Critics Defend Crop Insurance, Question White House Logic on Proposed Cuts
(DTN)Republicans in Congress charged with helping draft the next farm bill said President Barack Obama's proposal to spur the economy and reduce the deficit "is not credible."
Some lawmakers and farm groups say President Barack Obama's plan to cut $8.3 billion from crop insurance would be devastating to agriculture, particularly in a year that has seen extremely volatile commodity prices and weather events ranging from droughts to floods. (DTN file photo by Elaine Shein) House Agriculture Committee Chairman Frank Lucas of Oklahoma and Sen. Pat Roberts of Kansas issued a joint statement Monday afternoon criticizing the plan Obama announced Monday that would cut $33 billion out of agricultural spending over the next 10 years.
Most news releases and statements Monday about the proposal cited that leaders in agriculture were willing to help "in getting our fiscal house in order," but had specific criticisms. The GOP lawmakers wrote that the president's policy priorities show a lack of knowledge about production agriculture or how changes would affect farmers.
"For example, cutting $8 billion from the crop insurance program puts the entire program at risk," the lawmakers wrote. "We have heard again and again from producers that crop insurance is the best risk-management tool available. In jeopardizing this program, the president turns a deaf ear to America's farmers."
Lucas and Roberts added that the Supplemental Revenue Assistance (SURE) program has not worked as expected, but the president wants to extend it. Further, the president's plan doesn't address waste, fraud, abuse and other integrity issues within nutrition programs, which account for 80% of USDA spending, the lawmakers stated. "Ultimately, cuts to agriculture must reflect its diversity across the country, respect the challenges producers face, and preserve the tools necessary for food production."
The White House posted a blog on farm programs, stating that "'someday' is now" for eliminating direct payments.
http://1.usa.gov/r9zT5s
The White House plan includes a tax increase for millionaires and cutting loopholes that the administration states would increase revenue by $1.5 trillion over 10 years. Bringing home all the troops from Afghanistan and Iraq would save another $1.1 trillion. The administration's plan also has $580 billion in savings over 10 years to mandatory programs, which is where cuts to agriculture would come in. Another $430 billion would be saved in interest payments.
The president's plan sets a clear distinction between himself and Republicans that control the House and can freeze bills in the Senate. House Speaker John Boehner, R-Ohio, posted a blog titled "How President Obama's Tax Hike Would Destroy American Jobs."
http://bit.ly/qCrw3v
The White House stated a net savings of $33 billion would come from agricultural programs over 10 years. The plan proposes eliminating direct payments to save $30 billion, as well as $8.3 billion in cuts to crop insurance. Another $2 billion would be saved in conservation. That's $40.3 billion in total cuts to agriculture programs, but the plan would also extend the SURE program through 2016, which would negate some of the savings.
The administration wants to tighten the insurers' return on investment to 12%, which the administration states would save $2 billion over 10 years. The administration also wants to lower the cap for administrative and operating expenses USDA pays the insurers for the program. Such a plan would save $3.7 billion in A&O payout over 10 years.
Added to that, the plan would expect farmers to pay a higher percentage of the premium for policies in which the premium subsidy is above 50%. Another $600 million in savings over 10 years would come from changing the premium for catastrophic, or CAT, insurance coverage.
Tom Zacharias, president of National Crop Insurance Services, released a statement saying the crop insurance industry shares the belief that deficit reduction is important. Zacharias said that the insurance industry has already taken cuts going back to the 2008 farm bill. Cutting the programs now also doesn't serve the interests of farmers, Zacharias said.
"The plan is devastating to those in agriculture, particularly in a year that has seen extremely volatile commodity prices and weather events -- from droughts in Texas and Oklahoma to floods in the Northeast and Midwest," Zacharias said. "The White House calls for further streamlining of the Federal Crop Insurance Program, which has already contributed more than $4 billion towards deficit reduction, and $12 billion overall in spending reductions since 2008. Congress needs to evaluate the economic impact of weakening the primary safety net on which farmers and our rural economy can rely."
Crop insurers took a $6 billion cut in the growth of program spending when USDA and the industry negotiated the standard reinsurance agreement last year. USDA used $4 billion toward deficit reductions, then used $2 billion to help pay for general signup in the Conservation Reserve Program.
National Corn Growers Association President Bart Schott also said in a statement that NCGA backs efforts to get the federal budget under control, and the need for shared sacrifice. But NCGA also had concerns about the cuts in crops insurance.
