Four dozen groups representing banks, farm-equipment makers, insurers and farmers urged senators not to meddle with the 2014 farm law or the federally subsidized crop-insurance program while writing a catch-all government funding bill. Congress faces a deadline of mid-December to fund the government for the rest of fiscal 2016. The letter from the agribusiness groups emphasized a promise by House and Senate leaders to roll back a proposed $3 billion cut in crop insurance funding.
“Farmers and lawmakers agree that crop insurance is an essential risk management tool … we urge you to uphold the promise to make the crop insurance program whole again without re-opening the farm bill,” says the letter, which also noted an assurance from lawmakers that the $3 billion offset would not come out of USDA programs. The 2014 farm law eliminated the $5 billion “direct payment” subsidy, made regardless of need, and shifted some of the money into an expansion of crop insurance. The remainder went to deficit reduction. The 2014 farm law forbids USDA from seeking budget cuts in any renegotiation of terms with crop insurers.
“Just like we opposed this unwarranted cut to crop insurance, our members will also strongly oppose cuts to other important titles of the farm bill, such as additional cuts to conservation, energy and nutrition,” said National Farmers Union president Roger Johnson.
At present, the government pays 62 cents of each $1 in premiums for coverage, part of the overhead for delivery of insurance, and shoulders most of the losses during catastrophic years. It also sets the rates for policies, requires insurers to accept all customers and determines where coverage for specific crops can be offered. Congressional critics have suggested carrying out the $3 billion in cuts along with other reforms totaling $24 billion over 10 years, or roughly a quarter of estimated spending.
“The votes for this level of cuts are not there in Congress at this time,” wrote economist Art Barnaby of Kansas State University, a crop insurance expert, in a blog that argues the cuts would tear apart the crop-insurance system and drive up farm subsidy costs. Opponents “don’t like crop insurance and there is no compromise or education that will change their minds,” says Barnaby. “So while most farmers and insurance professionals thought all of this was done when the farm bill was passed, it now appears the fight will continue, with no end in sight.”