Lawmakers Urge ‘VOTE NO’ On Kind Amendment to Kill Crop Insurance

June 20, 2013

Two Dear Colleagues currently circulating highlight the importance of voting NO on the Kind amendment that aims to destroy crop insurance:

Oppose Kind Amendment #149 That Aims to Destroy Federal Crop Insurance

FROM: The Honorable Frank D. Lucas, Chairman, House Agriculture Committee

The Honorable Collin Peterson, Ranking Member, House Agriculture Committee

Dear Colleague:

I write to urge your strong opposition to the amendment by Rep. Ron Kind (D-WI) that aims to destroy Federal Crop Insurance.

The amendment is backed by groups whose goal is to cut $100 billion out of the Farm Bill’s safety net and crop insurance which would zero out the safety net and gut crop insurance.

Some of the same groups say it is their goal to eliminate all federal support for crop insurance.

Don’t let this crowd fool you:  this amendment will mean no insurance for farmers, period.  For a lot of farmers and ranchers, this amendment will also mean no loans from their banker.

This amendment means we will go back to the days of a failed, government-run crop insurance program or costly, unbudgeted ad hoc disaster bills.  Washington will always respond to a disaster.

This amendment is offered after a string of natural disasters, including record droughts that in some places has held a choke-hold on farmers and ranchers for 3 straight years.

The AGI test is not credible.  It is 66 percent lower than the AGI test proposed by Sen. Coburn (R-OK) and included in the Senate bill.  This will throw many farmers out of crop insurance and raise premiums on the rest.  Even the Senate bothered to include a safeguard.  A $250,000 AGI in one year may look really good until you realize it has to cover the next three years due to drought.

The pay limit is not credible.  A South Carolina peach farmer could insure about 100 acres under the amendment.  A Texas cotton farmer just under 900 acres.  An Indiana corn farmer under 1400 acres.  Higher valued specialty crops, including fruits and vegetables, will lose most of their insurance.  This amendment will knock real producers out of insurance, raise premiums and lower coverage on those left, and lead to ad hoc disaster programs.  All told, the payment limit alone would impact insurance coverage on almost 105 million acres—that’s more than the area covered by the nation’s entire corn crop!

The pay limit and AGI do not even make sense.  The government does not write a check to a farmer or the insurance company for premium support.  The premium support is only for the farmer to gain liability protection.

For private sector agents and adjustors, the amendment means another 35 percent cut.  They took a 40 percent cut in 2011.  Agents are already laying off workers.  This will close agencies and cost jobs.

For private sector insurance companies, the amendment breaks a contract they have with the government.  Every one of these companies reported losses last year.  Rep. Kind and others point to company gross underwriting gains but ignore that these gains must cover administrative costs, taxes, and meet capital requirements to cover big losses like 2012.

The amendment even invades the privacy of farmers, ranchers, agents, and companies, forcing them to publicly disclose insurance and proprietary business information so extreme environmental groups can post all of it on their website.

Crop insurance has been cut by $17 billion since 2008.  Crop insurance is all many farmers and ranchers have.  Even farmers who have a Farm Bill safety net lose much of that safety net due to the cuts in the Farm Bill and repeal of the Direct Payment.

This amendment is not “common sense reform.”  This amendment is about destroying Federal Crop Insurance.

Please vote NO on Kind-Petri Amendment #149.

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Vote No on Kind

From: The Honorable Jeff Duncan
(R-SC)

Dear Colleague:

I am writing to urge you to oppose the Kind Amendment to this year’s FARRM bill that would result in essentially eliminating Federal Crop Insurance for many of America’s farmers starting immediately. While we can and should have an ongoing debate on the appropriate, constitutionally sound ways to ensure farmers are free to produce and Americans are free to buy their products, we must be prudent in the timing and the impact of the reforms on the industry, taking the realities of farming into account.

To quote prior Congressional testimony by the American Enterprise Institute:  “When normal commercial loading factors are applied, the premiums required by insurers to offer an actuarially viable private crop insurance contract are sufficiently high to reduce the demand for such contracts to zero.” Additionally, while the new burden placed on farmers impacted by this means test would be damaging enough; this requirement would actually punish other farmers as well through the higher insurance premiums that would result from a decrease in the risk pool.

The effect of this amendment will increase premiums sharply while also lowering coverage levels. The nature of this change could have an immediate and drastic impact on production – potentially ending food production for some farmers within a year.

I believe this issue is too important to America’s farmers and to our national security to be considered outside of the normal committee process. I do not believe changing such an important program on the House floor with limited discussion and even more limited stakeholder input is in the country’s interest.

Because of the feedback I am receiving from farmers in my district on the immediate, devastating impact of this amendment, I urge you to vote no on Kind.

Blessings & Liberty,