead and yield another 5 minutes back to myself 
and ask some questions, since I am still here. I will have one 
more vote back on the House floor, but we will try to manage 
this with Members coming in and out. And if, for some reason, 
we don't have any other Members come in, I will suspend until 
they are back, but it will be no more than probably a few 
minutes. But I am going to go ahead and turn back to Mr. 
Kirwan, if I could, please.
    Mr. Kirwan, you referenced in your testimony the heavy 
winds and the flooding that impacted much of Illinois and much 
of the Midwest in 2019. That year there was a significant 
number of prevented planting acres and related crop insurance 
indemnities. In addition to crop insurance, USDA also 
implemented a top up payment to prevent plant through the WHIP+ 
Program. Could you please talk about how implementation of that 
top up payment worked from your perspective as a farmer?
    Mr. Kirwan. Yes. Basically, because it is at a 55 percent 
level, I believe, this has been a couple years now, at about--
our revenue streams in the springtime weren't super high, so we 
started looking at having all the inputs on our crop ground, 
and all of a sudden the revenue streams that would be generated 
through the crop insurance program weren't going to be enough 
to cover that, let alone make any kind of money, so we lobbied 
pretty hard for that, had conversations with you about the top 
up programs, or anything that we could do to generate more 
dollars because, at the time that we were making those 
decisions in June, we were up against the deadlines. Crop 
prices had increased because of the delayed planting, and we 
looked at the revenue streams that had increased, and we 
weren't able to participate in those because our crop wasn't in 
the ground.
    So we appreciated those top up payments, and it is probably 
something, as you look forward into the crop insurance, how to 
capture--whether it is adding--allowing them--that to 
participate in the harvest price, to then kind of generate some 
sort of an increase in the indemnity to the producer. But the 
real conundrum, if you will, was we were sitting there with all 
the inputs into the ground, and no crop planted. We are just 
waiting to get in that, so I guess that is how it affected me.
    The Chair. All right. Thank you for that important 
perspective. Jeff, you also talked in your testimony about the 
recent announcement from the USDA to provide crop insurance 
premium discounts to farmers that planted cover crops for this 
crop year, as well as about a program from the Illinois 
Department of Agriculture that you identified as a pilot 
program. Can you talk a little bit about the role of cover 
crops in your operation, and how that pilot program has worked?
    Mr. Kirwan. Yes. So we started I believe 2 years ago, and 
have been building on that in the state. We offer a $5 an acre 
rebate on crop insurance for anyone willing and--that can 
actually get on our website and do that from the Department of 
Agriculture. Usually that--those funds--we started out with 
$300,000, so it doesn't include a lot of acres, but those funds 
are usually disseminated within 2 hours at the opening of that 
website. But, we are really appreciative, and what has came out 
now through you folks is that--the $5 rebate as well on the 
crop insurance, which I have signed up on.
    And, implementation has been very easy at this point. We 
have certified those acres, and hopefully that carries through. 
But, we use those quite extensively on our farm, both from a 
nutrient management and from a water quality standpoint, and 
have really started to work with them.
    The Chair. All right. Thank you very much, Jeff. Mr. Allen 
from Georgia is back, so at this point I recognize the 
gentleman from Georgia for 5 minutes.
    Mr. Allen. Okay. Thank you, Madam Chair, for holding this 
hearing, and thank you to the witnesses for your valuable 
input. American farmers continue to face challenges as they 
fight to feed the world. Volatile commodity prices, increased 
market consolidation on both ends of the supply chain, unfair 
and dishonest trade practices by partner countries, and 
continued deficient access to high speed internet are some of 
the most pressing issues that my constituent farmers face. 
Today, I look forward to discussing the experiences each of our 
witnesses have had over the past several years with the 
implementation of the 2018 Farm Bill programs, and to getting 
an update on the effectiveness of our farm safety net.
    Food security is national security. Congress must continue 
to support our farmers, remain attentive to our needs, not only 
because they feed us as a nation, but because without them we 
would become helpless and dependent on other nations, thereby 
losing our sovereignty. Mr. Talley, in your comments you spoke 
of California's wildfires, and the impact they are having on 
California farmers. As I understand this, this is somewhat of a 
battle between the environmental sector and proper management 
of our forest. We have had this discussion over and over. There 
has to be science to this. Obviously, I am from the timber 
basket of the South, in my district, and we manage our forests. 
