House plans budget vote, some aggies protest crop insurance provision
October 28, 2015
As the House appears headed today to vote on a budget deal that would make a $3 billion cut to the crop insurance program, congressional agriculture leaders and lobbyists expressed opposition to the cut but at the same time were trying to figure out how the cut got into the bill without any leaks before the release late Monday.
The vote is expected in the House today, with a possible Senate vote as early as Thursday.
House Agriculture Committee Chairman Michael Conaway, R-Texas; House Agriculture Committee ranking member Collin Peterson, R-Minn.; Senate Agriculture Committee Chairman Pat Roberts, R-Kansas; and Senate Agriculture ranking member Debbie Stabenow, D-Mich., issued a joint news release Tuesday with a statement from each expressing their outrage over a cut to a section of the 2014 farm bill.
The bill would require the Agriculture Department to renegotiate the Standard Reinsurance Agreement between the companies and the government so that the rate of return for the companies is reduced from 14.5 percent to 8.9 percent, resulting in budget savings of just over $3 billion over 10 years.
There was some speculation that the cut had originated with the White House, because the Obama administration has proposed cuts to crop insurance in several budgets. But a USDA official said that was not correct.
"The reality is this is a negotiated agreement between two sides, and it's unfair for some people to suggest this was solely an administration proposal when Congressional Republican budget proposals going back several years have proposed similar cuts," the official said.
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The most recent proposal from the Obama administration had included cuts to a provision that pays farmers when they are prevented from planting, and a provision that allows them to take advantage of prices at harvest when claiming benefits.
One lobbyist suggested that the $3 billion cut had come first and that the negotiators had then figured out how to come up with the cut. The lobbyist also suggested that making it harder for farmers to claim benefits would have created a much bigger uproar, and that House Speaker John Boehner, R-Ohio, may have said it would be easier to cut the rate of return for crop insurance companies because neither farmers nor the public would object so much to that.
The lobbyist also noted that, while the crop insurance industry is known for its lobbying prowess, this is the sort of measure that ends up in a major bill when the bill is negotiated quickly and in secret by only a few people, as this one was between House and Senate leaders and the White House.
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But the National Farmers Union, the most Democratic-leaning of farm groups, said it opposed the cut because it would lead to companies exiting the crop insurance business and further concentration in that industry, which could be bad for farmers in the long run.
"More and more crop insurance providers are exiting the sector because these cuts have made it no longer profitable to be engaged in this business," said NFU President Roger Johnson.
"Previous budget proposals were set at 12 percent," Johnson added. "However, since the SRA change was implemented, the average rate of return has been less than 4 percent. Since 2013, John Deere Insurance Co., John Deere Risk Protection Inc., OneBeacon Insurance Group Ltd., Monsanto Co., ProAg, and The Goldman Sachs Group Inc. (Global Atlantic Financial Group Ltd. insurance unit) sold their crop insurance operations."
NFU's position left only the National Sustainable Agriculture Coalition and the Environmental Working Group praising the crop insurance cut.
National Journal reported late Tuesday that, while crop insurance was a major issue, most members of Congress and analysts expect the bill to pass.
The Republican leadership will have to rely on Democratic votes to pass the bill, but there are now so few Democrats from rural areas that it seems unlikely concerns about crop insurance will influence very many of them.
The four leaders of the Agriculture committees said jointly, "The Members of Congress stand united against reopening the 2014 farm bill to further cuts, emphasizing that the proposed cuts to crop insurance in the budget agreement would undermine a critical risk management tool for American agriculture producers and consumers."
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Rep. Michael Conaway, R-Texas
"Make no mistake: This is not about saving money. It is about eliminating Federal Crop Insurance," Conaway said. "The House Agriculture Committee was not consulted regarding any changes to policies under the jurisdiction of our committee. This provision is opposed by an overwhelming majority of our committee members. It was debated and defeated during the 2014 farm bill process, and to move forward with it now breaks faith with the American producer. I am working alongside many of my colleagues to have the provision removed. If it is not removed, I will vote against this bill and work to defeat its passage. The American people deserve better than continued backroom deals struck in the middle of the night that entirely undercut the legislative process."
"We made major cuts when we wrote the farm bill," said Peterson. "It is not appropriate to cut agriculture again. The farm bill should not be raided. I oppose any cuts."
"Farmers and ranchers have done more than their fair share to reduce government spending," said Roberts. "To target the No. 1 priority for producers with additional cuts will undermine the delivery of this important protection for agriculture. While congressional leaders may sell this package as providing budget stability, it is anything but stable for farmers and ranchers.
"It took years to negotiate and pass a new farm bill," he added. "Producers have signed contracts and purchased policies. These proposals to make further cuts to the crop insurance program were not included in the House- or Senate-passed budgets, in any appropriations bills or in the president's budget request. Once again, our leaders are attempting to govern by backroom deals where the devil is in the details. I will continue to oppose any attempts to cut crop insurance funding or to change crop insurance program policies."
"It is particularly disappointing to see cuts to crop insurance in the budget agreement," said Stabenow. "These types of cuts only undermine the economic certainty that the farm bill provides. The farm bill made meaningful reforms to help reduce the deficit. Any attempts to reopen any part of the farm bill to more cuts would be a major setback for rural America and our efforts to create jobs."
Sen. Heidi Heitkamp, D-N.D., said she was upset by the "dire" cuts, but she did not say she would oppose the overall bill.
"Working with leaders on the Senate Committee on Agriculture, I'm looking for a path forward to prevent these devastating cuts to crop insurance," Heitkamp.
–the Hagstrom Report