Ag Policy Blog

House May Consider Means Testing for Crop Insurance

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Will the sense of the House lead to means testing for crop insurance?

A group of 47 major farm and agribusiness associations wrote House Speaker John Boehner and Minority Leader Nancy Pelosi on Tuesday asking them not to risk changes to crop-insurance subsidies. The agricultural groups oppose a potential "Sense of the House" resolution that would limit crop-insurance premium subsidies for larger farmers.

Conference talks on the farm bill are waiting for the House to appoint conferees. As the House votes to name conferees sometime either Friday, Saturday or next week, lawmakers also are expected to vote on a "Sense of the House" resolution that would indicate House support for means testing farmers over crop-insurance premium subsidies.

House Budget Chairman Paul Ryan, R-Wis., is bringing forward the means-testing resolution. Groups on Capitol Hill emailed details regarding the resolution. Ryan is asking for a vote on language that is comparable, if not identical, to a Senate means-testing provision.

If it passes, the Sense of the House resolution wouldn't lock in a position for House negotiators, but it would be hard to ignore.

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The farm groups stated "crop insurance plays a critical role in the survival of farms and ranches, and remains a key reason that producers have been able to return to growing food, fiber, feed and fuel this year." Thus, the groups are disappointed over repeated attempts to cut crop-insurance program costs.

"As with other lines of insurance, the crop insurance program is actuarially sound and requires a broad pool of participants to function properly. Arbitrarily assigning a means test for support would reduce program participation, resulting in a higher risk pool of insured producers, higher loss ratios over time and increased premium rates for those that remain in the program. Limiting crop insurance protection would also yield the unintended consequence of increased calls for ad hoc, off-budget disaster assistance," the farm groups stated.

Further, means testing is a barrier to a key goal of the farm bill to expand crop insurance. "Means testing unfairly discriminates against full-time and diversified farms. Additionally, it discriminates against those producing fruits and vegetables and other high-value crops. Clearly, producers would be impacted by means testing, and those thresholds would likely become more severe in the future."

Thus, the major agricultural groups asked Boehner and Pelosi to oppose the Sense of the House resolution on crop insurance.

The U.S. Senate voted 59-33 in May to lower the premium subsidy for farmers making more than $750,000 in adjusted gross income, or $1.5 million for married couples. Under the provision, those higher-income farmers would see their premium subsidy lowered 15 percentage points, from a maximum of 62% to 47%. Senators last spring said their amendment would affect about 20,000 farmers and save $1 billion over 10 years. They also noted that roughly 4% of farmers account for nearly 33% of all the premium support for the federal government. Those figures come from a Government Accounting Office report last year.

Ferd Hoefner of the National Sustainable Agriculture Coalition stated, "The identical amendment filed in the House by Reps. Richard Hanna, R-N.Y., and Chellie Pingree, D-Maine, was bottled up in the Rules Committee and was not allowed for debate and vote on the House floor. The Ryan resolution would rectify that situation by allowing the House to express its will on the proposition prior to the first meeting of the conferees."

NSAC sent a letter to House members supporting the resolution.

Groups signing onto the letter opposing the Sense of the House resolution include:

Agricultural Retailers Association, American Association of Crop Insurers, American Bankers Association, American Farm Bureau Federation, American Insurance Association, American Society of Farm Managers and Rural Appraisers, American Soybean Association, American Sugar Alliance, Association of Equipment Manufacturers, Association of Fish and Wildlife Agencies, California Association of Winegrape Growers

Cooperative Network, Corn Refiners Association, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Ducks Unlimited, Farm Credit Council, Independent Community Bankers of America, Independent Insurance Agents & Brokers of America, Irrigation Association, National Association of Mutual Insurance Companies, National Association of Professional Insurance Agents, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Cotton Council, National Council of Farmer Cooperatives, National Farmers Union, National Milk Producers Federation, National Peach Council, National Sorghum Producers, National Sunflower Association, North American Equipment Dealers Association, Reinsurance Association of America, Southern Peanut Farmers Federation, Southwest Council of Agribusiness, The Fertilizer Institute, U.S. Canola Association, U.S. Cattlemen’s Association, U.S. Dry Bean Council, U.S. Rice Producers Association, United Fresh Produce Association, U.S. Apple Association, USA Dry Pea & Lentil Council, USA Rice Federation, Western Growers, Western Peanut Growers Association

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