Of course, most of ours are privately owned. Do you have any 
suggestions on what we can do? In fact, Madam Chair, I would 
request on the record that we have a hearing with those people, 
on both sides, that we can help us come to some kind of 
conclusion on how to move forward with preventing these 
terrible fires, and the smoke, and everything else that goes 
with it. So, Mr. Talley, could you comment on that?
    Mr. Talley. Yes. I am in favor of more ongoing prescriptive 
burning. That is what happens, as I understand it, for 
thousands of years here in California before people got so 
concerned about really stopping natural fire. And consequently 
we have a lot of areas that haven't burned for a long time, and 
that, coupled with the effects of, I would ascribe it to 
climate change, and this drought that we are facing, we just 
have ongoing drying vegetation. Again, I think that there are 
management practices that could be implemented controlled burns 
in the springtime that are much easier to control, that would 
reduce the fuel load.
    Mr. Allen. Thank you. Mr. Tate, thank you for your 
testimony. Are there any specific crops or commodities that you 
would like to identify which you feel the crop insurance 
provisions of the 2018 Farm Bill are not serving adequately? 
Are these issues that farmers might have with it on a more 
regional nature?
    Mr. Tate. I would have to say that would be more regional 
in nature. I can only speak in terms of my area, and I believe 
that most of our area is covered fairly well with options for 
Federal crop insurance.
    Mr. Allen. Dr. Schnitkey, one concern that I often hear 
from my constituent farmers is that an increase in market 
consolidation in the ag industry has led both to the companies 
which they buy inputs from, and the companies which they sell 
crops to, to have increased market power over our farmers 
themselves who actually produce the product, and we don't feel 
like they are getting an equal share. Could you speak to this 
concern, and is there any validity to it?
    Dr. Schnitkey. Obviously, there has been a great deal of 
consolidation within the input industry in the Midwest 
particularly, as you look at seed companies being whittled down 
to basically three large companies. And, yes, there are 
concerns, and they are legitimate concerns, about the market 
power that those companies have. I would also mention that as 
we have seen consolidation one of the longer-term concerns may 
be that innovation slows down, and innovation and improved 
genetics are one of the things that keep the agriculture 
economy rolling, and so there are legitimate concerns in that 
area.
    Mr. Allen. Okay. Thank you very much. Madam Chair, I yield 
back.
    The Chair. Thank you, Mr. Allen. We still have three 
Members who would like to ask questions, however, we are on our 
third and last vote over on the House floor, so we are going to 
suspend for--I am going to say 5 minutes or less, at which time 
I am also going to run over and cast a vote. My apologies to 
our witnesses for having to stand by, but count on about a 5 
minute break, if we could. So we will recess for about 5 
minutes. Thank you.
    [Recess.]
    Mr. Carbajal [presiding.] I would like to call us back to 
order, and I would like to recognize Representative Mann.
    Mr. Mann. Thank you, Mr. Carbajal.
    Mr. Carbajal. Actually, Mr. Mann, just 1 second.
    Mr. Mann. Yes.
    Mr. Carbajal. I also would like to ask the witnesses to 
unmute your microphones. Was that correct? And cameras back on. 
Representative Mann, 5 minutes.
    Mr. Mann. Great. Well, thank you, Representative Carbajal, 
and thanks to all our witnesses for joining today. Thank you. I 
know we just had a quick recess as we ran to vote, so thanks 
for staying on with us as we finish this up. I have a handful 
of questions. My first question would be for Mr. Tate on crop 
insurance flexibility. You are a producer, an agent, and a crop 
revenue consultant, so you have a unique perspective on the 
program, and have probably seen a lot of changes during your 
career. One of the advantages of the crop insurance program is 
its flexibility to adjust to changes in agriculture and the 
environment through the creation of new programs and policies, 
as well as certain flexibilities within any given crop season. 
What are some of the policies, or what are some of the 
adjustments to the program that you have seen over the last 16 
years that you think have been the most helpful for farmers and 
ranchers?
