Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Monday 10/29/12

Crop Insurance Motivation to Get a Farm Bill Done

I wasn't the only one who thought House Majority Leader Eric Cantor masterfully parsed words in Idaho last week. It was reported Cantor, R-Va., had suggested the House would take up the farm bill when it returns for a lame-duck session in mid-November. Cantor had said he was "committed to bring the issue to the floor."

A Cantor spokeswoman stated in a Roll Call article that Cantor's statements didn't necessarily specify what he would do. Thus, Cantor didn't endorse the idea of bringing the House Agriculture Committee farm bill up for a debate and vote.…

The Hill also suggested the "fiscal cliff" is now the best shot for a farm bill. Effectively, the legislation would be attached to any legislation dealing with tax cuts or spending.…

But the drought and its associated costs have now added a new dimension to the farm bill debate. There will be a ramped up lobby effort to get this farm bill passed before the end of the year. It won't just come from farmers, however. The crop insurance industry is assuredly now highly motivated to get this farm bill done now. The banks that own those insurance companies will want to see a farm bill passed as well. As DTN's Washington Insider highlights today, insurers know as more indemnity checks gets sent out the sticker shock will start to become obvious to everyone.

"Program critics have been worried all along about the amount of producer risk the government is proposing to assume, and the implication of such policies for both the structure of the industry and potential government costs. For example, USDA could pay three-fourth of this year's underwriting losses, perhaps $15 billion, including $7 billion in premium subsidies, $1.3 billion in overhead costs for insurers plus about $7 billion from underwriting losses, according to agricultural economist Vince Smith of Montana State University."

Insider added, "Part of the reason farm groups proposed to make insurance the central safety net was the conviction that it was the only approach that could survive anticipated budget pressures. However, estimates suggesting that the insurance-based safety net could actually cost three-times as much as the widely unpopular $5 billion-a-year direct payments it is being proposed to replace are bolstering arguments that the strategy should be rethought."

I can be found on Twitter @ChrisClaytonDTN

Posted at 7:55AM CDT 10/29/12 by Chris Clayton
Comments (3)
Good article! Good info. "The banks that own the ins. companies." One of the real reasons of the Food Bill, not welfare for farmers.
Posted by Bonnie Dukowitz at 8:50AM CDT 10/29/12
I seem to remember remarking that the real forces behind the "Big Agra" push on the 2012 Farm Bill WAS, in fact, not only the "Banksters", but the players in the Derivatives Market behind Wall Street who pushes them. Evelyn De Rothschild and "Liz" Windsor are laughing at us as we fight each other and ignore them. Meanwhile, take another look at who in Congress is also in on the push and start tracking who's REALLY filling their "War Chests" should be "enlightening".
Posted by Ric Ohge at 11:48AM CDT 10/29/12
I think many underestimate the impact of having and not having a farm bill. Agriculture is a cornerstone of the American economy and vital to both rural and urban interests. Not passing a decent farm bill soon will have severe repurcussions for all the country.
Posted by G. Sean O'neill at 5:48AM CST 11/06/12
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