Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Thursday 10/10/13

House May Consider Means Testing for Crop Insurance

Will the sense of the House lead to means testing for crop insurance?

A group of 47 major farm and agribusiness associations wrote House Speaker John Boehner and Minority Leader Nancy Pelosi on Tuesday asking them not to risk changes to crop-insurance subsidies. The agricultural groups oppose a potential "Sense of the House" resolution that would limit crop-insurance premium subsidies for larger farmers.

Conference talks on the farm bill are waiting for the House to appoint conferees. As the House votes to name conferees sometime either Friday, Saturday or next week, lawmakers also are expected to vote on a "Sense of the House" resolution that would indicate House support for means testing farmers over crop-insurance premium subsidies.

House Budget Chairman Paul Ryan, R-Wis., is bringing forward the means-testing resolution. Groups on Capitol Hill emailed details regarding the resolution. Ryan is asking for a vote on language that is comparable, if not identical, to a Senate means-testing provision.

If it passes, the Sense of the House resolution wouldn't lock in a position for House negotiators, but it would be hard to ignore.

The farm groups stated "crop insurance plays a critical role in the survival of farms and ranches, and remains a key reason that producers have been able to return to growing food, fiber, feed and fuel this year." Thus, the groups are disappointed over repeated attempts to cut crop-insurance program costs.

"As with other lines of insurance, the crop insurance program is actuarially sound and requires a broad pool of participants to function properly. Arbitrarily assigning a means test for support would reduce program participation, resulting in a higher risk pool of insured producers, higher loss ratios over time and increased premium rates for those that remain in the program. Limiting crop insurance protection would also yield the unintended consequence of increased calls for ad hoc, off-budget disaster assistance," the farm groups stated.

Further, means testing is a barrier to a key goal of the farm bill to expand crop insurance. "Means testing unfairly discriminates against full-time and diversified farms. Additionally, it discriminates against those producing fruits and vegetables and other high-value crops. Clearly, producers would be impacted by means testing, and those thresholds would likely become more severe in the future."

Thus, the major agricultural groups asked Boehner and Pelosi to oppose the Sense of the House resolution on crop insurance.

The U.S. Senate voted 59-33 in May to lower the premium subsidy for farmers making more than $750,000 in adjusted gross income, or $1.5 million for married couples. Under the provision, those higher-income farmers would see their premium subsidy lowered 15 percentage points, from a maximum of 62% to 47%. Senators last spring said their amendment would affect about 20,000 farmers and save $1 billion over 10 years. They also noted that roughly 4% of farmers account for nearly 33% of all the premium support for the federal government. Those figures come from a Government Accounting Office report last year.

Ferd Hoefner of the National Sustainable Agriculture Coalition stated, "The identical amendment filed in the House by Reps. Richard Hanna, R-N.Y., and Chellie Pingree, D-Maine, was bottled up in the Rules Committee and was not allowed for debate and vote on the House floor. The Ryan resolution would rectify that situation by allowing the House to express its will on the proposition prior to the first meeting of the conferees."

NSAC sent a letter to House members supporting the resolution.

Groups signing onto the letter opposing the Sense of the House resolution include:

Agricultural Retailers Association, American Association of Crop Insurers, American Bankers Association, American Farm Bureau Federation, American Insurance Association, American Society of Farm Managers and Rural Appraisers, American Soybean Association, American Sugar Alliance, Association of Equipment Manufacturers, Association of Fish and Wildlife Agencies, California Association of Winegrape Growers

Cooperative Network, Corn Refiners Association, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Ducks Unlimited, Farm Credit Council, Independent Community Bankers of America, Independent Insurance Agents & Brokers of America, Irrigation Association, National Association of Mutual Insurance Companies, National Association of Professional Insurance Agents, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Cotton Council, National Council of Farmer Cooperatives, National Farmers Union, National Milk Producers Federation, National Peach Council, National Sorghum Producers, National Sunflower Association, North American Equipment Dealers Association, Reinsurance Association of America, Southern Peanut Farmers Federation, Southwest Council of Agribusiness, The Fertilizer Institute, U.S. Canola Association, U.S. Cattlemen’s Association, U.S. Dry Bean Council, U.S. Rice Producers Association, United Fresh Produce Association, U.S. Apple Association, USA Dry Pea & Lentil Council, USA Rice Federation, Western Growers, Western Peanut Growers Association

