Crop insurance targeted for cuts

Crop insurance targeted for cuts

- In 2012, 86% of planted farmland was insured. - Coalition calls crop insurance "cornerstone" of farmers' risk management plans. - Bi

DURING the 2012 farm bill debate, farm groups insisted that crop insurance remains a vital piece of farm programs, while others see the program as an avenue for budgetary savings.

In 2012, 86% of planted farmland was protected by crop insurance, which kept calls for ad hoc disaster assistance at bay despite devastating losses last year.

Farmers invested more than $4.1 billion in 2012 to purchase more than 1.2 million crop insurance policies that protected 128 different crops. So far, nearly $15 billion have been paid out from last year's losses.

According to the National Crop Insurance Services (NCIS), farmers have spent $28.6 billion over the past decade to purchase crop insurance protection.

A coalition of more than 40 commodity groups, lending organizations and other agricultural stakeholders, led by the Crop Insurance & Reinsurance Bureau, sent a letter to House Agriculture Committee chair Frank Lucas (R., Okla.) and ranking member Rep. Collin Peterson (D., Minn.) March 12, the same day the House budget was released.

In it, they urged Congress to defend the farm safety net and noted that crop insurance has become the "cornerstone of most farmers' risk management portfolios" and is delivered through an "effective public/private partnership."

In a speech on the Senate floor March 12, Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) said the farm bill she plans to present to colleagues later this year strongly supports efforts to strengthen crop insurance. She noted that farmers' crops have been decimated by droughts and late freezes, but because of crop insurance, they have been able to "sustain themselves."

Calls are still being made, however, for farmers to pay more for their insurance coverage.

Sen. Jeff Flake (R., Ariz.) and Rep. John Duncan (R., Tenn.) introduced legislation in their respective chambers that would cut $40 billion in federal crop insurance subsidies over the next 10 years. The Crop Insurance Subsidy Reduction Act (S. 446 and H.R. 943) would return federal crop insurance premium subsidies to their pre-2000 levels.

The introduction of this legislation was timely due to the fact that the Environmental Working Group (EWG) and Bruce Babcock of Iowa State University held a forum for Capitol Hill staffers to share their views on crop insurance.

NCIS responded to claims from EWG that farmers "pray for disaster" in hopes to collect a crop insurance check. In a press release from NCIS, Marvin Andris, a farmer from Milford, Ill., charged that the EWG members "obviously haven't brushed shoulders with any farmer" and said farmers are "into this because we want to raise crops, and the more bountiful, the more excited we become."

Sen. Chuck Grassley (R., Iowa) said last week there may not be any new commodity programs in the next farm bill, just crop insurance.

The House version included an Agriculture Risk Coverage (ARC) and Supplemental Coverage Option (SCO) to cover shallow losses not protected by crop insurance.

In a policy switch last week, American Soybean Assn. president Danny Murphy reported that although his group supported the ARC program last year, "because of ARC's higher cost and the need to find additional savings in the farm bill, we have decided to support updating and extending the (countercyclical) program included in current law."

Murphy added that "SCO will provide revenue protection at the county level and is more defensible because, like crop insurance, it requires farmers to pay part of the cost of the premium."

Volume:85 Issue:11

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