"While NCGA agrees the fiscal challenges before us require even greater efficiency in the delivery of farm safety net programs, we are deeply concerned by proposals that would directly undermine a farmer's ability to purchase adequate insurance coverage at a time of heightened volatility in commodity markets," Schott said.
NCGA announced a plan last week, the Agriculture Disaster Assistance Program, that would eliminate direct payments and create roughly 30% savings over current farm programs over 10 years. NCGA also wants decisions on farm programs to be done by the House and Senate Agriculture Committees.
"As the administration and members of Congress begin to prepare for the next farm bill, we also ask that decisions and writing of the legislation be made within the committees of jurisdiction," Schott said.
Critics of farm programs have a differing view. Environmental Working Group issued a statement in which Ken Cook, president and co-founder of the group, applauded the president's plan.
"Environmental Working Group has been raising objections to automatic farm payments regardless of crop prices for nearly two decades," said Cook. "We are encouraged to see the tide turning in favor of investments in agriculture that are smarter for farmers and the environment and fairer to taxpayers who have been padding the bank accounts of profitable agribusiness operators for years."
EWG stated Cook sent a letter to the deficit super committee in Congress urging its members to take similar steps to those proposed by the president.
"Cutting out this wasteful spending will help bring down the deficit while protecting other priorities," Cook wrote to the committee. "Direct payments that go out regardless of market conditions or actual land use must be eliminated, or at least targeted only to farmers who demonstrate a clear financial need."
Yet, even lawmakers who have championed tighter payment programs criticized the president's proposal. Sen. Charles Grassley, R-Iowa, said the plan would hurt the safety net for farmers. He too referenced the cuts already made in crop insurance, a program farmer back.
"Unfortunately, the plan put forth by the president today was more of the same, and hits agriculture just when it's dealing with weather conditions unseen in many, many years," Grassley said. "It seems one of the president's main focuses for cuts is the crop insurance program. In town hall meetings during the August recess, I routinely heard that the crop insurance program is vital to ensuring they can keep producing the necessary food, fiber and fuel. The crop-insurance program has proven to be a successful public-private partnership that helps farmers manage their own risk, instead of relying on the whims of Congress for assistance when problems arise."
http://www.dtnprogressivefarmer.com
Some lawmakers and farm groups say President Barack Obama's plan to cut $8.3 billion from crop insurance would be devastating to agriculture, particularly in a year that has seen extremely volatile commodity prices and weather events ranging from droughts to floods. (DTN file photo by Elaine Shein) House Agriculture Committee Chairman Frank Lucas of Oklahoma and Sen. Pat Roberts of Kansas issued a joint statement Monday afternoon criticizing the plan Obama announced Monday that would cut $33 billion out of agricultural spending over the next 10 years.
Most news releases and statements Monday about the proposal cited that leaders in agriculture were willing to help "in getting our fiscal house in order," but had specific criticisms. The GOP lawmakers wrote that the president's policy priorities show a lack of knowledge about production agriculture or how changes would affect farmers.
"For example, cutting $8 billion from the crop insurance program puts the entire program at risk," the lawmakers wrote. "We have heard again and again from producers that crop insurance is the best risk-management tool available. In jeopardizing this program, the president turns a deaf ear to America's farmers."
Lucas and Roberts added that the Supplemental Revenue Assistance (SURE) program has not worked as expected, but the president wants to extend it. Further, the president's plan doesn't address waste, fraud, abuse and other integrity issues within nutrition programs, which account for 80% of USDA spending, the lawmakers stated. "Ultimately, cuts to agriculture must reflect its diversity across the country, respect the challenges producers face, and preserve the tools necessary for food production."
The White House posted a blog on farm programs, stating that "'someday' is now" for eliminating direct payments.
http://1.usa.gov/r9zT5s
The White House plan includes a tax increase for millionaires and cutting loopholes that the administration states would increase revenue by $1.5 trillion over 10 years. Bringing home all the troops from Afghanistan and Iraq would save another $1.1 trillion. The administration's plan also has $580 billion in savings over 10 years to mandatory programs, which is where cuts to agriculture would come in. Another $430 billion would be saved in interest payments.
The president's plan sets a clear distinction between himself and Republicans that control the House and can freeze bills in the Senate. House Speaker John Boehner, R-Ohio, posted a blog titled "How President Obama's Tax Hike Would Destroy American Jobs."
http://bit.ly/qCrw3v
The White House stated a net savings of $33 billion would come from agricultural programs over 10 years. The plan proposes eliminating direct payments to save $30 billion, as well as $8.3 billion in cuts to crop insurance. Another $2 billion would be saved in conservation. That's $40.3 billion in total cuts to agriculture programs, but the plan would also extend the SURE program through 2016, which would negate some of the savings.
