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.
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