by Marcia Zarley Taylor, DTN Executive Editor
WASHINGTON (DTN) — Crop insurance abuse continues to plague the Prairie Pothole states, despite the Risk Management Agency's best efforts since 1999 to tighten prevented planting rules, a farm program watchdog charged in a new report released Tuesday. At issue are repeated prevented planting claims for seasonal wetlands which are only farmable during abnormally dry years.
Just 195 counties in the five-state Prairie Pothole region collected 61{f2533179b7c7e7cbdbc11018732de14c82f3d44c9f1e829e9a046cc47141a2e6} of prevented planting claims nationwide between 2000 and 2013. (Graphic courtesy of USDA Risk Management Agency)
Between 2000 and 2013, 195 counties in the five-state Prairie Pothole region collected $4.9 billion in payouts for excessive moisture, or 61{f2533179b7c7e7cbdbc11018732de14c82f3d44c9f1e829e9a046cc47141a2e6} of all prevented planting payouts nationwide, the Environmental Working Group (EWG) charged in its latest report.
[EasyDNNGallery|1752|Width|450|Height|450|position|left|resizecrop|False|lightbox|False|title|False|description|False|redirection|False|LinkText||]A mere 65 counties — 30 in North Dakota, 30 in South Dakota and five in Minnesota — received claims for excessive moisture 14 years in a row. Another 29 counties had excessive moisture claims paid 13 out of the last 14 years. Those 94 counties accounted for 94{f2533179b7c7e7cbdbc11018732de14c82f3d44c9f1e829e9a046cc47141a2e6} of all policies making moisture-linked claims nationwide, but Congress has thwarted attempts to disqualify individuals with repeat insurance claims. Locals defend the insurance coverage as necessary, given the high risks and small planting window faced in the upper Midwest.
Seasonal wetlands — some as small as bathtubs and others the size of small lakes — are scattered throughout the so-called Prairie Pothole region, an area rich in habitat for nesting waterfowl. Under average weather, many of these shallow wet spots typically dry out by fall. Sometimes they are plantable in May and June once every three or four years, EWG claims. “Inability to plant these seasonal wetlands in the springtime is the norm,” not the exception, the EWG report said. In this region, “excessive moisture in the springtime is entirely predictable.”
“In the counties that dominate the claims, prevented planted coverage is just not workable because we are looking at a landscape where wet springs are the normal,” Craig Cox, EWG senior vice president for agriculture and natural resources told DTN. Just like a homeowner with repeated flood claims might be deemed uninsurable, “you shouldn't get claims for the same cause of loss year after year,” Cox added.
Two counties — Brown, South Dakota, and Ward, North Dakota — illustrate the size of such payments. As crop prices began to climb between 2007 and 2013, average claims ran $63 per acre in Brown County and $42 per acre in Ward, EWG found.
MULTIPLE ATTEMPTS TO FIX
Government auditors have long targeted crop insurance's prevented planting rules as being too generous. In 1999, the inspector general for USDA's Risk Management Agency issued a report challenging payments on 43{f2533179b7c7e7cbdbc11018732de14c82f3d44c9f1e829e9a046cc47141a2e6} of all claims. Especially troublesome was how claims had been paid on lakes, potholes and stream beds that were under water or idle during 1996 and the previous four years. Over the years, some insurers complained payments were made on properties “with perch swimming in them.”
Since then, RMA officials issued new standards in 2006, 2011 and 2012 in an effort to curtail what they considered improper claims. As it stands, acreage must be (1) planted in at least one of the four most recent crop years immediately preceding the insured crop year and (2) harvested or adjusted for claims purposes for a cause of loss other than flood or excess moisture. If acreage fails the one-in-four rule, it can regain crop insurance eligibility only after it has been planted for two consecutive crop years. However, that's unlikely to happen since EWG believes the one-in-four rule is overly generous and most Prairie Pothole farmers will meet that initial test.
Instead of repeated crop insurance claims, Cox believes private insurers should develop products to protect these problematic wetlands, such as weather insurance coverage. Failing that, taxpayers and the growers themselves might benefit by using crop insurance savings to permanently retire the riskiest fields from crop production.
“Right now, growers have an incentive to try to plant because they sometimes get a good crop — and if not, they get a payment,” Cox said. “So their attitude is, why not roll the dice.”
Sam Willett, a crop insurance analyst for the National Corn Growers Association, thinks EWG's latest criticisms are unwarranted. “The fact is the RMA instituted a much more restrictive eligibility criteria for prevented planting claims beginning with the 2014 crop year,” Willet said. “In light of these changes and rating methodology reforms that better reflect actual production risk in premiums, we should see real progress in addressing the concerns raised by the Office of Inspector General.”
To read the EWG report go to http://www.ewg.org/…
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