Ag Policy Blog

Lawmakers Introduce Bills to Cut Crop Insurance Subsidies

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
Connect with Chris:
@ChrisClaytonDTN

Two Republicans in Congress have introduced legislation they argue would help reform the crop-insurance program by cutting the premium subsidy.

Sen. Jeff Flake of Arizona and Rep. John Duncan of Tennessee introduced bills in their respective chambers called "The Crop Insurance Subsidy Reduction Act of 2013." The lawmakers announced their proposals Tuesday at an event in Washington hosted by the Environmental Working Group.

Flake cited that the bill would reduce premium subsidies to levels seen before the Agriculture Risk Protection Act was passed in 2000. Flake stated in a news release the legislation would save $40.1 billion over 10 years. 

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“The current U.S. fiscal crisis makes a strong argument for a commonsense roll back of crop insurance subsidies,” said Flake. “I’m proud to have the support of Congressman Duncan in introducing this legislation, which offers an opportunity to have taxpayer-funded federal farm subsidies more realistically reflect our current fiscal situation.”

Duncan added, “The crop insurance program has turned into a huge taxpayer-funded boon for some of the biggest, multi-national insurance companies and multi-millionaire farmers. In a time of record deficits and an incomprehensible $16.5 trillion in debt, this program can no longer be justified in its current form. Senator Flake and I have joined together to offer a common sense reform that shields taxpayers and protects family farms."

It is unlikely members of the House and Senate Agriculture Committees will rush to co-sponsor the bills. As Environmental Working Group noted in its news release, both committees proposed to increase spending on crop insurance in their proposed farm bills last year. Still, the bills by Flake and Duncan also won't be the last to curb crop-insurance costs. The Senate did vote last year to place a cap on the crop-insurance premium subsidy for farmers with more than $750,000 adjusted-gross income. That amendment was co-authored by Dick Durbin, D-Ill., and Tom Coburn, R-Okla.

The Senate bill last year would have increased crop-insurance spending by $5.5 billion over 10 years. The House bill would have increased programs for crop insurance by $11 billion over 10 years.

The Flake-Duncan bill comes as the National Crop Insurance Services is beginning to more aggressively push back against the Environmental Working Group and its claims. NCIS has posted a new video on-line with farmers and crop-insurance agents criticizing claims by EWG that farmers were laughing all the way to the bank because of crop insurance. NCIS argues no one begins a crop year hoping for a drought.

http://www.youtube.com/…

NCIS also issued a press release citing inaccurate claims last year that crop-insurance indemnities would be in the $20 billion to $40 billion range. Indemnities as of now are $15.4 billion, according to USDA. The payouts by insurers aren't nearly as high as some expected, but it is still a record payout.

