President’s insurance ideas rejected
Members of both the Senate and House agriculture committees showed more resistance to proposed cuts to crop insurance put forth in President Barack Obama’s 2012 budget this week.
“I would hope that we would reject the president’s proposal on crop insurance,” House Agriculture Committee Chairman Frank Lucas (R-OK) told Agriculture.com Wednesday.
The crop insurance program has already taken big cuts twice, Lucas said. first in the 2008 Farm Bill and again in USDA negotiations with the insurance industry in 2010.
“Now to ask for basically $8 billion more to come out of crop insurance, I worry that the pump will loose prime,” Lucas said.
The effect of those cuts will be to raise premiums and farmers in some marginal areas may decide not to participate, Lucas said. Because an insurance program pools risk of a large number of participants, that could weaken crop insurance.
“If we shrink the pool, we’ll basically implode the program,” Lucas said.
Lucas has been a strong supporter of direct payments in the past, arguing that they comply with World Trade Organization rules against trade-distorting subsidies. The President’s budget also proposes eliminating those payments.
“If you’re going to step away from direct payments, how do you create a functioning safety net?” Lucas asked.
Lucas argues that the funds from direct payments should be used to do that. If Congress decides to add more price protection to revenue insurance, “that’s going to take more money, not less money,” he said.
At the same time Lucas was sharing his views with Agriculture.com, the Senate Agriculture Committee was holding its first hearing on a potential 2012 Farm Bill.
There, too, members voiced strong support for crop insurance.
Senator Mike Johanns (R-NE), who served as Secretary of Agriculture under President George W. Bush, said Wednesday that ,”overwhelmingly producers are telling me they think risk management is the key element of the next farm bill.”
And, while Nebraska farmers are voicing strong support for crop insurance, Johanns said he has yet to hear anyone say they liked the SURE program, a permanent disaster program called Supplemental Revenue Assistance Payments. The Obama Administration’s budget proposal would continue spending for a disaster program.
“I understand the politics of that, but quite honestly it doesn’t make any sense to me whatsoever,” Johanns told the current Ag Secretary, Tom Vilsack, who was testifying to the committee.
When the 2008 Farm Bill was written, a permanent disaster program had strong backing in the northern Great Plains, represented by influential Senate Ag Committee members Max Baucus (D-MT) and Kent Conrad (D-ND).
Vilsack conceded that the SURE program has been “a day late and a dollar short.” Its payments arrive about a year later than crop insurance. But he said it was needed to help overcome the shortcomings of crop insurance when farmers have multiple years of losses.