    Mr. Tate. Well, I guess there are a number of things. Like 
I had mentioned before, the introduction of the revenue 
policies is a big one. Also the trend adjusted yield on the 
APH, I had mentioned in my statement about how that is kind of 
a hidden deductible, if you will, if your APH lags a little 
bit, and so there have been changes to try to improve that. 
That has helped out the program considerably. But as far as 
what you are asking, what can be done to enhance this further. 
Again, I would have to go back to, if we could look at maybe 
potentially getting some higher coverage levels even, I think 
that would be helpful to the program.
    Mr. Mann. Okay. Well, thank you. And then my remaining 
question would be for the three producers we have, Mr. Kirwan, 
Mr. Talley, and Mr. Shannon, thank you for joining us. My 
parents and brother still operate our fifth generation family 
farm that I grew up on in Quinter, Kansas, which is western 
Kansas. For our family's farm, one of the most important 
changes to ag policy was the 1996 Freedom to Farm Act, which 
changed our operation permanently for the better. As we 
consider updates to the 2023 Farm Bill, what are the most 
important parts of the farm safety net for your operation, and 
what potential enhancements or improvements would you like to 
see being made to our current programs? Maybe start with Mr. 
Kirwan.
    Mr. Kirwan. So I would say that some of the best 
improvements would be the revisiting of the base acres, and 
some of the acreages and the yields, and seeing if there is any 
updating that can done with that. From the crop insurance side, 
increasing coverage levels, and/or some of the things that we 
have now, the ECO and SCO, and some of those accounting-based 
things to top up on top of what our revenue protections are 
would be things that--considerations continuing.
    Mr. Mann. Great. How about you, Mr. Talley? What 
improvements or enhancements would you like to see as we think 
about the 2023 Farm Bill?
    Mr. Talley. Well, one of the challenges that we face in 
California is that the farm bill is really more structured for 
producers in the Midwest, and California is very unique. We 
farm a lot of niche type products, a lot of specialty products, 
but it does add up to the biggest value agriculture in the 
United States. So somehow I would like to see a little bit more 
attention paid to the unique challenges that specialty crop 
producers in California face.
    Mr. Mann. Thank you. And, last, how about you, Mr. Shannon? 
Improvements, enhancements you think about as we look at the 
2023 Farm Bill?
    Mr. Shannon. The seed cotton thing is important to me, and 
I want to thank you all for getting that back in title I. That 
and peanut program, keeping the separate payment limits on 
peanuts, and if we could help the reference prices some. 
Undoubtedly our cost of production had went up the last few 
years, and appreciate that that could move up some.
    Mr. Mann. Okay. Great. I have no further questions. Mr. 
Carbajal, I yield back. Thank you.
    Mr. Carbajal. Thank you, Mr. Mann. I will now recognize 
Representative Bishop.
    Mr. Bishop. Thank you very much, Mr. Chairman, and let me 
give a special shout-out and welcome to Mr. Shannon of Georgia, 
and, of course, a welcome to each of our panelists. So let me 
just say that one of my most pressing concerns for the 
Subcommittee is to establish a permanent solution for disaster 
assistance. We have done ad hoc disaster assistance on the 
Agriculture Appropriations Subcommittee for several years, and 
the ins and outs of the legislative process, not to mention the 
time it takes for implementation really often means delays in 
getting assistance to the farmers. I believe that we need to 
have a rainy day fund, or an interest-bearing account, set 
aside so that if damage were to occur within a certain level, 
that we could use that fund instead of having to do a 
supplemental appropriations bill. My good friend, Ranking 
Member Austin Scott, and I have worked together to bring much 
needed assistance to middle and south Georgia in the wake of 
Hurricane Michael, and can agree that creating a standing 
disaster program is not only vital, but necessary, an ongoing 
investment to ensure that rural America has timely relief and 
access to resources to sustain our operations when, and not if, 
but when the next disaster comes.
    So, Mr. Shannon, can you give us your perspective of how 
such a permanent solution for disaster systems might impact 
your operation? And, Dr. Schnitkey, can you tell us whether or 
not the University of Illinois, or other entities that you are 
aware of, have conducted any analysis to evaluate the impact of 
a permanent disaster relief fund?