I can be found on Twitter @ChrisClaytonDTN

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Comments

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Raymond Simpkins
3/7/2013 | 2:58 PM CST
Tim ,You answered my thoughts earlier when you stated you were a smart young man.
Tim Haugen
3/7/2013 | 12:47 PM CST
Lon - all your comments have been directed towards eliminating the program. Your links to the AEI and the Heritage Institute all pointed towards articles calling for the end of "market distorting" public supports. If you simply want to make the program better, more equitable, and tougher on the fraudulent few...well then my new friend, you are right on board with the crop insurance lobby!
Tim Haugen
3/7/2013 | 12:38 PM CST
Ray - over 150 clients in our offices. Not a single one that gets paid without proving damage. If you want to see the frauds, go to the department of justice website. They're on there - prosecuted, fined, and jailed. You're the one that claimed people are getting paid "millions for nothing." If you know these people, there is a federal hotline that goes to the OIG. Use it. If you think crop insurance is such easy windfall profit machine, why aren't you participating?
Lon Truly
3/7/2013 | 12:03 PM CST
As I have said before, reasonable limits on fci subsidies and fci investment/profit guarantees would go a long ways in reducing the crony capitalistic aspects of fci. Also bankers would not be so busy driving smaller producers out of business when pursuing wild goose chases such as Grabanski, Rosentreter, and Stamp. As most of us who are farming know just about every community has a few individuals very similiar to these people pursing every dollar that they can find from bankers ever eager to grow loan volume based on the open ended nature of federal crop insurance.
Raymond Simpkins
3/7/2013 | 11:45 AM CST
figures your an insurance salesman!I didn't say pull the plug I farm full time and use crop insurance. But I can farm without it and did for 30 years.Last year was the first year I bought it ,did it pay was could I farm again without coverage? YES! May I point out the fact I farm fulltime no other income and do just fine.I don't understand your comment about fraud it happens every day.Guys getting paid for damaged corn that had no damage,big whammo!Why do you buy insurance on your car ? Is it to protect your investment?I am still going to grow a crop just not expecting to be payed more than I have invested.Last but not least I don't know who Lon is but Ithink you are going though life with blinders on.Because everyone is going to have to give up something or there is going to be no programs.Thanks for your input Tim
Tim Haugen
3/7/2013 | 9:33 AM CST
Nothing against perennial farmers...if anyone took my points as a slight against you. I like eating my Florida oranges and California grapes. Using the term "millionaires" is hypothetical. We, in the real world, know that farmers are only millionaires on paper - dirt rich. Highly leveraged, non-liquid assets that are more often than not passed down to the next generation or sold post mortem. Really, Lon, my clients pull up in pickup trucks and dirty boots. They aren't sporting gucci and ferraris. By the way, what do YOU do? You aren't just some philanthropic intelluctual bestowing knowledge on simple rural folk. You are trolling DTN columns for a reason. What is it? Unacceptable answers include "I'm a concerned taxpayer" because with your logic I could make cases against any type of national defense spending and encourage euthenasia over medicare. Afterall, these programs ONLY exist to enrich the hospitals and weapon manufactures (sarcastic tone).
Lon Truly
3/7/2013 | 8:14 AM CST
Accidental double post - my apologies!
Raymond Simpkins
3/7/2013 | 8:05 AM CST
What is Lon on?Here is my take on crop insurance,Why don't we buy a policy on our investment instead of the growing crop. In otherwords you are covered for all your inputs for the covered crop.When we cover our car or house the most you are going to get if they are lost is the cost of the item or replacment value.The insurance is not going to buy you 3or4 more houses.So why should crop insurance pay for what could have been!Cover my investment and in the event of of a failed crop I will live to farm next year.This would end fraud and getting payed millions for nothing.
Bonnie Dukowitz
3/7/2013 | 4:14 AM CST
Good Morning Chris, Is there a means in which DTN could limit the size and number of comments by each individual commenting on the site? It seems all good things will self destruct. Today was a good day to get up.
KEITH PEARSON
3/6/2013 | 6:00 PM CST
Lon put a cork in it!!!!!!! After talking to my crop ins agent today Lon put a cork in it!!!!!!!! After talking to my crop ins agent today about your complaint , he told me everything you are saying is false & he backed it up with facts. something you havent done by a long shot. If you are wondering if he read your comments on this subject he has.
Cheri Zagurski
3/6/2013 | 2:31 PM CST
Bill, you are the oddest rich guy I know!
Tim Haugen
3/6/2013 | 2:26 PM CST
