WASHINGTON (DTN) -- Senate Agriculture Committee Chairwoman Debbie Stabenow began Monday to jumpstart the debate on a new farm bill with a plan that would give farmers a choice between a higher premium subsidy for crop insurance or signing up for the traditional commodity programs.
"This is one of several ideas that I will be putting out to really jumpstart negotiations, because we're not where I think we ought to be here in terms of negotiating the bill," Stabenow, D-Mich., told DTN in an interview.
The senator pointed to commodity groups and a repeated theme at hearings from farm groups that protecting and expanding crop insurance is considered a top priority.
"Far and away, people want us to make sure that we're protecting crop insurance and we're moving forward on new options and make it more affordable," Stabenow said.
Farm groups and Republicans in Congress want to see higher reference prices under the Agricultural Risk Coverage and Price Loss Coverage (ARC and PLC) programs. Plans to raise reference prices 10% or more are projected to cost at least $20 billion over ten years.
Stabenow is proposing to give farmers the option of enrolling in ARC and PLC or in a countywide insurance plan that would include a higher premium subsidy.
"There's no reason why we can't offer farmers more choice," she said.
Stabenow pointed to the program for cotton producers, who can enroll in ARC or PLC, or choose to buy the Stacked Income Protection Plan, or STAX, which is sold to cotton producers with an 80% premium subsidy. If cotton farmers sign up for ARC or PLC, they cannot buy STAX.
The senator said her proposal would support a broader range of farmers than boosting reference prices because specialty crop farmers don't participate in ARC and PLC. She pointed to her home state of Michigan which has a high percentage of specialty crops. Other farmers don't have base acres on their commodities as well, so they are prevented from enrolling those acres in the ARC-PLC programs.
"This would give more of a choice and help those who don't have base acres, and beginning farmers, and specialty crops who would be better off with more crop insurance as their risk management tool," Stabenow said. "And we can do it for a reasonable amount of money. And so, it's something that I think is very doable and that is one of the reasons I put it forward."
TALK TO INSURERS
Stabenow made similar comments Monday in an online speech to the National Crop Insurance Industry Convention in Scottsdale, Arizona, that she delivered from the Detroit airport.
The senator told crop insurers that Republicans are pitching boosts in reference prices while at the same time proposing cuts to the Supplemental Nutrition Assistance Program (SNAP) and the conservation money in the Inflation Reduction Act. Those proposals are opposed by Democrats in both chambers of Congress.
"Folks don't want to even start unless I pick something that will lose every Democratic vote," Stabenow said.
Republicans have proposed putting restrictions on the Agriculture Department's ability to rewrite the Thrifty Food Plan that determines benefit levels for SNAP, which used to be known as food stamps. Republicans have noted that previous updates of the Thrifty Food Plan had been budget-neutral, but the Biden administration rewrote increased benefit levels.
Republicans have also proposed taking some of the almost $20 billion in budget authority for climate-related conservation programs to use for other purposes, particularly raising the reference prices that trigger farm subsidies under Title I of the farm bill.
"I have thrown that out as a choice to get things going," Stabenow told crop insurance leaders. "We are not seeing the active negotiation we have seen in the past."
COTTON PRODUCERS WANT PLC/STAX
STAX is a county-based policy for cotton producers that supplements their standard yield or revenue policies. STAX was initially created for cotton producers after Brazil won the World Trade Organization case declaring the U.S. unfairly subsidized its cotton exports.
The National Cotton Council, in a recent report, stated that NCC late last year was lobbying lawmakers on Capitol Hill to push changes in the farm bill, including both raising the seed cotton reference price and "eliminate the current prohibition on joint PLC/STAX enrollment."
It's too soon to determine if STAX pays out for 2023, but USDA Risk Management has summary reports for 2022. There were 24,973 STAX policies sold in 2022 on 6.8 million acres. Those policies had a total premium of $467.74 million, but $375.1 million -- 80% -- was subsidized by the federal government. STAX had an indemnity payout of $762.5 million in 2022.
To put the STAX payout into context, the entire ARC-County payout for the 2022 crop year involving 22 crops was $267 million. PLC did not trigger a payout for 2022.
Farmers planted 12.5 million acres of cotton in 2022, so STAX basically covered half the crop.
PITCHING TO CROP INSURERS
In her speech to crop insurers, Stabenow emphasized the importance of crop insurance as the No. 1 risk management tool for agriculture and noted that farmers who testified before Congress repeatedly said it was the most important program.
She noted that crop insurance covers most of the planted acreage in the country, covering 136 crops while the traditional commodity programs, Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC), only cover 22 crops.
In a letter to colleagues last month, Stabenow said she is also open to an update of the reference prices, but she also noted that the budget is limited.
Stabenow said she has some key principles for the next farm bill, which include targeting benefits to active farmers, providing choice and flexibility and assistance as soon as possible, reaching more farmers and addressing emerging risks.
CONCERNS OVER TIME
Stabenow told DTN her proposal reflects that it is time to get serious about negotiations. A farm bill also needs to be bipartisan, "which means there are certain red lines on both sides," Stabenow said.
"This is the art of the possible," Stabenow said to insurers, adding there has to be bipartisan support.
The bill needs to "respect" points at which Republican and Democratic votes would be lost. Negotiators need to "find a spot in the middle," she said, adding that the committee has not traditionally taken money from one title to fund another. She said she is opposed to both cuts to the nutrition title and cuts to crop insurance.
"The only way we get a farm bill is to get a strong bipartisan bill in the Senate first," Stabenow concluded.
Stacked Income Protection Plan (STAX) for Upland Cotton Fact Sheet: https://www.rma.usda.gov/…
Chris Clayton reported from Washington, D.C., while Jerry Hagstrom reported from Scottsdale, Arizona
Chris Clayton can be reached at Chris.Clayton@dtn.com
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