Days after Republican leaders agreed to reverse $3 billion in cuts in the crop insurance program, lawmakers proposed reforms that would cut federal spending on the program by one-fourth. The reformers would deny premium subsidies to large operators and would ban premium subsidies for the Harvest Price Option. That option allows farmers with revenue insurance to base their payments on prices at harvest if they are higher than the price that was guaranteed at planting time.
The change would save $19 billion over 10 years, according to sponsors Reps Jim Sensenbrenner and Ron Kind of Wisconsin. Sensenbrenner said the bill “makes sensible changes … to reduce unnecessary subsidies directed toward our country’s largest and most profitable farms and agribusinesses,” said Agri-Pulse. The bill also would limit, at $900 million a year, the government share of overhead costs for delivery of coverage to producers and reduce the rate of return allowed to insurers, now 14.5 percent, to 8.9 percent. “The bill represents a collection of cuts that have been proposed to crop insurance in Congress or by the White House in recent years,” said Agri-Pulse.
For example, the White House proposed elimination of premium subsidies for the Harvest Price Option as part of its proposed budget for fiscal 2016. Sen Jeff Flake of Arizona, who was to file a Senate companion to the Sensenbrenner-Kind bill, was a cosponsor in February of a bill to carry out the Harvest Price proposal. Congress is in the final weeks of this year’s session with only a handful of major bills expected to see action.