The federal crop insurance program escaped excise last week after negotiations with bipartisan leadership of the House and Senate Agriculture Committees spared it from significant cuts in the congressional budget bill signed into law by President Barack Obama.
Now, however, the program is back on the chopping block as four lawmakers in the House and Senate introduce legislation intended to save taxpayers an estimated $24.4 billion over 10 years by gutting subsidies to farmers.
The bill, titled the Assisting Family
Farmers through Insurance Reform Measures (AFFIRM) Act, endorses the new target rate of return of 9% for crop insurance companies as recommended in the original version of the budget deal – down from the current 14% rate, and aiming to save taxpayers $3 billion over 10 years.
AFFIRM would also subject crop insurance premium subsidies to means tests, payment limits and greater transparency to realize additional savings. Supporters of the bill say these reforms, which are already applied to other farm subsidies, would save taxpayers more than $24.5 billion over 10 years.
“The crop insurance savings laid out in the budget deal are just the tip of the iceberg,” said Craig Cox, senior vice president for agriculture and natural resources for the Environmental Working Group. “The last farm bill ended the much derided direct payment program but re-directed those funds toward the crop insurance program, guaranteeing big profits for crop insurance companies and virtually guaranteeing payouts to farmers.”
Lawmakers say the cuts do not prevent the program from being helpful to family farmers, however. According to Democrat Congressman Ron Kind – who has historically been critical of farm subsidy programs – the bill will still provide a sufficient safety net for formers.
The current crop insurance system, however, he believes is “in need of major reform.”
“These reforms will promote the longevity of agriculture risk-sharing programs and make sure the farm safety-net remains readily available, especially for those who need it most,” Kind said. “With our national debt approaching $19 trillion, Congress must continue to work in a bipartisan fashion to reduce excessive spending and ensure future generations inherit a prosperous America.”
Republican Congressman Jim Sensenbrenner agrees, saying the bill makes cuts “to reduce unnecessary subsidies directed towards our country’s largest and most profitable farms and agribusinesses.”
