Winter is Here/FSA Payments

We had our first winter snow storm this Saturday. My first winter in the valley! It really is lovely but kind of scary. Richard drove to the Madison indoor Farmer's Market at Monona Terrace (RIP Otis Redding) and José and Margo had CSA deliveries that day. It started snowing mid-morning and visibility and the roads were crap! Andrea and I were home, here at the farm, and tried to convince both Richard & José to stay in Madtown, but they both insisted they'd be careful y despacio, and get home that night. I was so glad to see them (José and Margo much later than Richard)! We're expecting another couple inches today. I moved into the farmhouse just in time, I think! (the first cabin is mine, the upper is Glen's - electricity but no water)














Richard has been working on getting a fair payment from the FSA for our crop losses from the flood this summer. This is a letter and table he sent to the Vernon County FSA, Russ Raeder at the state FSA, and to the Wisconsin Deptarment of Agriculture. If you click on the picture of the table it should enlarge - it's all very interesting, but pay special attention to the last 3 columns: 2007 HVF Loss ($/Acre), FSA Payment ($/Acre), and FSA Payment: % of Actual Loss. FSA payments are incredibly low!



















Being certified organic involves good record keeping, so Richard has very good records on all he's grown over the years - yields, prices and planting periods. I think he makes a great case for making changes in how the FSA calculates payments:

Comparative Analysis of Market Crop Values to Actual FSA Payments

Compiled By Richard de Wilde, Harmony Valley Farm

I have been farming in southwest Wisconsin since 1985. I grow certified organic produce on 100 acres of land that I sell to the fresh market. Half of my sales are to wholesale markets, with the other half of sales to retail markets including farmer’s market and our large CSA. In August of this year we experienced excessive rainfall resulting in devastating flooding in our valley that damaged and destroyed over 45 acres of crops as well as prevented planned plantings. I filed crop loss claims with NAP and have received 14 payment calculations from FSA thus far. The NAP policy is supposed to pay 27.5% of losses, however these 14 payment calculations only average 2.17% of Harmony Valley Farm’s (HVF) actual loss for these crops. If the remaining crop calculations are similar, I will receive $16,000 on a $750,000 loss. With a discrepancy this great, it is obvious that there is something really wrong here! My assumption is that the individuals associated with implementing the NAP program are well-meaning and want to work with farmers to make this program functional with an efficient process for filing and paying claims that will benefit and help the farmers who rely on this program. With this assumption in mind, I would like to outline some of the problems with the current NAP program from my perspective as a farmer. Please refer to the accompanying chart which will help demonstrate some of the problems.

CROP VALUE & PRICING

Please take a look at the crop value section on the chart, expressed in “dollars per pound.” I have been told that the FSA crop table uses the AMS fresh market price at the Chicago terminal. The crop table values are based on AMS prices taken from 120 days prior to the application closing date (March 15, 2007). Using AMS data from November 1, 2006, I found that the FSA crop table prices are only 29% of the AMS prices. How can this be? There are also obvious errors, such as “Green Baby French” beans are priced the same on the FSA table as the regular green beans when the AMS prices show a 214% higher price for this variety. There are serious problems with the FSA crop table when this sampling shows FSA prices are on average only 29% of the AMS prices when I would expect them to match. The issue is actually much worse than this!

The HVF average prices from 2006 are 158% higher than AMS prices. Yes, some of that is a premium for “certified organic production,” but much more so it reflects the fact that half of HVF production is sold at retail prices while AMS and FSA crop values are based on wholesale market price. Retail prices are 100% higher than wholesale, a standard practice in the produce industry. To pay only wholesale prices may work for businesses who only sell to wholesale markets, but the reality is that most produce growers sell some or all of their product to retail markets. Thus, the current FSA practice is discriminatory against direct market produce growers.

A more reasonable practice would be to use a price that more closely matches the individual farmer’s market situation. FSA already uses an individual farmer’s yields (APH) to figure crop values, thus why not extend the practices to use an individual farmer’s prices as well. In the very least, figure payments using a scale that matches a farmer’s actual market breakdown where crops are sold instead of assuming all sales are made at a wholesale market price. NAP rules include ‘local markets’ in the list of price sources.

UNHARVESTED FACTOR

As stated previously, NAP policy is supposed to pay 27.5% of loss when the loss exceeds 50%. This percentage is based on paying 55% of losses over 50% of the total. So, payment is already being based on a much lower amount than the actual loss. If a farmer has a total loss on a crop—now FSA is going to decrease payment further by calculating in an unharvested factor (FSA value assigned to costs that would have been incurred had the crop been harvested). Their rationale for this is that costs associated with harvest are decreased or eliminated if a crop is lost. Where do these numbers come from? Are they based on records of harvest costs? If so, whose records were they and when were they gathered? While I do not feel an adjustment factor for harvest costs is even warranted, if it must be there it should at least be an accurate value.

I have included the HVF labor cost per pound for harvest and calculated a harvest factor cost based on our known harvest costs. I derived these values from time studies that have been done on my farm to establish labor costs for my own business use. You can see that the HVF harvest factor is 177% greater than the average FSA unharvested factor and hence would increase a 100% loss payment substantially.

Also, though many of the crops appeared to be a total loss initially, in many cases there was a higher part of the field that recovered and we were able to harvest some crop that went to market, so we have some production to report. Both the assessor and the Vernon County office advised me to ask the State FSA office for permission to change those crops from zero production to harvested. Reporting production would remove the unharvested factor for those crops initially assessed to be total loss. Regardless, the fact still remains that the unharvested factor numbers as they are now are a serious impediment to this program working effectively.

PLANTING PERIODS

The NAP handbook has clear provisions for establishing planting periods for crops that are planted multiple times during a growing season. The majority of vegetable crops are in this multiple planting category. It is absolutely essential and necessary for planting periods to be established for NAP to work! This was evident in 2003 when I applied for a drought disaster for 4 acres of beets planted for fall harvest and storage. When that loss was combined with our good spring beet crop, the loss was only 50% and payment was zero. FSA refused to establish planting periods for that loss.

In December 2004 Russ Raeder asked me to write planting periods for all vegetables. I submitted them on January 4, 2005 and they were reviewed by Karen Delahout, vegetable specialist for the University of Wisconsin. As a result, a few planting periods were established, but two years later there are still more than 40 crops from the NAP list that we grow that do not have established planting periods! I wrote the planting periods without compensation, providing FSA with all the information needed to do the right thing. I did my part, but it is the responsibility of FSA employees and committees to implement them.

The NAP insurance program is a workable program as catastrophic insurance if, and only if, it is administered properly. It has not been so. There are still serious errors in final plant dates, price, unharvested factor and planting periods, that when combined make a $100,000 difference in my loss payment. This may be the difference between being able to continue farming or not. I would like to see FSA take responsibility for making the necessary and long overdue changes needed to make the NAP program an efficient, manageable, fair and reasonable insurance program that will actually benefit farmers who are invested in growing food necessary to feed and sustain our families and communities. I have followed through on my end of the deal and expect the government representatives to do the same. I am not satisfied with hearing “We will try to get it right for next year!” Changes need to be made, not in the future, but NOW for 2007.