Lon must personally know me. Hey, you're right, my clients get a premium DISCOUNT from the GOVT on its own insurance policies...so this automatically discredits the fact that I used your sources to refute your specific claims (see Clayton's previous column). Have it your way: free enterprise...premiums go up and I make more money in a private sector industry where RMA regulations don't cap commissions and prevent us from being even more cutthroat. I am not worried about my income. I'm a smart, young man. I'm simply fighting against bad information such as yours. You made it too easy in the previous article. Now your're the one ranting off topic about oil who knows what and limiting my freedom to "pontificate," or speak. To imply that I was unqualified in exposing your flaws is rather ignorant. If the emporer has no clothes...ahh screw it, maybe I'll just let you keep walking around naked.
Aaron Cross
3/6/2013 | 11:40 AM CST
BTW Lon I searched for you on the EWG website.
Aaron Cross
3/6/2013 | 11:38 AM CST
I agree with Tim, Lon everytime you post on here it is the same thing over and over again. I don't know how many times you have stated your OPINION and I personally am tired of reading your misguided ranting and raving over how something is not fair in your world view. . . Start a blog.
Tim Haugen
3/6/2013 | 10:30 AM CST
Start a blog, Lon. I dismantled your arguments in Clayton's previous column by using your own sources and 'research'. You didn't even comprehend the meaning behind your own links, you don't know what your talking about and I'm not going to take any more of my valuable time reading your manifestos. You have some personal, misguided, political grudge. Why don't you attack publicly funded schools? Or, better yet, water utilities - they perform a social interest much like producing food, and they do it on the public dime. Why should a millionaire pay the same subsidized water rates? I live on a rural well I paid for with my money, yet my taxes go to subsidize city water for rich people. According to your logic, we should privatize water usage, deregulate the system and let the free market determine the haves and have nots. What do you think would happen then? Do you really think the small guy would win?
Jay Mcginnis
3/6/2013 | 8:38 AM CST
Also Bill you can do what I do, redistribution of wealth by giving a generous proportion of subsidies to organizations like Drs, Without Borders, Salvation Army, local food banks and others that help the folks that this society overlooks. But you are right and its even more difficult to justify billions to corporations like the oil giants and medical insurers who are already making billions in profit,,,,, its easy to tell what its all about!
Young Farmer
3/6/2013 | 8:35 AM CST
I guess maybe we should be looking at net earnings requirement for the crop insurance subsidies in the $500,000.00 range like we do for the rest of the govt programs. We also need an investigation into how much croplosses our current wetlands policy is costing us in losses on CROPLAND before we tie wetlands compliance to crop insurance. I can understand highly erodable land compliance but wetlands compliance that is actually contributing to the croplosses would surely hurt the credibility of the program let alone lead to many legal battles with terminalogy like prior converted and farmed wetlands. This type of policy is not only discimitory but is arguebly unconstitutional. By allowing some to have drained wetlands and some not will surely lead to a huge legal battle down the road with huge implications that are not seen by many.
Jay Mcginnis
3/6/2013 | 8:28 AM CST
Don't worry Bill,,, During his campaign Romney said that the average American income is $150,000
Bill Billson
3/6/2013 | 8:11 AM CST
About time they end crop ins and DCP subsidies for the rich (myself included). I have always felt guilty taking the money when I get tons of tax breaks on top of it. Really hard to defend when talking to wage earners making 30000 who are subsidizing multimillionares like me. Cant imagine any honest farmer claiming these subsidies are needed.
Young Farmer
3/6/2013 | 7:59 AM CST
I would like to see an investigation on EWG and some of these other non-profit tax-free activist groups. I think it would be interesting to see how much the top people in these organizations are getting paid, the type of lifestyles they are leading and from who and from what countries are the leading contributers. It seems they do a lot of finger pointing without any questioning or oversite. It seems like if you put a name like, "Environmental, Conservation, or Sustainabilty" on your name your untouchable.
Curt Zingula
3/6/2013 | 7:19 AM CST
I too despise the thought of being in bed with the EWG even though I think the crop insurance subsidies are over done. The donation seeking EWG claims that from outer space they have searched hundreds of millions of acres for cattails and their claim of wetland destruction is countered by the Forestry Service's on ground account of an increase in wetlands. The EWG has also gone on line with conservation contract and cost share payments to farmers in an attempt to embarrass us and fatten their checking account. With the EWG fighting to reduce insurance subsidies, I'll be cheering for the NCIS. Let's not give an inch to the devil!
Bonnie Dukowitz
3/6/2013 | 5:58 AM CST
It is unfortunate the E.W.G. is behind this. To me, Environmental Working Group is a scam. Look up their funding, intents&purposes, etc.
Lon Truly
3/5/2013 | 9:03 PM CST
See http://www.heritage.org/research/reports/2007/06/how-farm-subsidies-harm-taxpayers-consumers-and-farmers-too