WASHINGTON, D.C. — A deal to remove cuts in crop insurance from a two-year federal budget passed by Congress last week has left some who had lobbied against the reduction feeling more optimistic.
The Senate approved the Bipartisan Budget Act of 2015 by a 64-35 margin on Oct. 30, two days after the House passed the measure with a 266-176 vote. President Barack Obama was expected to sign the bill early this week. The budget raises spending caps and the debt limit, and also prevents a potential federal government default this week.
A key sticking point in the budget bill for some agricultural organizations was a change in the rate of return for crop insurance providers. The legislation sets an 8.9 percent cap on the overall rate of return. Currently, the rate is about 14.5 percent. The reduction would have resulted in a cut of about $3 billion from the insurance program.
An agreement among House and Senate agriculture committee members and Congressional leadership calls for the cuts to be removed when the legislature works on an omnibus spending bill for fiscal year 2016 in the next few weeks.
U.S. Rep. Mike Conaway (R-Texas), chair of the House committee, said the agreement on the cuts is the reason he voted for the budget bill.
"I want to thank my colleagues who have made it very clear over the last 24 hours that the attempt to gut crop insurance in the budget was not acceptable," he said Oct. 28 before the House voted on the legislation. "Crop insurance is working as intended, and private industry deserves to be lauded, not thrown under the bus.
"I take our leadership at their word when they committed to me and many of my colleagues that we will eliminate these harmful provisions in the not-so-distant future."
The American Soybean Assoc. (ASA) said it would remain in "trust-but-verify mode" on the issue. "While we are happy to see an agreement to remove the cuts, the language still remains in the bill, and we will watch House and Senate leaders closely to ensure that the agreement is honored and the cuts eliminated."
Roger Johnson, president of the National Farmers Union, was cautiously optimistic about the agreement on crop insurance. "No one involved in agriculture was consulted when the budget was being negotiated," he stated. "It’s outrageous to think that the agriculture committees were completely left in the dark, but we are thankful that the (House) Committee, its members and other members of Congress stood up for a program that is critical to family farmers."
Before the agreement on the cuts to crop insurance was announced, ASA President Wade Cowan said it would oppose any legislation that included a cut to the farm safety net. "It is unconscionable that after the House and the Senate agriculture committees put more than three years of careful work into creating a farm bill that protects farmers and actually brings budget savings to the table, Congressional leadership would strike a backroom deal that hobbles our risk management framework," he said.
"The farm economy is cyclical, and to assume that the farm economy won’t notice a $3 billion hit is extraordinarily shortsighted on the part of this Congress." Congress should oppose a reopening of the farm bill and look for cuts elsewhere, he added.
Chip Bowling, president of the National Corn Growers Assoc., told the organization’s members to contact their elected officials to voice their concerns over crop insurance.
"Tell them if cuts to federal crop insurance are not removed, they must vote no on the budget bill," he said. "Slashing the federal crop insurance program is bad policy. Cuts to the crop insurance program will lead to fewer insurance providers and agents, and that means fewer choices for farmers to manage their risk."
The Center for Rural Affairs supported the idea of lowering the rate of return for crop insurance providers, according to Traci Bruckner, its senior policy associate. "This (cut) is a small but positive step forward," she explained.
"Insurance companies have been one of the largest beneficiaries of the subsidized insurance program. They witnessed double-digit returns over the last decade or more. During belt-tightening times, it is most appropriate to ask crop insurance companies to accept a reduction in the profits from federal subsidies that they receive."
U.S. Rep. Ron Kind (D-Wis.) also backed the proposed cuts to crop insurance, saying they would provide reform to the program. Kind voted in favor of the budget bill.
"I am pleased this (budget) agreement reflects my idea on farm bill reform by making much needed changes to the wasteful crop insurance program," he said. "This legislation will lower the profit margin to large insurance companies to 8.9 percent from 14 percent, generating $3 billion in savings for taxpayers. These important reforms not only strike a better deal for taxpayers but will have no out-of-pocket expense to farmers."
