As a long list of farm groups sent Congress a letter opposing any cuts to the crop insurance program, a key American Farm Bureau Federation official told an industry conference Feb. 5. The program is a “bull’s eye” for critics, she said.
“We strongly oppose the president’s budget proposal to make crippling cuts to crop insurance,” said the letter, which was signed by 31 groups, including Farm Bureau, the National Farmers Union, commodity groups and the American Bankers Association.
“Attacking farmers’ most important risk management tool only weakens the farm safety net in the bipartisan farm bill that Congress carefully crafted after years of deliberation and more than 40 hearings.”
But despite the display of unity, a budget-minded Congress is likely to consider crop-insurance cuts, Mary Kay Thatcher, Farm Bureau’s senior director for congressional relations, told the annual meeting here of the Crop Insurance and Reinsurance Bureau, whose members include insurers and reinsurers.
House Budget Committee Chairman Tom Price, R-Ga., and Senate Budget Committee Chairman Mike Enzi, R-Wyo., have both said they would like to achieve a balanced budget within 10 years.
Congress wants to pass a budget by April 15 and that could lead to a reconciliation process in which each committee gets instructions to cut a certain percentage from its programs.
Republican proposals to cut the Supplemental Nutrition Assistance Program, also known as SNAP or food stamps, could lead to pressure to cut crop insurance, she said.
SNAP is the biggest USDA program, but crop insurance is now the biggest program benefiting farmers and makes up 45 percent of the farm program budget, she added.
“I get very nervous about anybody tying SNAP and crop insurance together,” Thatcher said.
Thatcher added that she does not agree with proposals to split the farm program from the nutrition programs, saying there are now so few farm-dependent congressional districts that she does not see how a farm bill-only farm bill could get passed in Congress.
Even though the decline in crop prices has led to a drop in the value of crops and the Congressional Budget Office has projected crop insurance spending will go down slightly while the cost of commodity programs climbs, crop insurance is likely to remain the target of budget cutters and critics, Thatcher said.
Because there are two programs for crop farmers — Agricultural Risk Coverage and Price Loss Coverage — as well as separate programs for cotton and dairy farmers those programs would be complicated to cut, she said.
Cutting crop insurance “is intellectually simpler and that is where the money is,” Thatcher said.
She noted one difference from proposed crop insurance cuts in previous years: The Obama administration’s proposal focused on a cut to crop insurance premium subsidies and did not mention any cuts to the companies or the agents.
“Farmers are going to be the ones looked at for cuts,” Thatcher said.
Premium subsidies are “such a big part of the program,” she said, noting that they have not been cut since the modern program was established in 1980.
A recent paper by academics Carl Zulauf and David Orden concluding that crop insurance premium subsidies are higher than necessary has her “really concerned” because they are so highly respected, Thatcher said.
“This is going to be the most challenging year we have had in a long time but we have a strong coalition,” she said.
Thatcher said the changes in Congress make the crop insurance-farm coalition’s job of warding off “worrisome amendments” harder.
In 2013, an amendment to cut crop insurance sponsored by Sen. Dick Durbin, D-Ill., won 61 to 47.
Still in office are 54 senators who supported Durbin’s amendment and 25 who opposed it and supported the industry. That means there are 21 new senators who need to be approached.
A 2013 House amendment to cut crop insurance sponsored by Rep. Ron Kind, D-Ill., was defeated 217 to 208. Of the members who voted on the Kind amendment, 178 who supported him are still in office, 185 who opposed him are in office and 72 members are new.
“It’s going to take a lot of shoe leather” with crop insurance industry officials and farmers going to Congress to explain the program to the many freshmen members of the House and the Senate, but there are already 4,000 to 5,000 farmers coming to Washington this spring to defend the program, she concluded.
–The Hagstrom Report
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