June 21, 2024
Loans

Dunleavy continues food security initiative with CROP Act, with loans and crop insurance


Gov. Mike Dunleavy on Friday introduced the “CROP Act,” (Capital access, Revenue protection, and Open Procurement Act” as he continues his work strengthening Alaska’s food security.

According to the American Farmland Trust, there are just 990 farms in Alaska, comprising 849,753 acres of land, less today than the 881,585 acres that were under cultivation in 2007. The market value of the farming products in Alaska annually is $3,531,000 in goods sold directly to retail markets, institutions, and food hubs for local or regionally branded products.

With a generally warming weather pattern, farming is becoming more viable in the north.

“Alaska’s reliance on importing so much of our food creates a vulnerability. While we can’t change the weather, we can change policy to optimize Alaska’s agricultural output,” Dunleavy said. “Farming has always come with risks that are outside of man’s control. However, the CROP Act will reduce financial risks and cultivate an economic environment where Alaska’s food producers can succeed and Alaska can be more self-reliant. Furthermore, the legislation will also keep a greater percentage of money spent on food circulating within Alaska rather than flowing to producers out of state.”

House Bill 296 and Senate Bill 211, will hopefully reduce risks and put some incentives into growing of food. Its main mechanism is simply adjusting existing Alaska statues.

“Governor Dunleavy’s CROP Act addresses financial policies that restrict some farmers from reaching their full potential to put more Alaska Grown food on Alaskans’ tables,” said DNR Commissioner John Boyle in a statement. “This legislation will provide better loan options for the agricultural industry, make critical crop insurance less risky, and ensure that State of Alaska purchasing power is invested back into Alaska.”

Earlier in the Dunleavy Administration, the governor pushed to open up more agricultural land outside of Nenana. The Legislature funded the first phase of the project, which opens up more than 100,000 acres for food farming. The Legislature funded the first phase of the project in its 2022 budget.

There are three major components of the CROP Act: Increasing access to and availability of agricultural loans, revising crop insurance premium subsidies, and stimulating state spending on Alaskan agricultural and fisheries products.

Agricultural Revolving Loan Fund Improvements

The bill amends the Agricultural Revolving Loan Fund by repealing outdated loan limits and allowing the Board of Agriculture and Conservation to set new limits in regulation. It expands the range of loans to include shipping costs and refinancing. The CROP Act would provide a $4 million capital injection into the fund – the first capital injection since 1986.

Crop Insurance Updates

The bill amends existing law requiring the state to provide premium support to farmers for crop insurance policies. The bill provides for a staggered level of support in which the State will pay the full farmers’ shares for revenue protection policies offered in Alaska for four years, and partial support in the following years provided farmers contribute to a minimum level of coverage.

Crop insurance premium support will incentivize increased planting and provide an asset that can be leveraged for farm improvements. With an increased in-state supply of feed grains, Alaska’s livestock producers can grow their herds with less risk, and meat processors will also benefit from increased production.

The bill provides an initial level of $4 million for premium support payments. That amount accounts for current acres in production and potential growth.

Revised Preference for Alaska Grown and Harvested Products

Dunleavy would repeal limits on state agencies’ purchases of Alaska grown or harvested products for five years.

Under current law, any entity receiving state funds, including state agencies, school districts, and municipalities, are required to purchase Alaska grown or harvested products so long as they are no more than 7-15% more expensive than a comparable product from outside of the state. In place of percentages, the bill will require eligible entities to purchase an available Alaskan agricultural or fisheries product if the product is of “like quality” compared to a product harvested out of state.

Alaska’s farmers often struggle to enter retail channels because of corporate requirements for regular and dependable deliveries to secure shelf space. By providing access to market through institutional buying power, Alaskan producers will have the ability to scale up with less risk and to reach a level of production that can meet the requirements of retail customers.

To mitigate potential increased costs due to mandatory purchase of Alaskan products, the bill contains three protective measures: a five-year sunset that reverts the amended provisions back to current law, a requirement that Alaskan producers submit accurate wholesale pricing lists in response to solicitations, and an annual reporting requirement to the Legislature.



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