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Crop insurance linked to income, conservation

DANIEL LOOKER 06/19/2012 @ 11:00pm Business Editor

In what could be a historic change of fortune for the nation's crop insurance industry, the Senate voted Wednesday to link eligibility for coverage to meeting conservation rules, and it approved reducing premium subsidies for farms with adjusted gross income (AGI) above $750,000.

Neither change is law yet, but it will be part of the Senate's version of a farm bill that's expected to be finished on Thursday.

It would be the first time since 1996 that conservation compliance is required to buy crop insurance coverage. The close vote of 52-47 in favor of a conservation compliance amendment offered by Senator Saxby Chambliss (R-GA) was followed by a two-thirds vote in favor of the premium subsidy cut for large farms that was backed by Senators Tom Coburn (R-OK) and Dick Durbin (D-IL), who is the assistant majority leader for the Democrats in the Senate.

The crop insurance changes have a way to go before becoming law. The House of Representatives lags the Senate in writing a farm bill. Its ag committee markup has been pushed back to July 11 and the committee leaders have said they're against other ideas for limiting premium subsidies that were suggested this spring. If the House passes its own bill, the two pieces of legislation will have to be merged into one in a conference committee, where controversial proposals often die.

Still, the Senate rejected its own ag committee leadership's opposition to the Durbin-Coburn amendment by a vote of 66 to 33.

Coburn said his amendment was not as severe as an option studied by the Government Accountability Office that would have capped crop insurance premium subsidies for all farmers at $40,000.

TACKLING THE DEBT

That proposal didn't come up for a vote in the Senate. Instead, on Wednesday it considered Coburn's idea of lowering subsidies for farms above $750,000 in AGI. "If you want to save a billion dollars, if you want to tackle the debt, here's a way to save a billion dollars and not put anybody at risk," Coburn said.

Earlier in the day, Durbin spoke against an amendment by Senator John Thune (R-SD) that would have delayed Coburn's amendment with a USDA study.

Coburn's reduction in subsidies would affect only 1,500 farmers out of 1.5 million, Durbin said. For those large farms, the USDA premium subsidy would drop from an average of 62% to 47%.

The Thune amendment to stop the Durbin-Coburn amendment failed by a vote of 44-55.

Senate Agriculture Committee Ranking Member Pat Roberts (R-KS) spoke passionately against both changes. Programs are in the commodity title already have conservation compliance, he said, and linking compliance to crop insurance would be wasteful duplication. When farmers find out how much extra paperwork will be added to crop insurance, "You will have to hide in your office four weeks. Don't hide in your office....Vote no," he said.

And the Durbin-Coburn amendment would hurt smaller farmers, Roberts said.

"The rest will pay higher premiums when they (larger farms) are out of the program because that's what happens with an insurance pool," he said.

Reaction to the votes was swift.

“The National Corn Growers Association is very disappointed to see passage of Senator Saxby Chambliss’ conservation compliance for crop insurance amendment in the 2012 farm bill.  Our members have spent a significant amount of time discussing this issue and feel this addition to the farm bill would have a negative impact toward America’s farmers.  NCGA’s official policy states we oppose the coupling of conservation compliance to eligibility for federal crop insurance,” the group said in a statement.

A VOTE FOR CONSERVATION

At the National Sustainable Agriculture Coalition, its policy director, Ferd Hoefner commented,

"The bill reported by the Committee has been significantly improved these past two days.  The Brown (Ohio) amendment provides critical funding for rural jobs and new farming opportunities.  The Chambliss amendment brings common sense conservation protections to the farm safety net to protect the natural resources on which our food security depends.  The Durbin-Coburn amendment begins the process of targeting taxpayer support for crop insurance, saving money by reducing subsidies for mega farms.  The Merkley amendment starts to level the playing field for organic farmers with respect to crop insurance. 

The Grassley-Johnson amendment restores payment caps to the marketing loan program, completing the historic commodity payment limit reform in the underlying Senate bill. NSAC supported each of these amendments, and applauds the Senate for improving the bill with these important measures. We encourage passage of the bill tomorrow and urge the House to begin its farm bill process as soon as possible, with a goal of reaching a final bill this September."

   

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