WASHINGTON, D.C. — The recent attention to possible crop insurance cuts in the president’s 2016 budget proposal shows how complicated party politics may be in the new Congress.

As widely reported in the farm press, President Barack Obama’s 2016 budget proposal includes a 10 percent cut to the Harvest Price Option (HPO) subsidy. The HPO, designed to protect farmers who pre-harvest hedge, provides protection if farmers have to buy grain to cover forward contracts.

The HPO cut is the biggest chunk of an 18 percent budget cut in crop insurance proposed by the White House, said the American Farm Bureau Federation. Farm-state Republicans were not impressed. "The President’s budget again turns a deaf ear to our nation’s farmers and ranchers by directly cutting the very tool that helps growers produce a safe and affordable food supply year after year," said Sen. Pat Roberts (R-Kan.), the Senate’s new Agriculture Committee chair and a longtime crop insurance supporter.

And many farm-state Democrats also support crop insurance in its current form, as evidenced Feb. 11, when members of both parties on the House Agriculture Committee urged USDA Secretary Tom Vilsack to leave crop insurance funding alone. Minnesota Rep. Collin Peterson, ranking Democrat on the House committee, said agriculture should get some credit for how the farm bill has already cut spending. "Despite this savings and the efforts of the agriculture committees, agriculture programs continue to come under attack," said Peterson, who noted some Republicans want similar cuts. "The administration recently proposed cuts to the crop insurance program and I anticipate, given what we have seen in the past, that the Republican budget will also propose similar cuts," he said Feb. 11.

Part of that prediction came true the next day, when two Republicans and a Democrat reintroduced House and Senate legislation to eliminate the HPO altogether. Sens. Jeff Flake (R-Ariz.) and Jeanne Shaheen (D-N.H.), along with Rep. John J. Duncan (R-Tenn.), resurrected language from a farm bill amendment that failed in 2013. Their Harvest Price Subsidy Prohibition Act is supported by at least six right-leaning groups advocating less government spending, as well as the left-leaning Environmental Working Group, a longtime critic of farm subsidies.

"We’re proposing a common-sense reform with the potential to save taxpayers nearly $20 billion," said Shaheen. "This is a smart, pragmatic bill that will provide our current crop insurance program with a much needed fix. We ought to act on it immediately to save taxpayer dollars."

House Agriculture Chair Michael Conaway (R-Texas) made crop insurance the first area of questioning for Vilsack last week. Conaway, a CPA, asked why the administration keeps trying to cut crop insurance support, and requested more information on how the Risk Management Agency calculates crop insurance program returns to insurers.

In other words, there seems some disagreement between what the government says crop insurers are making from some subsidized programs and what crop insurers say their returns are. "The reality is that both the General Accounting Office, our own inspector general, have raised questions and concerns about various aspects of the program," replied Vilsack.

"In terms of the Harvest Price Option loss coverage, that’s a question of whether or not we or you believe that the partnership should be more of a 50/50 partnership instead of a 65/35 partnership, in terms of the level of subsidy. When subsidies are as high as 65, 70, 80 percent, the question is: Is that the right level?"

Some House members indicated support for the crop insurance industry, which is opposed to cutting current subsidy levels. "Anything that weakens the crop insurance system ultimately harms rural America and the men and women who feed, clothe and fuel the country," said a statement made by three crop insurance industry groups.

That argument – crop insurance helps rural America – does not resonate with Duncan, who represents Knoxville and surrounding areas in the House.

"In an era of very few small farms, the largest corporate farms collect the lion’s share of the money, creating an unfair playing field for family farmers. Ninety-nine percent of the people in my district do not get subsidies from the federal government to run their businesses," said Duncan. "Big agribusinesses and insurance corporations have a sweet deal with our crop insurance."

Conaway disagrees with that view. He sees crop insurance needing to continue at current levels, as a public-private partnership.

"With commodity markets plummeting and producers struggling to find financing, now is precisely the wrong time to weaken crop insurance," he said, at last week’s House hearing on the state of the rural economy.

Carl Zulauf, agricultural economist at The Ohio State University, looked closely at the HPO in the midst of the 2012 drought.

His analysis showed farms with some of the higher HPO insurance levels could have higher revenues from low or zero harvest, with the insurance, than in typical crop years. That is because hedging in drought years creates large revenue loss potential.

Zulauf said the HPO helps farmers feel more comfortable about forward-contracting grain. He also noted HPO opponents say the policies promote more forward-contracting "than is consistent with prudent risk management, especially in drought years." Both sides offer valid observations, in his view.

Zulauf’s more recent analysis, presented with Virginia Tech’s David Orden at a December 2014 professional meeting, stated the overall current subsidy rate for crop insurance is too high. But the two economists noted disagreement exists among agricultural economists on both the rationale and subsidy levels for crop insurance.

It all means the crop insurance debate will come down to policy. With members of Congress from both parties on either side of the crop insurance issue, the HPO is likely to keep making interesting political news. And, as evidenced by the introduction of the bipartisan bill last week, members of both parties will be campaigning to reduce or eliminate the HPO.