By Alex Leary | Photographs by Caitlin O'Hara for The Wall Street Journal
SNOWFLAKE, Ariz. -- Billy Elkins' pickup rumbled through miles
of barren rangeland and came to a stop near an old black cow.
"She's just thinner, not doing so good," he said. "She's going to
go. She'll be hamburger somewhere."
Western ranchers are suffering one of the worst droughts in
decades, and this week Mr. Elkins is liquidating half his herd of
1,000. He has avoided even deeper losses by offsetting feed costs
through a decade-old federal drought-insurance program, which he
says has been a "game changer."
But in late August, the Trump administration stunned the
ranching community here by unveiling plans to significantly scale
back the insurance program in 2019, ratcheting up anxiety in farm
communities already upset over retaliatory beef tariffs imposed by
China after President Trump imposed levies on its products.
"We're probably some of his biggest supporters. It's pissed off
a lot of people," said Mr. Elkins, 60 years old and
fifth-generation rancher who raises Black Angus cattle on his
50,000-acre Rocking Chair Ranch. "As of right now, we're not
blaming him, but [it] could be a problem politically for the
administration."
The rollback of the Agriculture Department's Pasture, Rangeland
and Forage program has become an issue in the toss-up Arizona U.S.
Senate race, and in a sign of ranchers' political muscle, both
candidates are pledging to get it fixed.
"It's not right and it's not fair," Republican Congresswoman
Martha McSally said in an interview. Ranchers, she said, "know I'm
going to fight for things that matter to them. We're going to work
through this but it's certainly not good." Democratic Congresswoman
Krysten Sinema, who said she has been approached about the program
while campaigning, called it "really bad for Arizona" and called
the sudden change "very Washington, D.C."
Ms. McSally has support from ranchers such as John Ladd, who on
Friday will make the four-hour drive from his ranch on the
Arizona-Mexico border to Mesa for a rally featuring the candidate
and President Trump. Ladd, 63, said ranchers have faith McSally can
win a policy reversal but said it's bothersome that the problem
remains. "There are some people who may be sitting on the fence
that this could be an excuse not to vote for her," he said.
Strategically, organizers of a congressional letter protesting
the move chose Ms. McSally as the lead signature, knowing a
Trump-endorsed candidate from a hard-hit state may gain more
attention. Ms. Sinema also signed the appeal for change. Another
letter, from four senators, was sent to Secretary of Agriculture
Sonny Perdue this week. "The tens of thousands of American
producers who rely on this program deserve much better," it
said.
The White House declined to comment.
The USDA said crop-insurance programs are routinely evaluated
and that the goal is to mitigate risk, not make ranchers whole.
"Since premium is subsidized, overinsurance results in the producer
getting more subsidy than was intended by law, and increasing the
cost of the program to the taxpayers," the department said in a
statement.
The pasture, rangeland and forage program is a hedge against
drought. Ranchers pay a premium -- half of which is subsidized by
the government -- and receive indemnities in times of low
precipitation. They use those payments for hay and other
supplemental feed or water.
"It saved my ass big time," said Roger Warner, 71, of the
family-run Eureka Springs Cattle Co., in southeastern Arizona.
In 2017, he paid $60,000 in premiums and got $150,000 in
payments after seeing only about an inch of rain over the six-month
period of his coverage. The money covered liquid supplement and
protein blocks and helped compensate him for a dearth in calves due
to poorly nourished cows.
"If it rains, I have to pay. It's not like it's a freebie," said
Mr. Warner, who has contributed more this year than he has gotten.
"I'd like an explanation."
While used across the country, the insurance has been most
coveted in recent years in the West. The "four corners" area of
Arizona, Utah, Colorado and New Mexico is in "extreme" or
"exceptional" drought, according to government data. Statewide over
the past year, Arizona has seen half its average precipitation.
Navajo County, home to Snowflake, is going through its
second-driest year in a more than a century.
The easygoing Mr. Elkins lamented a landscape barren as far as
the eye can see, stripped of the knee-high grass that would
normally sustain his herd. He has used the insurance payments to
truck in 200 tons of hay in the past two years, which he says is
hardly enough.
The USDA isn't eliminating the program, but in many areas it has
sharply reduced how much forage is worth on a given acre, arguing
the values used today to determine payouts are artificially high.
Some rangers in Arizona, who reject that reasoning, could see cuts
of 40% or more.
The program began in 2007 and expanded nationally during the
Obama administration. Today, there are almost 99 million acres
covered -- 24 million alone in Arizona -- and the net government
cost has gone from $14 million to $136 million, a fraction of the
billions in annual farm subsidies. Nearly 33,000 policies were sold
in 2018.
"This is a valuable program and I want it to be around 10 to 20
years from now, so I think the changes they are making will help it
last," said Brandon Willis, a former USDA official who was involved
with the expansion. "It is quite a shock, there's no doubt about
it," he said of the cutback.
Secretary Perdue hasn't responded to the Sept. 18 letter from a
bipartisan group of U.S. House members that called for no changes
in 2019 while concerns about the program were being evaluated. One
concern within the administration is preventing people without
cattle from buying the insurance. Ranchers who have been consulted
by the USDA's Risk Management Agency -- which operates the
insurance program -- say certification of cattle ownership will be
part of next year's program, among other tweaks.
"We felt like we were stabbed in the back by the RMA folks after
having a lot of communication with them," said Jay Whetten,
president of the Arizona Cattle Growers' Association. He said that
while ranchers have never sought the kind of programs other farm
sectors have long relied on, the pasture, rangeland and forage
program has been welcome.
"People out here in the West, we don't believe that Washington
hardly ever gets it right," Mr. Whetten said. "It's 'get out of my
way, leave me alone so I can make a living.' But this
drought-assistance program has been a very good and effective
program."
In Snowflake, Mr. Elkins gave a tour of his ranch after spending
hours on horseback rounding up cattle for sale. "The weather is
your livelihood and if you don't get moisture it can be crushing,"
he said. "I haven't seen it this bad in my lifetime."
As it happened, a couple of inches of rain had fallen a few days
earlier, some of it forming muddy puddles on the dirt road and
spurring some grass growth on the periphery. But Mr. Elkins is
already moving to cut his losses and selling half the herd. "It's
too late," he said.
Write to Alex Leary at Alex.Leary@wsj.com
(END) Dow Jones Newswires
October 19, 2018 05:44 ET (09:44 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.