Crop Insurance Cuts Axed

House Leadership Reverses Course

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A two-year budget deal negotiated in the House rescinded planned cuts to the federal crop insurance program which was detailed in the 2014 farm bill. (DTN file photo)

OMAHA (DTN) -- Plans to cut $3 billion out of the federal crop insurance program in the next eight years were reversed after members of the House Agriculture Committee announced Wednesday an agreement had been reached to leave the program alone as part of a two-year budget deal.

The House passed H.R. 1314, the Bipartisan Budget Agreement, Wednesday afternoon by a vote of 266-167, with unanimous support from Democrats and 79 votes of support from Republicans.

The change of direction over the proposed cuts to crop insurance came following pressure levied Tuesday by ag-state lawmakers, farm groups and the crop insurance industry.

The budget bill proposal would have reversed a provision in the farm bill and effectively required USDA to renegotiate the Standard Reinsurance Agreement with crop insurance companies in 2016.

The bill also would have set a hard cap of 8.9% as the overall rate of return crop-insurance companies can receive. Under current law, the overall rate of return is 14.5%.

In a news release issued Wednesday afternoon ahead of the House vote on the budget agreement, House Agriculture Committee Chairman K. Michael Conaway, R-Texas, and Ranking Member Collin Peterson, D-Minn., said farmers can rest easy for now.

"I want to thank my colleagues who have made it very clear over the last 24 hours that the attempt to gut crop insurance in the budget agreement was not acceptable," Conaway said. "Our nation's farmers and ranchers did their part in reining in our nation's debt in the 2014 farm bill, saving an estimated $23 billion. It is imperative that we do not undermine their trust by attacking the primary tool they use to manage the tremendous risks involved in producing food and fiber.

"Leadership has heeded our concerns by agreeing to completely reverse this disastrous provision in the upcoming omnibus. Crop insurance is working as intended, and private industry deserves to be lauded, not thrown under the bus. I take our leadership at their word when they committed to me and many of my colleagues that we will eliminate these harmful provisions in the not-so-distant future, which is why I will vote in support of the budget agreement today.

"I encourage my rural-minded colleagues to follow suit and put their support behind this agreement by passing the budget deal on the floor today. While not the easiest path forward, this is a win for rural America and should be viewed as such.

"I will continue fighting against policies that hurt our farmers and ranchers, and I am thankful to leadership for working with us to avoid these harmful cuts."

Ranking Member Peterson said, "I'm pleased that we have an agreement to fix the crop insurance cuts and not open the farm bill. We have assurances that the cuts will be removed and the farm bill will not be raided. We produced a fiscally responsible and bipartisan farm bill in 2014 that saved $23 billion. We've done our part. I can now support the budget agreement with these assurances."

National Sorghum Producers Chairman James Born said in a news release Wednesday it was important to have agriculture's voice heard.

"The work done in the last 48 hours to protect crop insurance, an essential farmer safety net element fought hard for through the 2014 farm bill process, is a true testament to the agriculture leaders we have representing farmers and ranchers across the United States," he said.

"Agriculture's voice was heard loud and clear this week, and as agriculture income has dropped in the past two years, we remain united in working together to protect the agriculture safety net."

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley