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In a Break, Disaster Relief Bills Could Pay Farmers’ Crop Insurance Premiums

When Congress passes disaster bills, the government commonly compensates growers for loss of crops and livestock with the proviso they buy crop insurance in the future so they are protected against catastrophic damage. Companion bills filed by Democrats in the House and Senate would go a step further by giving farmers the money to pay for the policies — a “terrible” expansion of the federally subsidized program, says a small-farm advocate.

Congress has been deadlocked over disaster aid for weeks due to President Trump’s opposition to aid to Puerto Rico beyond $600 million for food stamps and the insistence by Democrats that Puerto Rico and other U.S. territories need several hundred million dollars in additional reconstruction money. All sides agree that farmers and ranchers caught by blizzards and flooding in the northern Plains and western Corn Belt this year should be part of a disaster bill originally aimed at 2017 and 2018 hurricanes, wildfires, and volcanic eruptions.

More than $3 billion is earmarked for agriculture in bills written by both parties and pending in both chambers. Democratic bills filed last week say Agriculture Secretary Sonny Perdue can award the money in block grants “and such assistance may include compensation to producers, as determined by the secretary, for past or future crop insurance premiums, forest restoration, and poultry and livestock losses…” Both bills say that if they get a payment, growers “shall be required” for the next two crop years to buy crop insurance or coverage under a USDA program for crops that lack insurance coverage.

“It’s terrible. It’s awful. But there it is,” said Ferd Hoefner of the National Sustainable Agriculture Coalition, an advocacy group for small farmers and proponent of limits on subsidies to big operators. “Once again, the southern states set the parameters of what subsidy programs are going to be.”

At present, the government pays an average 62c¢ of each $1 in premium for crop insurance as well as paying part of the overhead for the program and sharing the burden in years of heavy losses. The USDA estimates it will spend $9.5 billion on crop insurance this fiscal year.

Crop insurance is the largest strand in the farm safety net. For farm groups, the top priority in the 2018 farm law was maintenance of a strong insurance system. Backers say crop insurance is preferable to farm supports because growers pay part of the cost of insurance and don’t see a payment until they suffer a loss.

Under the disaster bills, some growers effectively would pay nothing for insurance because the block grants could cover their out-of-pocket costs for premiums or give them a refund for previous premiums.

The disaster bill backed by Senate Republicans allows USDA to distribute aid money via block grants but is silent on crop insurance premiums as one of the potential uses. Like the Democratic bills, however, it includes a plum for the wealthiest farmers – eligibility for up to $125,000 in so-called Trump tariff payments.

Farmers with an adjusted gross income above $900,000 are barred from the Market Facilitation Program, the formal name for the administration program to offset the impact of trade war on the agriculture sector. The $900,000 AGI cap is used in other farm support programs.

Vice President Mike Pence took an aerial tour of flood damage near Pacific Junction, Iowa, near the confluence of the Platte and Missouri rivers, on Friday and remarked “how much water is still here and how much devastation still exists.” Congress should “approve disaster assistance bill for Iowa and Nebraska, and do it now,” said Pence at the century-old Lincoln’s Ridgeview Farms near Pacific Junction.

In southwestern Georgia, “many farmers are resorting to desperate measures as they wait for Congress to approve emergency aid six months after (Hurricane) Michael brought the region to its knees,” said the Atlanta Journal Constitution. “Without imminent help from Washington, some local farmers warn they could be forced to sit out the upcoming planting season, sell off land, or even leave agriculture for good.”

The $13.5 billion GOP disaster bill is available here.

For information about the $17.2 billion disaster bill filed by House Appropriations Chairwoman Nita Lowey, click here.

To read about the companion bill backed by Senate Democratic Leader Chuck Schumer, click here.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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