    Mr. Shannon. Well, my first comment would be amen. Thank 
you. Yes, sir, we would love to have something that would be 
quick to get, didn't take a lot of trouble and aggravation on 
anybody's part. The other part of the question, I am not 
familiar with what you are talking about there, with the folks 
from Illinois.
    Dr. Schnitkey. I think that one of those questions was 
addressed to me, and specifically have we looked at a standing 
disaster program? No, we haven't looked at that particular 
issue here lately. We would also suggest that that program, as 
much as possible, compliment crop insurance, and not take away 
from crop insurance, because that has become, at least in the 
Midwest, a very important part of the safety net for farmers, 
and they would list that.
    Mr. Bishop. Not suggesting, sir, that we eliminate crop 
insurance. I am trying to make available whatever crop 
insurance doesn't cover----
    Dr. Schnitkey. Yes.
    Mr. Bishop.--that we have something in place that will be 
available on short-term, as opposed to having to wait months, 
and months, and months to get some kind of relief through the 
legislative process. That was what my suggestion was. And if 
you guys could think about that, all of the panelists could 
think about it, and give us some thoughts about it as we look 
forward to the next farm bill, we might want to consider doing 
that.
    I have a little more time back, and I just wanted to ask, 
as we look toward the new farm bill, we have to ensure that it 
is flexible enough to include all of our agricultural programs 
and commodities, as well as a variety of specialty crops from 
many different geographical areas, which is why I am glad that 
all of you are here today. Mr. Talley, as the wine grape 
grower, Mr. Shannon, peanut producer, Mr. Kirwan, as a grain 
farmer, how can Congress ensure that the next farm bill 
accommodates all of your unique needs, and yet covers everybody 
at the same time?
    Mr. Kirwan. Again, my perspective, working with farm 
organizations in our state and our universities, some of the 
challenges that you guys have identified here today is a great 
step forward in working with our Congressional people to offer 
suggestions, and improving what we have in place.
    Mr. Shannon. I would certainly agree. Improving what we 
already have, if we can up the reference price on the seed 
cotton and the peanuts, I think that would be good for our 
area.
    Mr. Bishop. I guess my suggestion was that we need to have 
something that is broad enough to include everyone, but 
flexible enough so that no particular commodity would be 
overlooked, mistreated, or under-supported.
    Mr. Talley. That is appreciated.
    Mr. Bishop. My time has expired, Madam Chair, and I yield 
back.
    The Chair [presiding.] Thank you, Mr. Bishop. Before we 
adjourn today, I invite the Ranking Member to share any closing 
comments he may have. Mr. Scott?
    Mr. Austin Scott of Georgia. Well, thank you, Madam Chair, 
and, Mr. Talley, I heard you loud and clear on the specialty 
crop issue. Our specialty crops are different than yours, but 
they are still specialty crops, and that is where improvements 
to the NAP Program can come in, and hopefully we can address 
them in the next farm bill. I want to thank all of you for 
being here. One of the things that I do want to mention as we 
write the next farm bill is that it is important to me that any 
additional things that are done with regard to the environment 
currently being discussed not come out of the current safety 
net for our ag producers, and that it be done in the form of 
additional funds, not in lieu of what we are currently 
providing in crop insurance and other things to our producers. 
So thank you so much for your valuable testimony, and, with 
that, Madam Chair, I yield to you.
    The Chair. Thank you, Mr. Scott. I want to thank all of our 
witnesses here today as well. The discussion was informative. I 
learned from it, and I want to emphasize our commitment to 
ensuring that the safety net and the risk management tools are 
working well for our farmers in time of need. With the weather, 
and the market conditions in recent years our witnesses have 
described, and the worsening drought conditions affecting much 
of the country, we will, together, be actively working to 
understand and address the challenges that our family farmers 
are facing. The input that you provided us today is essential 
in our examination of existing programs, and as we start to 
look ahead to the next farm bill.
    Under the Rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member. This hearing 
of the Subcommittee on General Farm Commodities and Risk 
Management is adjourned.
    [Whereupon, at 2:51 p.m., the subcommittee was adjourned.]