Reaction to Obama's $33.245 Billion Farm Program Cuts

September 20, 2011 03:18 AM

via a special arrangement with Informa Economics, Inc.

Democrats, Republicans, crop insurance industry express concern about proposed cuts

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

It did not take long for some key U.S. farm policy stakeholders to respond to President Obama's $33.245 billion in cuts to major U.S. farm programs, including around $30.8 billion cuts in direct payments (which some say would eliminate the program), $8.3 billion in crop insurance/industry-related reductions, and $2.148 billion in conservation program shaving, offset somewhat by an $8 billion increase in extending the SURE program for five years (whereas the cuts previously detailed are over ten years).

House Agriculture Committee Chairman Frank Lucas (R-Okla.), and Sen. Pat Roberts (R-Kan.), Ranking Member of the Senate Ag Committee, issued the following statement in response to President Obama's debt plan.

"The agriculture community remains willing to do its part in getting our fiscal house in order, but, in essence, President Obama’s plan for economic growth and deficit reduction is not credible.

"The President’s policy priorities reveal a lack of knowledge of production agriculture and fail to recognize how wholesale changes to farm policy would impact the people who feed us. For example, cutting $8 billion from the crop insurance program puts the entire program at risk. We have heard again and again from producers that crop insurance is the best risk management tool available. In jeopardizing this program, the President turns a deaf ear to America’s farmers. Meanwhile, SURE has not worked as intended for most crops, but the President proposes extending it. The President only proposes a $2 billion cut, roughly three percent, to conservation despite his claim that conservation spending has increased 500 percent through the years. And, the President does nothing to address waste, fraud, abuse, and other integrity issues within nutrition programs, which account for 80 percent of USDA spending.

"Ultimately, cuts to agriculture must reflect its diversity across the country, respect the challenges producers face, and preserve the tools necessary for food production."

Senate Budget Chairman Kent Conrad (D-N.D.) praised the president’s overall deficit reduction plan but said Obama is asking for too much from agriculture, in a plan that would end yearly direct payments, reduce government subsidies to companies selling crop insurance policies besides further cuts to the program, and cut $2 billion over 10 years from conservation programs. "It is unfortunate the plan calls for larger agriculture cuts than are necessary or appropriate, and which could undermine our ability to develop an effective farm bill," Conrad,said, referring to the next multi-year authorization of farm programs. "Everyone has to contribute to deficit reduction, but we should not be asking farmers and ranchers to bear a disproportionate share of the burden," Conrad added.

The U.S. crop insurance industry, and many farmers who have listed crop insurance as the most important safety net item to maintain and improve on via the coming far bill debate, also reacted to the Obama cuts.

Tom Zacharias, President of National Crop Insurance Services, released the following statement:

"The crop insurance industry shares the belief that deficit reduction is important. In fact, crop insurers have contributed more than most other industries to the goal of deficit reduction in recent years. However, the President's plan to make further reductions to the crop insurance system does not serve the best interests of America's farmers or the country's food security.

"The plan is devastating to those in agriculture, particularly in a year that has seen extremely volatile commodity prices and weather events -- from droughts in Texas and Oklahoma to floods in the Northeast and Midwest.

"The White House calls for further streamlining of the Federal Crop Insurance Program, which has already contributed more than $4 billion towards deficit reduction, and $12 billion overall in spending reductions since 2008. Congress needs to evaluate the economic impact of weakening the primary safety net on which farmers and our rural economy can rely."

The following statement was released by the American Association of Crop Insurers, Crop Insurance Professionals Association, Crop Insurance and Reinsurance Bureau, Independent Insurance Agents & Brokers of America and National Association of Professional Insurance Agents:

"On behalf of crop insurance companies, agents, and producers who have stated that federal crop insurance is the cornerstone of US farm policy, we strongly oppose the Administration's reckless cuts to crop insurance. The Administration's proposal does not "modernize" crop insurance or implement it "more efficiently," as it purports to do. To be clear, the Administration proposal would end federal crop insurance. Given the bad economy, high unemployment, recent deep cuts, and widespread natural disasters, the Administration proposal is divorced from reality and is an attack on rural America."

The National Corn Growers Association noted disappointment at the idea of making more cuts to crop insurance. The group’s president, Bart Schott, released the following statement:

"NCGA strongly supports the effort to get our federal budget under control and the need for shared sacrifice in order to achieve an equitable, balanced approach. We appreciate the recognition in President Obama’s plan of how important reliable effective risk management tools are to farmers and rural communities. While NCGA agrees the fiscal challenges before us require even greater efficiency in the delivery of farm safety net programs, we are deeply concerned by proposals that would directly undermine a farmer’s ability to purchase adequate insurance coverage at a time of heightened volatility in commodity markets.


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

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