Could Crop Insurance Escape Cuts After All?

October 28, 2015 04:33 PM
 
Could Crop Insurance Escape Cuts After All?

The federal crop insurance program, slated for a $3 billion cut in the proposed federal budget agreement released Monday, may escape unscathed after all.

According to U.S. Rep. Michael K. Conaway (R-Texas) and Rep. Collin Peterson (D-Minn.), who lead the House Agriculture Committee, there will be no cuts to the crop insurance program in the upcoming budget after all.

“Leadership has heeded our concerns by agreeing to completely reverse this disastrous provision in the upcoming omnibus,” said said Conaway in a prepared statement. “Crop insurance is working as intended, and private industry deserves to be lauded, not thrown under the bus.”

The budget proposal had called for capping the rate of return on earned premiums at 8.9% for crop insurers for 2017-2016. It would have saved the federal government an estimated $3 billion, but potentially could have seriously hurt the viability of the federal crop insurance program and the financial health of the crop insurance industry.

Those impacts could have trickled down to farmers, who have becoming increasingly reliant on crop insurance to manage their risk since the 2014 farm bill ended direct payments.

Farm state legislators also reacted strongly to the prospect of slicing more money from a program that had already seen reductions.

“Our nation's farmers and ranchers did their part in reigning in our nation's debt in the 2014 farm bill, saving an estimated $23 billion,” Conaway said. “It is imperative that we do not undermine their trust by attacking the primary tool they use to manage the tremendous risks involved in producing food and fiber.”

Where will Congress find the $3 billion in cuts that were supposed to come from crop insurance? That remains to be seen, even as the House prepares to vote on the overall spending bill.

“I take our leadership at their word when they committed to me and many of my colleagues that we will eliminate these harmful provisions in the not-so-distant future, which is why I will vote in support of the budget agreement today,” Conaway said.

With the quick reversal in the crop insurance program’s situation, Peterson said he also would also vote for the spending bill.

“I'm pleased that we have an agreement to fix the crop insurance cuts and not open the farm bill,” he said. “We have assurances that the cuts will be removed and the farm bill will not be raided. We produced a fiscally responsible and bipartisan farm bill in 2014 that saved $23 billion. We've done our part. I can now support the budget agreement with these assurances." 

After the House, the spending bill goes to the Senate, where  Senate Agriculture Committee leaders have also vowed to protect the crop insurance program.

"We hope Senate Leadership finds a path forward soon to ensure these cuts are not realized," said the Crop Insurance Reinsurance Bureau, National Crop Insurance Service  and American Association of Crop Insurers said in a joint statement. "Today's action shows that crop insurance is truly the centerpiece of agricultural risk management and rural America is willing to fight to maintain the crop insurance program. Crop insurers remain committed to providing superior service to our customers--America's farmers--who desperately need risk management tools to deal with today's extreme weather and falling crop prices."

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Comments

 
Spell Check

Gordon Garrison
Estherville, IA
10/29/2015 07:38 AM
 

  I think Federally subsidized crop insurance is a great risk management tool. However I also believe farm operators who farm highly erodible land should maintain grassed waterways and apply fertilizer in a responsible manner. The farm next to me has an IADNR approved manure management plan that calls for 4996 gallons hog manure annually in a continuous corn rotation. Functional grassed waterways are absent. Farm bill was suppose to tie environmental concerns to insurance benefits. There needs to be a stronger link between FSA & NRCS when it comes to correct compliance with the provisions of FSA form 1026.

 
 
stanton
oblong, IL
10/29/2015 09:06 AM
 

  "The budget proposal had called for capping the rate of return on earned premiums at 8.9% for crop insurers for 2017-2016. It would have saved the federal government an estimated $3 billion, but potentially could have seriously hurt the viability of the federal crop insurance program and the financial health of the crop insurance industry." The greedy insurance guys can't survive on an 8.9% profit????

 
 
Scott
Warsaw, IN
11/2/2015 09:38 AM
 

  Stanton - The 8.9% is NOT a profit number. Certainly anyone would consider 8.9% a healthy profit number. 8.9% represents the TOTAL percentage of premium that the companies are allowed to get to run their entire companies. This means ALL costs, loss adjustment, reinsurance, etc must come out - leaving the companies in the red.

 
 

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