Ag-Related Details of Proposed Language for Obama Deficit Reduction Measure

September 29, 2011 06:32 AM

via a special arrangement with Informa Economics, Inc.

Proposal would cap CRP at 30 million acres

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

The Obama administration recently sent to Capitol Hill a 284-page document with more details on the deficit reduction proposals it outlined Sept. 19, including potential legislative language. Link

The document includes legislative language and brief analyses of proposals first outlined in the summary released Sept. 19. The president has proposed $4.4 trillion in deficit-reduction that includes $1.5 trillion in tax increases.

The document's table of contents notes two proposals for which details were not available: a proposed commission to review military retirement benefits and applying a single blended matching rate to Medicaid and the Children's Health Insurance Program starting in 2017.

The document also provides more analysis and legislative details for changes impacting agriculture policy, including:

  • Termination of Direct Payment Program: Terminates the direct payment program for both field crops and peanuts at the end of the 2011 crop year.

  • Crop Insurance: Cap on Administrative and Operating Costs. Caps the government’s reimbursements for administrative and operating costs at $935 million for the 2012 insurance year, and increases the cap in subsequent years by the inflation factor established in the 2011 Standard Reinsurance Agreement.

  • Crop Insurance: Cap on Overall Rate of Return. Caps the overall rate of return for the companies providing subsidized crop insurance at 12.8 percent. In years that the 12.8 percent cap is reached, the Secretary of Agriculture is to determine how to distribute the returns among the companies.

  • Crop Insurance: Reduce the Catastrophic Coverage Premium. Amends the Federal Crop Insurance Act to reduce the premium charged for Catastrophic Risk Protection (CAT) insurance coverage by buying the percentage equal to the difference between the average loss ratio for a crop and 100 percent, plus a reasonable reserve. The reduced premium change will allow USDA to accurately reflect the true value for each crop and the true risk associated with CAT coverage.

  • Crop Insurance: Reduce Premium Subsidy by 2 Basis Points. Reduces the premium subsidy farmers receive (increases the premium farmers have to pay) by two basis points for all crop insurance policies that have a premium subsidy that is greater than 50 percent.

  • Better Target Agriculture Conservation Assistance: Cap the Conservation Reserve Program (CRP) at 30 million acres by 2012 (saving an estimated $1.148 billion over ten years). This language gradually reduces the acreage enrolled in the program through attrition. High commodity prices have lowered demand for enrollment in CRP as more farmers look to increase planted acres.

  • Better Target Agriculture Conservation Assistance: Reduce the Environmental Quality Incentives Program by -$100 million annually from the level authorized in the 2008 Farm Bill (saving an estimated $1 billion over ten years).

  • Extend Mandatory Disaster Assistance: Terminates the Agricultural Disaster Relief Trust Fund (which was created to fund the mandatory disaster programs in the 2008 Farm Bill), and cancels any existing funds in the trust. Gives USDA’s Commodity Credit Corporation the authority to pay all claims for mandatory disaster assistance, and extends mandatory disaster assistance through August 31, 2016.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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