The proposed 3-percent cut in crop insurance funding will be erased when Congress passes its catch-all spending bill at the end of the year, said Senate Majority Leader Mitch McConnell. The cuts were written into the two-year budget pact, announced on Monday, but Republican leaders, under fire from farm-state lawmakers, backpedaled. “It is our joint understanding that House leaders will work to reverse these crop insurance changes and find bipartisan alternative savings when they consider an omnibus appropriations bill later this year,” McConnell said during a colloquy. Speaking separately to reporters, Agriculture Secretary Tom Vilsack said crop insurance reform “should be part of the discussion” in Washington.
“As far as the budget is concerned, we will obviously continue to work with the budget process to ensure that whatever reductions are required are thoughtful and well thought out,” said Vilsack. “There are ways in which the crop insurance program can be reformed and improved while also saving money.”
The 2014 farm law expanded the crop insurance program and made it by far the largest source of government support, with spending estimated at $90 billion over 10 years. The budget package called for $3 billion in savings by limiting insurers to a rate of return of no more than 8.9 percent, down sharply from the current 14.5 percent. Farm groups and insurers quickly mobilized into an unbeatable opponent to the cuts. “We have all agreed here to restore these funds to the program and reverse this policy,” said Senate Agriculture chairman Pat Roberts.
The Obama administration has proposed a variety of changes to crop insurance, which is heavily subsidized by the government. The most recent ideas, to save more than $1 billion a year, were to make farmers pay more for policies that pay indemnities even if market prices at harvest time are higher than projected when policies were purchased in the spring, and to tighten the rules on payments to farmers unable to plant a crop.
As part of the 2014 farm law, Congress said any renegotiation of the Standard Reinsurance Agreement, the contract between the government and insurers, must be budget-neutral. The budget pact would have overturned that guarantee and required a renegotiation during 2016.