Tuesday, October 27, 2015

Budget Deal Cuts Crop Insurance Subsidies

The two-year budget deal produces savings from one of the most popular programs in farm country — federally subsidized crop insurance — and farm state lawmakers are furious.
Senators and House members said Tuesday they weren't notified of the cut before the deal was struck, with Republican leaders pushing for a vote this week on the budget pact. The crop insurance companies that depend on federal subsidies said in a statement that the proposed $3 billion in cuts over 10 years could be devastating to the industry.
Budget-writers in Washington have long eyed the crop insurance program, which costs more than $9 billion annually, as a pot of available money. But farm-state lawmakers have fought to protect it, saying it makes more sense than other farm subsidies since it pays out when farmers suffer losses.
Congress got rid of other types of subsidies in a wide-ranging farm bill last year, including payments that went to farmers regardless of crop yield or crop price. In turn, they increased federal support for crop insurance.
The budget deal would create the savings by lowering the rate of return for companies that sell crop insurance to farmers. The federal government partially subsidizes those companies and insures some of their losses.
The Republican chairmen of the House and Senate Agriculture Committees, Texas Rep. Mike Conaway and Kansas Sen. Pat Roberts, issued a joint statement along with the top Democrats on the panels objecting to the cuts, which they said would "undermine a critical risk-management tool for American agriculture producers and consumers."
Both said they would vote against the bill.
I'm sure I'll hear some farmers complain that these cuts make it hard to do long-term planning or some other crap, but I'm also sure I've heard some farmers complain that the government subsidizes health insurance premiums under Obamacare.  I'm not sure I see the differences in those subsidies.  Anyway, farm state legislators who are ready and willing to target government spending they think goes to minorities in cities ought to consider whether the rural voters who elect them aren't the real minorities.  I can guarantee that if blacks, Hispanics and other city voters turned out for elections, many conservatives would have to look for jobs outside of the public sector.

Update:  Farm state legislators are pissed:

Ag-state lawmakers, farm groups and the crop-insurance industry were flexing their muscles Tuesday to push back against plans to cut $3 billion from crop-insurance companies over eight years.
The budget bill would reverse a provision in the farm bill and effectively require USDA to renegotiate the Standard Reinsurance Agreement with crop insurance companies in 2016. The bill also sets a hard cap of 8.9% as the overall rate of return crop-insurance companies can receive. Under current law, the overall rate of return is 14.5%.
The bill doesn't make any changes in crop insurance the cost of policies or protection levels for farmers.
Several congressmen and senators took to social media to vent as details about the budget plan made the rounds on Tuesday.
Sen. Heidi Heitkamp, D-N.D., ‏@SenatorHeitkamp -- See statement on how I'm looking 4 path to prevent cuts to #cropinsurance & avoid reopening #FarmBill in #BudgetDeal http://1.usa.gov/…
Senate Ag Chairman Pat Roberts, R-Kansas, ‏@SenPatRoberts -- I will oppose the budget deal. Farmers should not be forced to shoulder the nation's financial burdens. http://goo.gl/…
The battle immediately raised the profile of crop insurance in the budget arguments with Republicans loudly defending higher spending for a government program.
Roberts, along with Sen. Debbie Stabenow, D-Mich., House Ag Chairman Michael Conaway, R-Texas, and Rep. Collin Peterson, D-Minn., issued a joint statement, "Ag Committee Leaders State United Against Reopening Farm Bill to New Crop Insurance Cuts."
Rep. Kevin Cramer, R-N.D., placed the blame for the crop-insurance provision on the White House with the "intent to re-open the Farm Bill and create a single payer 'Obamacare of Crop Insurance,' " which Cramer said was unacceptable. Cramer then stated he was "committed to working with House Agriculture Committee Chairman Mike Conaway and his committee to find the $3 billion in savings in other areas of the government."
Rep. Randy Neugebauer, R-Texas, also issued a statement that included, "While this is unacceptable, it is of particular concern for cotton producers in my district as crop insurance is now the sole means of risk management available. Furthermore, the House Agriculture Committee was not even consulted during this process, and the Committee has overwhelmingly rejected similar proposals at every recent occasion—America’s farmers deserve better."
Now, if one were to listen to conservative talk radio (and not suffer brain damage), that person would probably be told that the solution to any problem is less government subsidy and more free market.  I'll just throw a rhetorical question out here and ask why that wouldn't be the case here.  I'll be interested to hear if any of the GOP candidates for president reference this while campaigning in Iowa.

1 comment:

  1. Recently FCI offered massive profit guarantees to the largest farmers in the country as well as annual million dollar premium subsidies. This highly financially discriminatory awarding of government benefits to the largest and wealthiest is devastating to the competitive ability of smaller farmers.