Ag Policy Blog

Ag Groups Seek to Avoid Cuts in Crop Insurance

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A collection of 31 agricultural, insurance and banking associations have come together to formally oppose President Barack Obama's proposal to cut crop insurance.

The president's budget proposes $16 billion in cuts to crop insurance over 10 years, or effectively $1.6 billion a year. The plan calls for reducing the premium subsidy for policies that include the harvest-price option, as well as tightening the rules for prevented-planting payments.

The proposal has been panned by the chairmen of the House and Senate Agriculture Committees. However, farm groups joined together to write the chairmen and ranking members of the House and Senate Budget Committees on Wednesday asking the budget committees to ignore the president's proposal.

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The groups noted the 2014 farm bill already reduced the projected spending for USDA programs by $16.6 billion. "Additionally, crop insurance has been contributing more than $1.2 billion a year towards reducing government spending since the 2008 Farm Bill," the agricultural, banking and crop-insurance groups wrote.

They added, "Therefore, we strongly oppose the president’s budget proposal to make crippling cuts to crop insurance. Attacking farmers’ most important risk management tool only weakens the farm safety net in the bipartisan farm bill that Congress carefully crafted after years of deliberation and more than 40 hearings."

The groups noted that the 2014 farm bill is centered on risk management. Moreover, farmers spend approximately $4 billion a year to buy crop-insurance policies. "Crop insurance products and protection levels can be tailored to the individual farm, making it so effective in managing risk that more than 90% of eligible farmland is currently protected."

The farm groups noted in their letter that crop insurance helped farmers cope with major natural disasters in 2011 and 2012 without having to request ad-hoc disaster aid from Congress.

"Such unbudgeted disaster bills were commonplace before crop insurance provided the depth and breadth of coverage that it does today, and these disaster bills were fully funded by taxpayers," the groups noted.

The letter defended the current budget levels for the program and argued that funding cuts "only weaken the system and ultimately shift risk exposure back to taxpayers. As the House and Senate develop their own budget proposals, we urge you to protect crop insurance and recognize its central importance to farmers, lenders and all of rural America."

The 31 groups signing the letter included, American Bankers Association, American Farm Bureau Federation, American Insurance Association, American Sugar Alliance, American Sugarbeet Growers Association, Association of Equipment Manufacturers, American Soybean Association, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Farm Credit Council, Independent Insurance Agents & Brokers of America, Independent Community Bankers of America, 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 Crop Insurance Services, National Farmers Union, National Sorghum Producers, National Sunflower Association, Southern Peanut Farmers Federation, Southwest Council of Agribusiness, US Canola Council, US Dry Bean Council, US Rice Producers Association, US Beet Sugar Association, USA Dry Pea & Lentil Council, USA Rice Federation and the Western Peanut Growers Association.

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Freeport IL
2/6/2015 | 8:45 AM CST
It will come back to land. Wider margins will be required when mechanisms are removed that stabilize gross revenue â?“ increasing risk. This is especially true when balance sheets turn poor. Yeah inputs: equipment, fertilizer, seed and chemicals will be cut. But large corporation will sell their agriculture divisions when it appears maintaining market share doesnâ?™t meet finance objects. Prices tend to rise when financials trump market share in a marketing plan. Farmers, in the longer run, will eek out profits they are collectively willing to accept. So in the large haul it will be land that takes the hardest squeezed. Our landlords may want to join the bankers, insurance agents and farmer groups if they like something similar to status quo. Freeport, IL
Mr. Brandy
2/5/2015 | 3:58 PM CST
Dump the ARC/PLC program. I do not think that the farmers/producers asked for it. These are dreamed up pet projects. They want a strong crop insurance program...