Two crop insurance reforms would cut the cost of the federally subsidized program by about 17 percent under the fiscal 2016 budget proposed for the Agriculture Department. The program is a routine target for cuts, most of which are rejected. This time, the administration proposed a lower premium subsidy for so-called revenue policies based on prices at harvest time, and reforms to prevented-planting coverage. Together, the changes would save $16 billion over 10 years.
Agriculture Secretary Tom Vilsack said the reforms would help reduce the cost of farm supports, as intended when Congress passed the 2014 farm law. “It’s important to put a variety of ideas on the table,” said Vilsack. Traditional crop subsidies are likely to cost $1 billion-$1.5 billion more than projected when the farm law was enacted a year ago, he said, while the decline in commodity prices is reducing the cost of crop insurance somewhat.
In a fact sheet on the proposal, the USDA said, “There remain further opportunities for improvements and efficiencies” in a program that “continues to be highly subsidized” and costs about $9 billion a year. The USDA says its proposals will save taxpayer money and still provide a safety net for farmers. The government pays 62 cents of each $1 in premiums for crop insurance.
“We have seen these types of proposals from this Administration before, and Congress has been right to ignore them,” said Senate Agriculture chairman Pat Roberts. Like many farm-state lawmakers, Roberts said crop insurance is the key tool for farmers. The 2014 farm law made crop insurance the mainstay of the farm safety net with spending that is projected to exceed traditional crop subsidies (forecast to cost $7.1 billion in fiscal 2016 vs $8.2 billion for crop insurance). House Agriculture chairman Mike Conaway said, “This ill-timed proposal on crop insurance would jeopardize the ability of producers to insure their crops in a climate of collapsing crop prices, major crop losses, and falling farm income.”
The Environmental Working Group said the administration proposals would reduce the temptation to plant crops on wetlands or other fragile land in order to collect a prevented-planting payment, and would reduce the appeal of policies “which greatly overcompensate growers when crop prices rise during a drought.”