Crop insurance cuts resolved favorably, for now

Crop insurance cuts resolved favorably, for now

Federal crop insurance may be able to avoid the chopping block when final budget is decided, likely in December.

Some are skeptical. But in general, agriculture groups and farmers are hopeful the promise made by key congressional leaders last week concerning the continued funding of federal crop insurance will hold true. Leaders of the U.S. House and Senate have pledged to reverse the $3 billion in cuts to the federal crop insurance program, now called for in a debt limit agreement for the federal budget.

PROMISES, PROMISES: Congressional leaders say they will remove the cuts in crop insurance now called for in the federal budget plan, to be finalized in the next month or so. "If people keep their word, presumably we'll be able to keep our crop insurance," said U.S. Sen. Charles Grassley last Friday at Nevada, Iowa.

"If people keep their word, presumably we'll be able to keep our crop insurance," said U.S. Senator Charles Grassley, R-Iowa, in a brief Oct. 30 interview with Wallaces Farmer magazine at Nevada, Iowa. Grassley was a member of a panel of Iowa leaders that met for a press conference following the grand opening of DuPont's huge new cellulosic ethanol plant in central Iowa. Congressional leaders are in the process of finalizing the two-year federal debt limit reconciliation measure.

Leaders in Congress promise to restore crop insurance funding
Farm state lawmakers earlier last week were outraged by a plan to slash $3 billion from the federally subsidized crop insurance program as part of the two-year federal budget deal being hammered out in Washington by Congress and the Obama Administration.

Crop insurance had already been cut as part of the $23 billion reduction in USDA spending in the 2014 Farm Bill when that legislation was signed into law. Now, the proposal is to reduce crop insurance subsidies by another $3 billion to help offset increased federal spending for defense and domestic programs.

Following last week's outcry from the ag community, Congressional leaders left the $3 billion crop insurance subsidy cut in the current budget legislation, but promised to remove it when the upcoming omnibus spending bill is finalized, probably in early December. To keep the government operating, the U.S. House approved the government funding bill on Wednesday of last week, and the Senate approved it early Friday morning. The upcoming omnibus spending bill must still be approved, and that's when Congressional leaders say they will restore the $3 billion for crop insurance.

Will crop insurance cut be removed from the final budget deal?
Grassley is fairly confident the reduction to crop insurance will be removed from the final budget deal, based on conversations he's had with other lawmakers. However, he adds that it is likely the $3 billion cut in spending could come from other federal agricultural programs.


Due to the fast-moving process on the budget plan, it was not possible to remove the cut from the legislation last week because it would have upended the overall budget agreement, which was passed by the Senate in the early morning hours of Oct. 30. Grassley was in Washington D.C. for the 3 a.m. vote in the Senate. He cast his vote, and then flew to Iowa to attend the cellulosic ethanol plant grand opening event at 10 a.m. that morning.

The proposed $3 billion cut would create the savings by lowering the rate of return for companies that sell crop insurance to farmers. The federal government partially subsidizes those companies and insures some of their losses. Crop insurance companies that depend on federal subsidies say the cuts could be devastating to the industry.

Professional farm managers call for continued strong crop insurance
"The American Society of Farm Managers and Rural Appraisers lauds the efforts of farm-state legislators who sounded off loud and clear on the disastrous consequences of the proposed cut to crop insurance," said Dennis Reyman, government relations committee co-chair for the American Society of Farm Managers and Rural Appraisers. He spoke from the ASFMRA annual meeting Oct. 30 in San Antonio.

"Crop insurance has become the staple of risk management for U.S. agriculture," said Reyman, an Accredited Farm Manager and Accredited Rural Appraiser from Iowa. "The value and worth of crop insurance was proven in 2012 when the worst drought in 60 years required no ad hoc assistance. Agriculture has led the way in federal budget control with $23 billion in cuts. That cut in agricultural spending was acceptable due to assurances that crop insurance would not be touched."

Congress is urged to resist further cuts in crop insurance budget
The USDA crop insurance program has already sustained $12 billion in cuts since 2008, according to the National Crop Insurance Service. While the federal budget agreement passed through both the House and Senate late last week, farm-state lawmakers have been assured that crop insurance will not be touched and the proposed $3 billion cut will be removed from the final federal budget, notes Reyman.

The ASFMRA urges lawmakers to continue to push against further cuts to crop insurance and any other attempts which leave the farm bill vulnerable to more reductions.

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