Confronted by angry farm-state lawmakers, House Republican leaders agreed they will not carry out the 3-percent cut in crop insurance spending that is part of a two-year budget agreement. “I take our leadership at their word when they committed to me and many of my colleagues that we will eliminate these harmful provisions in the not-too-distant future,” said Agriculture Committee chairman Michael Conaway, a Texas Republican.
GOP leaders abandoned the crop-insurance cuts less than 48 hours after they were announced. The $3 billion in savings would have been generated by limiting insurance companies to an overall rate of return of 8.9 percent from the federally subsidized program, down from the current 14.5 percent.
Conaway and Minnesota Rep. Collin Peterson, the Democratic leader on the committee, said the cuts were unfair considering the 2014 farm law would reduce agricultural spending by an estimated $23 billion. “We’ve done our part,” said Peterson.
Sixteen of the 26 Republicans on the Agriculture Committee voted against the budget package, not quite as strong a denial as the 2-to-1 vote against the package by House Republicans overall. The package passed on a 266-167 rollcall with Democrats voting in a bloc for it, joined by 79 Republicans. The package now goes to the Senate, which could vote as early as today. Efforts were underway by farm-state senators to de-fang the crop-insurance language.
“We hope Senate leadership finds a path forward soon to ensure that these cuts are not realized,” three industry groups said in a statement. Crop insurance “is truly the centerpiece of agricultural risk management and rural America is willing to fight to maintain the crop insurance program.”
Farm groups acceded to cuts in crop subsidies in the 2014 law in exchange for an expansion of crop insurance, making it the bulwark of the farm program. To head off the cuts in the budget package, they raised the prospect that insurers, who lost money in 2012 and 2013 due to drought, would abandon the sector now that commodity prices are down and farm income is in a slump. “Since 2013, we have witnessed the exit of five large crop insurance providers with additional providers teetering on the edge,” said the National Farmers Union. “It’s time for Congress to realize that crop insurance is not a piggy bank.”
In the crop-insurance program, the government pays 62 cents of each $1 in crop premiums, shares the overhead cost of delivering service to growers and shoulders much of the financial burden during crop disasters. Insurance rates are set by the government, which decides where coverage for particular crops can be offered and requires companies to accept all clients.