Budget Deal

UPDATE: Crop Insurance Payments Will Be Restored in Future Bill

October 29, 2015 By Ron Sylvester Leave a Comment

A budget agreement negotiated between the White House and congressional leaders that was passed by the House yesterday did contain $3 billion in cuts to the federal subsidies for the nation’s crop insurance program, but, House ag interests said that the cuts will be rolled back in a future spending bill.

National Farmers Union President Roger Johnson voiced cautious optimism Wednesday night about the deal and said the agreement was led by the House Agriculture Committee.

“No one involved in agriculture was consulted when the budget was being negotiated,” said Johnson. “It’s outrageous to think that the agriculture committees were completely left in the dark, but we are thankful that the committee, its members, and other members of Congress stood up for a program that is critical to family farmers.”

Johnson noted that the 2014 Farm Bill provided $24 billion in savings, which accompanies the $12 billion in savings that was part of the 2011 renegotiation of the Standard Reinsurance Agreement (SRA). “While the rest of Congress has been paralyzed, the agriculture committees delivered savings in the name of deficit reduction,” he said. “It would be shameful to punish agriculture for doing its job over the last several years.”

Absent this deal, the budget would require $3 billion in cuts to the reimbursement rates between the government and the companies that sell and administer the crop insurance program. The cut, from 14 percent to 8.9 percent, is far deeper than the 12 percent of previous proposals. However, the average rate of return for participating companies has been less than 4 percent, causing many crop insurance companies to exit the sector.

“Caps already exist on administrative and operating costs for crop insurance companies, and producers pay an estimated $4 billion into this program annually. It’s time for Congress to realize that crop insurance is not a piggy bank,” noted Johnson. “We are thankful for our allies in the House and the leadership of Chairman Conaway and Ranking Member Peterson.”

“We now call on the Senate leadership to follow the House’s lead and reject cuts to crop insurance,” he said.

Budget Deal Contains Horrible Crop Insurance Provision

October 27, 2015 By Ron Sylvester 1 Comment

One would think that if Congress were to take $3 billion out of the private sector crop insurance delivery system there would be hearings and lots of work done on the economics of the proposal by both sides of the issue.

You would be wrong to think that, because tomorrow there will be a vote in the U.S. House to accept a budget deal which contains what amounts to a $3 billion cut in the crop insurance subsidies that are so critical to the U.S. farm safety net.

According to the legislative shop at the National Farmers Union, this bit of business is such a surprise that both the House and Senate Agriculture Committees are lining up to oppose the entire budget deal if it contains this cut. NFU staff are all hands on deck canvassing members of Congress and senators all day today to oppose the deal.

The national budget can’t be balanced on the backs of farmers. While it is true that this money will come out of the insurance industry, it’s also true that there will be a trickle down effect in rural America. The compromises that took so many years to forge in the last Farm Bill set up what is essentially a public-private system behind the safety net. It can’t just be torn down in a day.

Here’s a quote from an email I received today from a staffer at NFU that sums it up nicely:

While this is a direct hit to crop insurance companies, there can be no doubt about the trickledown effect onto the countryside. Consolidation is already occurring in the crop insurance industry, and this will only speed up that consolidation, which will mean fewer choices and a less efficient private sector delivery system for producers.

And, if you think that farmers haven’t already done their piece for the national budget, consider the two charts pictured here. They speak for themselves.

Call your member of Congress and both of our U.S. Senators – Sherrod Brown and Rob Portman. You may call the Capitol Switchboard at (202) 224-3121 and ask for your representative or one of the senators. Tell them to vote NO on the budget deal if it contains the cut to the Private Sector Delivery System to Crop Insurance.

This is horrible policy and should be a poison pill to kill the whole deal.

Here’s more information:

NATIONAL FARMERS UNION

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