Crop insurance is the centerpiece of the farm safety net, a victory for farm groups who made a strong insurance program their top priority for the 2014 farm law. Now, a year after that success, the federally supported program is in the bull’s eye for budget cuts on Capitol Hill, ranging from tighter rules on prevented planting to higher premiums for big operators.
The fight won’t be decided for months to come. It’s pointed at operations in 2016, so it would not affect policies for this year’s crops.
At the first House Agriculture Committee hearing of the year, chairman Mike Conaway of Texas told Agriculture Secretary Tom Vilsack that cuts are unacceptable. “Now is precisely the wrong time to weaken crop insurance,” Conaway said, pointing to USDA forecasts that farm income will fall by one third this year. “The ag economy has been turned on its head.”
Farm groups and crop insurers, with their allies in Congress, are working strenuously to prevent cuts. Senate Agriculture Committee chairman Pat Roberts says he would “protect, preserve, and improve the number one risk-management tool available to farmers.” Growers insured 294 million acres last year.
With the program projected to cost nearly $9 billion a year – more than conservation or traditional crop subsidies – it is an inevitable target in the drive to cut federal spending.
“Make no mistake, crop insurance’s days of flying under the radar are done,” said
industry executive Tim Weber at a crop insurance convention.
The Obama administration proposed a 17% cut in insurance costs by:
• Reducing the premium subsidyby 10 percentage points for revenue policies with the harvest price option that insures the price at harvest and
• Adjusting payment rates for prevented planting.
“The safety net is solid and still there,” said Vilsack, if Congress agrees to the reforms.
Senator Jeff Flake (R-AZ), a frequent farm program critic, tried during the farm bill debate to eliminate the harvest price option and now has filed a bill to carry out the White House proposal.
Senators Jeanne Shaheen (D-NH) and Patrick Toomey (R-PA) have filed a bill to cap premium subsidies at $50,000 per farm, which would affect the largest 2.5% of farmers. Vilsack warned that the approach “could potentially impact participation” – quiet words of opposition.
Of the proposed reforms, the harvest price option would save the most, an average $1.4 billion a year. Reformers have talked as well of other ways to reduce costs, such as cutting off or sharply reducing premium subsidies to the wealthiest farmers.
