Budget Deal Called ‘Devastating’ to Crop Insurance

The two-year budget deal produces savings from one of the most popular programs in farm country — federally subsidized crop insurance — and farm state lawmakers are furious.

Senators and House members said Tuesday they weren’t notified of the cut before the deal was struck, with Republican leaders pushing for a vote this week on the budget pact. The crop insurance companies that depend on federal subsidies said in a statement that the proposed $3 billion in cuts over 10 years could be devastating to the industry.

Budget-writers in Washington have long eyed the crop insurance program, which costs more than $9 billion annually, as a pot of available money. But farm-state lawmakers have fought to protect it, saying it makes more sense than other farm subsidies since it pays out when farmers suffer losses.

Congress got rid of other types of subsidies in a wide-ranging farm bill last year, including payments that went to farmers regardless of crop yield or crop price. In turn, they increased federal support for crop insurance.

The budget deal would create the savings by lowering the rate of return for companies that sell crop insurance to farmers. The federal government partially subsidizes those companies and insures some of their losses.

Crop insurers and reinsurers called for lawmakers to oppose the cuts.

“Make no mistake–the budget deal’s proposed cuts to crop insurance would be devastating. Today, crop insurance is a successful public-private partnership that has already sustained $12 billion in cuts since 2008. This proposal would cripple that partnership and with it, the rural economy,” said the Crop Insurance and Reinsurance Bureau (CIRB), National Crop Insurance Service (NCIS), and American Association of Crop Insurers (AACI) in a joint statement.

“To add insult to injury, these cuts were airdropped without being proposed – let alone considered – by Congress. It doesn’t make sense to attack crop insurance after this critical protection helped farmers and ranchers survive one of the worst droughts in our nation’s history – without calls for ad hoc crop disaster aid. It is particularly irresponsible to push these kinds of cuts at a time when crop prices are falling, farm incomes are on the decline, and extreme weather is wreaking havoc on rural America,” the industry’s joint statement added.

The Republican chairmen of the House and Senate Agriculture Committees, Texas Rep. Mike Conaway and Kansas Sen. Pat Roberts, issued a joint statement along with the top Democrats on the panels objecting to the cuts, which they said would “undermine a critical risk-management tool for American agriculture producers and consumers.”

Both said they would vote against the bill.

Roberts told his colleagues at a Senate Republican caucus lunch Tuesday that his panel was “shut out.” He said that chipping away at crop insurance could mean that farmers have to depend on Congress to approve emergency spending for farmers when they suffer large-scale losses.

“Agriculture producers are battling floods while others continue to face ongoing and severe drought,” Roberts said. “Crop insurance has kept them in business in a tough economy and eliminated the need for a costly emergency federal disaster package.”

Still, Roberts did not go as far as to say he would try and block the budget deal over the issue. He said he hoped that lawmakers could find a different way to meet the same savings before Congress writes a final budget at the end of this year.

“Maybe we can achieve the same goal by a different path,” Roberts said.

Related:

• Top 25 Crop Insurance Writers: SNL
• Top 10 States for Extreme Weather Crop Insurance Payouts
• Crop Insurance Payments for Drought More Than for Flooding
• Viewpoint: Costs Bury Insurance Savings Promised in Farm Bill

Topics Legislation Agribusiness