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CBO: Farm bill would cut crop insurance spending


URBANA, Ill. — As the political situation around the 2018 farm bill continues to deteriorate, crop insurance is being overshadowed by food assistance disagreements between Republicans and Democrats in Washington, D.C.

The partisan nature of the House Committee on Agriculture’s initial steps in authorizing the 2018 farm bill – foremost, adding a set of key eligibility requirements for nutrition-assistance recipients – was met with unanimous disapproval by committee Democrats, while all of its Republican members voted for the provisions.

This is according to University of Illinois College of Agricultural and Consumer Sciences (ACES) farm economists Jonathan Coppess, Gary Schnitkey and Nick Paulson. Along with Carl Zulauf of The Ohio State University, the colleagues noted in a May 1 essay that the committee vote on the draft farm bill marked the first time since food assistance was added to the bill that a strictly party-line vote to advance a farm bill was recorded.

“The closest historical antecedent was the Food and Agriculture Act of 1962, which all 14 committee Republicans and a handful of Democrats opposed,” the university economists stated in the essay, Signs Point to More Farm Bill Headwinds, which is published on the U of I farmdocDAILY website.

“It could prove consequential for this and future farm bills if it serves to further damage the larger coalition between farm assistance and food assistance that has historically been necessary to pass a farm bill through Congress.”

So just where does all this political rancor leave crop insurance programs and funding under the 2018 farm bill? The Congressional Budget Office projects Title X Crop Insurance spending will decrease by $160 million compared to the April 2018 projected baseline. A $70 million drop in spending would occur during the initial five-year term of the farm bill, the CBO reported.

The House Ag Committee, in a published summary of the proposed farm bill, said the legislation “strengthens the farm safety net to help farmers and ranchers weather a five-year recession, depressed prices and a 52 percent drop in net farm income.” Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) are maintained and strengthened under the House farm bill, according to the committee.

Regarding Title X Crop Insurance, the committee’s farm bill summary touts an expansion in “quality coverage to all of America’s farmers and ranchers,” while noting its language honors one of the loudest and most consistent messages received from the heartland: Do no harm to crop insurance.

It also calls for “further research and development to create risk management products that work effectively for farmers and ranchers affected by hurricanes, encourages private sector innovation in the development and maintenance of new policies to meet unique risks and ensures farmers and ranchers who suffer natural disasters are not unnecessarily penalized in future years through effective double deductibles due to insurable yields being set artificially low.”

At a farm bill discussion hosted by the Washington Examiner, Rep. Rodney Davis (R-Ill.) praised the improvements made to disaster declarations.

“The old way we used to do things with disaster declarations was not budgeted,” Davis said. Damage predictions from the 2012 drought were close to $40 million, though aid delivered to farmers amounted to just $17 million under the former disaster aid program, he noted.

His colleague and fellow Illinois committee member, Democrat Cheri Bustos, was not as effusive in her praise for the House farm bill’s safety net and crop insurance provisions.

“As I travel around my Congressional district (17), the No. 1 ask from our farmers is to leave existing crop insurance in place,” she explained. “When all producers are facing tighter market conditions and a worsening farm economy, this bill seems to help some growers and not others. In a downturn, we should not be limiting new risk management tools for producers.

“Changes in Marketing Assistance Loans, yield updates and placing new limits on using crop insurance and ARC together (are) limits that could impact Illinois growers, once again leaving out farmers in my district.”

Crop insurance funding would be decreased by 13 percent from the 2014 version of the farm bill, Bustos added.

Federal crop insurance and commodity subsidy support programs were projected to make up roughly 75 percent, or $17 billion, of the farm program portion of the 2018 farm bill.

“These programs represent a very important part of the farm safety net; however, their sheer size (not to mention a significant vested interest in the status quo) has made making desperately-needed program modernizations a bit like trying to turn around the Titanic,” the National Sustainable Agriculture Coalition (NSAC) observed in April.

“Unfortunately, the (House) bill fails to take advantage of this rare opportunity to turn the ship and modernize these important programs.”

NSAC is taking the farm bill crafters to task for “completely ignor(ing) the asks of countless farmers and farm advocacy organizations to improve program access and equity, and to ensure the federal crop insurance program encourages – rather than penalizes – farmers for stewardship efforts like cover-cropping.”

More specifically, the House farm bill fails to remove barriers to conservation and stewardship activities within the federal crop insurance program, “which discourages farmers from engaging in conservation practices such as cover crops by threatening penalties or the voiding of their coverage,” according to NSAC.

Cuts to Title II Conservation Programs could total $796 million, according to the CBO assessment of the proposed farm bill.

2017 was a historic year for crop insurance, with 311 million acres enrolled, or an area roughly the size of California, Texas and New York combined. Despite its popularity, some farm policy opponents seek to eliminate or drastically reduce crop insurance funding in the 2018 farm bill.

That would be a dire mistake, observed Mike Day, chair of National Crop Insurance Service (NCIS), during its recent annual meeting. He espoused crop insurance as affordable and economically viable enough to encourage private-sector delivery.

“Today, crop insurance protects around 90 percent of the insurable land and more than 130 different kinds of crops,” he said. “Congress made crop insurance the cornerstone of farm policy, and it is important not just for farmers and rural communities, but for taxpayers and consumers alike.”

5/9/2018