Congress should make the wealthiest farmers pay a larger share of the cost of taxpayer-subsidized crop insurance and hold the line on crop subsidies in the new farm bill, said a half dozen think tanks, budget hawks, and environmental groups on Wednesday. “There is no obvious or urgent need to increase farm subsidies,” said Nan Swift of the R Street Institute, despite the appeals of farm groups.
The loose coalition of farm bill reformers called for income and payment limits for access to crop insurance and for cutbacks in federal support of insurance companies and the agents who sell the policies. At present, the government pays 62 cents of each $1 in premiums — about $11.6 billion in 2022 — promises insurers of underwriting gains of at least 14.5 percent a year, and pays at least $1 billion annually to insurers and agents for administrative and operating costs.
“Put some guardrails on that program,” said Joshua Sewell of Taxpayers for Common Sense, just as there are eligibility and payment limits on crop subsidies. “It makes no sense that we have no such limits on the crop insurance program,” said Scott Faber of the Environmental Working Group.
Reformers called for farm subsidy restraint a day after the leaders of the House and Senate Agriculture committees said they were looking for ways to expand the farm safety net. House Agriculture Committee chair Glenn Thompson said he was waiting for cost estimates from the Congressional Budget Office for increases in reference prices, a key element in triggering subsidy payments.
“I believe we need to make crop insurance more affordable; we have 130 crops that use crop insurance,” said Senate Agriculture Committee chair Debbie Stabenow. “The 20 crops that benefit from the commodity title — I think we need to do … more there.”
Higher reference prices and a stronger crop insurance program are the top farm bill priorities of farm groups. They say increases are justified because of record-high farm expenses and high inflation rates.
But farm household income is far above the median income of U.S. households overall, and the USDA estimates that farm profitability this year will be the second highest on record, said Bryan Riley of the National Taxpayers Union. Said Chris Edwards of the libertarian Cato Institute, “Agriculture is an unusually coddled industry.”
Farm subsidies escape reform because of the “logrolling exercise” of building an urban-rural coalition in Congress for passage of the farm bill, with farm, anti-hunger, and conservation groups vouching for the legislation, said David Ditch of the conservative Heritage Foundation. “I think it is important for Congress to recognize the old way of doing business … is not sustainable.”