The administration wants to tighten the insurers' return on investment to 12%, which the administration states would save $2 billion over 10 years. The administration also wants to lower the cap for administrative and operating expenses USDA pays the insurers for the program. Such a plan would save $3.7 billion in A&O payout over 10 years.
Added to that, the plan would expect farmers to pay a higher percentage of the premium for policies in which the premium subsidy is above 50%. Another $600 million in savings over 10 years would come from changing the premium for catastrophic, or CAT, insurance coverage.
Tom Zacharias, president of National Crop Insurance Services, released a statement saying the crop insurance industry shares the belief that deficit reduction is important. Zacharias said that the insurance industry has already taken cuts going back to the 2008 farm bill. Cutting the programs now also doesn't serve the interests of farmers, Zacharias said.
"The plan is devastating to those in agriculture, particularly in a year that has seen extremely volatile commodity prices and weather events -- from droughts in Texas and Oklahoma to floods in the Northeast and Midwest," Zacharias said. "The White House calls for further streamlining of the Federal Crop Insurance Program, which has already contributed more than $4 billion towards deficit reduction, and $12 billion overall in spending reductions since 2008. Congress needs to evaluate the economic impact of weakening the primary safety net on which farmers and our rural economy can rely."
Crop insurers took a $6 billion cut in the growth of program spending when USDA and the industry negotiated the standard reinsurance agreement last year. USDA used $4 billion toward deficit reductions, then used $2 billion to help pay for general signup in the Conservation Reserve Program.
National Corn Growers Association President Bart Schott also said in a statement that NCGA backs efforts to get the federal budget under control, and the need for shared sacrifice. But NCGA also had concerns about the cuts in crops insurance.
"While NCGA agrees the fiscal challenges before us require even greater efficiency in the delivery of farm safety net programs, we are deeply concerned by proposals that would directly undermine a farmer's ability to purchase adequate insurance coverage at a time of heightened volatility in commodity markets," Schott said.
NCGA announced a plan last week, the Agriculture Disaster Assistance Program, that would eliminate direct payments and create roughly 30% savings over current farm programs over 10 years. NCGA also wants decisions on farm programs to be done by the House and Senate Agriculture Committees.
"As the administration and members of Congress begin to prepare for the next farm bill, we also ask that decisions and writing of the legislation be made within the committees of jurisdiction," Schott said.
Critics of farm programs have a differing view. Environmental Working Group issued a statement in which Ken Cook, president and co-founder of the group, applauded the president's plan.
"Environmental Working Group has been raising objections to automatic farm payments regardless of crop prices for nearly two decades," said Cook. "We are encouraged to see the tide turning in favor of investments in agriculture that are smarter for farmers and the environment and fairer to taxpayers who have been padding the bank accounts of profitable agribusiness operators for years."
EWG stated Cook sent a letter to the deficit super committee in Congress urging its members to take similar steps to those proposed by the president.
"Cutting out this wasteful spending will help bring down the deficit while protecting other priorities," Cook wrote to the committee. "Direct payments that go out regardless of market conditions or actual land use must be eliminated, or at least targeted only to farmers who demonstrate a clear financial need."
Yet, even lawmakers who have championed tighter payment programs criticized the president's proposal. Sen. Charles Grassley, R-Iowa, said the plan would hurt the safety net for farmers. He too referenced the cuts already made in crop insurance, a program farmer back.
"Unfortunately, the plan put forth by the president today was more of the same, and hits agriculture just when it's dealing with weather conditions unseen in many, many years," Grassley said. "It seems one of the president's main focuses for cuts is the crop insurance program. In town hall meetings during the August recess, I routinely heard that the crop insurance program is vital to ensuring they can keep producing the necessary food, fiber and fuel. The crop-insurance program has proven to be a successful public-private partnership that helps farmers manage their own risk, instead of relying on the whims of Congress for assistance when problems arise."
http://www.dtnprogressivefarmer.com
Posted by Colvin & Co. at 9/22/2011 7:25 AM 
Categories: Farmland
Tags: agriculture corn Farm Bill farming food U.S. Weather
Categories: Farmland
Tags: agriculture corn Farm Bill farming food U.S. Weather
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