Senate debating federal dollars for crop insurance

5/21/2013 11:00 AM
By Associated Press

WASHINGTON (AP) — The farm bill the Senate is considering this week would cut some farm subsidies but also expand government-subsidized crop insurance, a safety net used by many farmers in case of bad weather or lost revenue.

The program has risen in popularity in recent years, especially in the Midwest, and helped many farmers recover financially after last year's blistering drought. Farm-state lawmakers have argued that crop insurance should be maintained and even expanded because it protects farmers when they need it most and because farmers contribute some of their own money to the program.

"It's a public private-insurance system that is frankly working very well," Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., said on the Senate floor Monday.

Not everyone in Congress wants to see the program expanded. Several senators are planning to offer amendments to limit the program, saying federal contributions to crop insurance are too generous and subsidize big agricultural businesses.

The government spent an estimated $15.8 billion on the program for the 2012 crop year after a drought destroyed many crops, up from $9.4 billion in 2011. The government subsidizes about 62 percent of farmers' insurance premiums and also subsidizes the insurance companies that sell the policies. The cost of the program has risen in recent years because of bad weather events and record-high crop prices.

Sen. John McCain, R-Ariz., offered the first crop insurance amendment Monday, proposing an end to $33 million a year in insurance policies for tobacco farmers. A buyout for tobacco farmers enacted nine years ago is phasing out government payments to tobacco farmers, but many of them still receive crop insurance.

"It turns out Joe Camel's nose has been under the tent this whole time in terms of crop insurance subsidies," McCain said, referring to a character that used to appear on packs of Camel cigarettes.

New York Sen. Kristen Gillibrand offered an amendment Tuesday that would cut subsidies for the crop insurance companies and use the money to reverse a $400 million annual cut to food stamps contained in the bill.

The Obama administration also said it wants to see more cuts to crop insurance in the legislation, which would cost almost $100 billion a year over five years and would set policy for farm programs and food aid. The White House, which supports passage of the overall bill, did not specify how large a cut it was seeking.

The Senate bill would expand crop insurance by creating a new "shallow loss" program to aid farmers before their paid crop insurance policy kicks in. It would also expand other parts of the current program.

The legislation would cut about $2.4 billion annually from overall farm spending, while expanding the crop insurance and also raising some subsidies for rice and peanut farmers. The Senate began debating the legislation Monday and is expected to consider the bill for several days.

Almost $80 billion of the annual cost of the bill is for domestic food aid, with most of the rest of the money split between farm subsidies, the federal help for crop insurance and programs to protect environmentally-sensitive land.

While calling for deeper cuts to subsidies, the White House also called for Congress to maintain the strong safety net farmers have now. Current farm programs expire Sept. 30.

"It is critical that the Congress pass legislation that provides certainty for rural America and includes needed reforms and savings," the White House said.

The Senate passed a similar bill last year, but the House did not consider it. The House Agriculture Committee approved its version of the farm bill last week with a similar expansion of crop insurance. The full House is expected to vote on the bill this summer.

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Find Mary Clare Jalonick on Twitter at http://twitter.com/mcjalonick


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10/22/2014 | Last Updated: 8:01 AM