Crop Insurance Targeted for $18 Billion in Cuts

February 10, 2016 05:00 AM

As feared, the federally subsidized crop insurance program is on the chopping block again, based on the Obama administration’s 2017 budget proposal released Tuesday.

“The Agricultural Act of 2014 included several reforms to the federal crop insurance program,” noted a USDA factsheet on the president’s budget proposal for the agency. “However, there remain further opportunities for improvements and efficiencies.”

Those opportunities include the following:

  1. Reduced subsidies for harvest price option coverage on crop insurance policies.
  2. Changes to prevented planting coverage, “including removing optional buy-up coverage.”

Such reforms are estimated to save $18 billion over 10 years, according to USDA.

Listen to Agriculture Secretary Tom Vilsack discuss USDA's budget:

Farm State Legislators Displeased

Both Republican and Democratic farm state legislators quickly expressed their displeasure at seeing cuts to crop insurance up for discussion again. Just last fall, crop insurance got hit with a $3 billion cut in a surprise bipartisan budget deal in October, although the money was eventually restored in December through the highway bill.

"The harmful changes to U.S. farm policy contained in the Obama Administration budget come on the heels of attempts by the Administration last year to kill federal crop insurance,” said Representative Michael Conaway (R-Texas), who chairs the House Agriculture Committee.

His Senate colleagues were equally irked.

“As farmers and ranchers are faced with the daily uncertainties of weather and volatile market conditions, the Obama Administration has once again chosen to attack America’s agriculture producers and their ability to manage risk. The President is hitting rural America where it hurts most, and all of this is occurring at a time when farm income is expected to decline 56 percent in the past three years,” said Senator Pat Roberts (R-Kansas), chairman of the Senate Agriculture Committee.

“While this budget request moves us forward on many fronts, I disagree with the President’s suggestion that we make additional cuts to crop insurance,” said Senator Debbie Stabenow (D-Michigan). “The 2014 Farm Bill made significant reforms to the way we provide risk management tools to our farmer and ranchers.  It’s important that we keep the Farm Bill intact to provide the full five-year certainty promised in that bipartisan bill.”

President Obama's Budget Draws Fire from Ag Community



Industry Reaction

The crop insurance industry, which has seen a wave of mergers and acquisitions this year, also noted how the regular re-opening of the farm bill is a frustrating situation that is bad for business and farmers alike.

"After years of debate and more than 40 hearings, Congress carefully crafted a bipartisan farm bill that made crop insurance the centerpiece of today’s farm safety net.  It did so because crop insurance helps shift risk exposure away from taxpayers, requires farmers to purchase and pay in advance for the protection, requires a loss before an indemnity is paid, is actuarially sound, and is delivered by an efficient and timely private sector system,” the industry said in a joint statement from the Crop Insurance Reinsurance Bureau, the American Association of Crop Insurers and RCIS. “The President, who applauded the 2014 Farm Bill and signed it into law, is now proposing a budget to undermine it.  The President’s proposed budget strips $1.8 billion a year from crop insurance, which leaves farmers and taxpayers more vulnerable to the whims of Mother Nature. … For crop insurance to be successful and operate as intended, it must remain affordable and widely available to farmers, and that private-sector delivery must remain viable.  The President’s budget does the opposite."

What do you think of the budget proposal? Does the federal crop insurance program need reform? Let us know in the comments. 

Back to news


Spell Check

western, WI
2/10/2016 09:52 AM

  maybe they would have more money if they did not pay these big farmers who have thousands of acres these big government payments. just like commodity prices we grow what pays more , but the problem is we all overkill on that commodity and that my friend kills the price not the government.

jordan, PA
2/9/2016 11:55 PM

  That's nothing new.Name one thing Obama has done foragriculture or the betterment of America.I cant think of one.

Cole Camp, MO
2/10/2016 01:07 PM

  Let the free market rule. Let the seed companies eat their high priced seed. Tell the banker to get lost. If you don't have your own operating money you are farming above your means. Farmers are not living in the real world.