Rural America Reminds Lawmakers to Keep Their Promise to Protect Crop Insurance from Cuts in Spending Bill

November 20, 2015

“It ain’t over till it’s over,” said the great Yogi Berra. He was referring to the New York Mets’ season in 1973, but the sentiment could easily describe the fight to stave off cuts to federal crop insurance this year.

Last month, leaders in Washington included a provision to cut crop insurance in a budget deal that was negotiated at the last minute and without any consultation with farmers and rural lawmakers. The agricultural community pushed back and leaders from the House and Senate Agriculture Committees were able to secure an agreement to remove the harmful provision in the upcoming omnibus spending bill that’s due to be revealed and considered in early December.

But, that promise is just a promise until it is included in the bill; it passes in Congress, and the president signs it into law. This reality is why a diverse group of farming organizations, agricultural businesses, banks and others sent a letter to Capitol Hill on Thursday reminding them of their commitment to farmers and ranchers across the countryside.

“We urge you to uphold the promise to make the crop insurance program whole again without re-opening the farm bill,” they write in the November 19 letter. “The crop insurance program is a linchpin of the farm safety net and is crucial to the economic security of rural America.”

The groups highlighted that farm spending and, specifically, crop insurance has been cut by billions to help balance the federal budget, but this cut in the budget goes too far saying it “would gut the private sector delivery” at a time when insurers are already seeing red. “The inevitable result of this provision would be industry consolidation, reduced choice in insurance providers for all farmers, and a dramatic decline in the availability and service of policies,” they explain.

Lawmakers will need to pass an omnibus spending bill to prevent a government shutdown by December 11. That’s when a stopgap measure, known as a continuing resolution, is set to expire.

The full letter is below and linked here:

November 19, 2015

All Senators:

Crop insurance is a linchpin of the farm safety net and is crucial to the economic security of rural America. We write today first to thank those Members who came to the defense of crop insurance during the recent budget debate. We also write to express our strong support for the agreement to unwind both the policy and the cut to crop insurance during the omnibus. We applaud assurances that any funding needed for this correction will not come out of the jurisdiction of the Agriculture Committees.

The agriculture community is strongly committed to the belief that balancing the Federal budget is important, which is why the industry supported the passage of the 2014 Farm Bill just last year that saves tens of billions of dollars. The bill is a careful balance of priorities and should not be reopened before its expiration in 2018. Additionally, crop insurance has contributed well over $12 billion towards reducing government spending since the 2008 Farm Bill. For these reasons, the industries represented on this letter should not be impacted by any necessary offset.

The crop insurance provision contained in the recently-enacted budget deal would gut the private sector delivery of crop insurance by cutting USDA’s assumed target rate of return by 38%. Since the 2011 Standard Reinsurance Agreement (SRA) was implemented by USDA, crop insurance providers have averaged negative net returns. The inevitable result of this provision would be increased industry consolidation, reduced choice in insurance providers for all farmers, and a dramatic decline in the availability and service of policies. This cut would ultimately end private sector delivery of crop insurance.

The alternative to a successful crop insurance system is often ad hoc disaster assistance, which is subject to the whim of Washington, is paid for entirely by the taxpayer, is not delivered in a timely manner, and may help a producer survive a disaster but does not help manage risk. Ad hoc disaster assistance also does not provide the confidence needed by lenders to provide farmers and ranchers the capital they need to produce our nation’s food, fuel and fiber. Today, the vast majority of cropland is protected by crop insurance, which has allowed U.S. farmers and ranchers to face back-to-back years of wide scale natural disasters without annual calls for ad hoc disaster bills.

Farmers and lawmakers agree that crop insurance is an essential risk management tool in a farmer’s risk management toolbox. As an omnibus appropriations bill is negotiated, we urge you to uphold the promise to make the crop insurance program whole again without re-opening the farm bill.

Sincerely,

American Bankers Association
American Association of Crop Insurers
American Farm Bureau Federation
American Farmland Trust
American Insurance Association
American Malting Barley Association
American Sesame Growers Association
American Society of Farm Managers and Rural Appraisers
American Soybean Association
American Sugarbeet Growers
Association of Equipment Manufacturers
California Association of Winegrape Growers
Council of Insurance Agents and Brokers
Crop Insurance and Reinsurance Bureau
Crop Insurance Professionals Association
Ducks Unlimited
Equipment Dealers Association
Farm Credit Council
Financial Services Roundtable
Florida Sugar Cane League
Independent Community Bankers of America
Independent Insurance Agents & Brokers of America
National Association of Mutual Insurance Companies
National Association of Professional Insurance Agents
National Association of State Departments of Agriculture
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 Grain and Feed Association
National Peach Council
National Potato Council
National Sorghum Producers
National Sunflower Association
Reinsurance Association of America
Rio Grande Valley Sugar Growers
Southern Peanut Farmers Federation
Southwest Council of Agribusiness
U.S. Apple Association
U.S. Beet Sugar Association
U.S. Canola Association
U.S. Dry Bean Council
U.S. Rice Producers Association
U.S.A. Dry Pea & Lentil Council
U.S.A Rice
United Fresh Produce Association
Western Growers Association
Western Peanut Growers Association