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Posted at 7:48PM CDT 10/10/13 by Chris Clayton
Comments (9)
Definitely a criminal case of fat hogs at the trough doing their best to bury this country with insane government spending driving national debt to unsustainable levels. See http://www.bloomberg.com/news/2013-09-10/crop-insurers-14-billion-some-see-as-money-laundering.html See http://www.bloomberg.com/news/2013-09-09/farmers-boost-revenue-sowing-subsidies-for-crop-insurance.html See
Posted by George Hanson at 8:55PM CDT 10/10/13
Do these greedy clowns have any idea of how ridiculous they sound? After years of record farm profits these jokers are claiming they might be discriminated against. How many decades of annual million dollar plus government benefits do some people think they deserve?
Posted by Sally Benson at 10:32PM CDT 10/10/13
And yet they find it defensible to cut off the poor from their benefits. If 4% get 33% of the support, that sounds like a big portion of farmer welfare. The biggest thing I get a kick out of is that the "large" farms are not going to take crop insurance if they don't get a subsidy. THIS IS THE BIGGEST LIE OUT THERE!!!! There is no way a farmer that is clearing that kind of money is going to leave himself exposed. Just ask the fellow farmers in Illinois and Iowa if they would give up their crop insurance if they were asked to pay $30/A more because they don't have a subsidy. They most likely would have been wiped out either last year or this year with a crop failure.
Posted by Pedro Sanchez at 8:51AM CDT 10/11/13
Do not get me wrong, please. I do not defend subsidies or tax breaks to any business, ag or other, large or small beyond a period of time. Say, 10 years. I will not ridicule any for taking advantage of the same. If a business cannot sustain itself after that, so be it. Most of you know or acknowledge little history of the food bill. The so-called farm subsidies are the cheapest means to supply food to those in need.
Posted by Bonnie Dukowitz at 11:49AM CDT 10/11/13
How sad does this make us farmers look? We are mostly multi-millionaires and we are crying poor asking for more welfare when many city folk are out of work???? Farmers net worths are 3-5 times the average American citizen yet we think we should be handed millions more in subsidies??? Bottom line, all aid to farmers should be CUT. We should MAN UP instead of begging like little GIRLS!
Posted by Bill Billson at 2:14PM CDT 10/11/13
How sad does this make us farmers look? We are mostly multi-millionaires and we are crying poor asking for more welfare when many city folk are out of work???? Farmers net worths are 3-5 times the average American citizen yet we think we should be handed millions more in subsidies??? Bottom line, all aid to farmers should be CUT. We should MAN UP instead of begging like little GIRLS!
Posted by Bill Billson at 2:14PM CDT 10/11/13
Bill, you are not a farmer like me. You have no right to speak for me. By the way, I am a farmer and you probably are a gardener. I have no problem calling you out on this, you just have no right speaking for me. I am not a multi-millionaire like you. I'm just a poor dirt farmer putting faith in God and providing for my family. You just have no right speaking for me.
Posted by Cypt Frms at 9:27PM CDT 10/11/13
At what point do the crooks and thieves decide it is time for annual payment limitations for federal crop insurance subsidies? 10 million or is it 100 million? I guess that it is a decision that these birds would rather leave to the Chinese government when the world's largest creditor nation takes possession of the largest debtor nation ever.
Posted by Sally Benson at 7:52AM CDT 10/12/13
I still think a hard cap on total subsidy $$'s is a better way to go -- and it keeps IRS information out of USDA calculations.
Posted by LeeFarms at 2:11PM CDT 10/15/13
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