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Obama Budget Cuts Crop Insurance, Conservation

President Barack Obama’s proposed budget for the 2016 federal fiscal year, sent to Congress Monday, proposes cutting crop insurance subsidies to offset commodity programs that likely will cost more than projected when the 2014 Farm Bill was written. 

The budget, which the Republican-controlled Congress isn’t expected to completely support, would also cut back on the number of acres enrolled in the Conservation Stewardship Program (CSP) and trim mandatory spending for the Environmental Quality Incentives Program (EQIP).

The Obama Administration would like to cut crop insurance spending by $16 billion over 10 years, or $1.6 billion a year from a program that currently costs about $9 billion annually.

Agriculture Secretary Tom Vilsack told reporters Monday that the cuts in crop insurance spending might help offset rising costs for two new commodity programs, Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC).

With commodity prices falling, “it’s anticipated we’re potentially going to have to spend a lot more on ARC and PLC,” Vilsack said. 

The lion’s share of the crop insurance savings, $14.6 billion, would come from reducing the premium subsidy by 10 percentage points for revenue protection that includes harvest price coverage. Another $1.4 billion in savings would come from changing prevented planting coverage so that farmers can no longer buy another 5% or 10% coverage above the 60% of a crop’s guarantee that prevented planting covers. The program would also be changed to encourage planting of a second crop after the first was prevented.

Vilsack refused to put any odds on Congress going along with those crop insurance changes, but he said that he believes the agriculture committees want to keep the costs of the farm bill in line with its projected savings.

The Environmental Working Group (EWG) welcomed the crop insurance proposal Monday, saying that Revenue Protection policies “greatly overcompensate growers when crop prices rise during a drought. During the 2012 drought, many farmers covered by these policies actually made more money than they would have in a nondrought year.”

And lowering payouts the prevented planting changes “would lower the large payouts that encourage farmers to plow up wetlands or plant their crops on other risky and environmentally sensitive land.”

“The administration’s proposed reforms to these two subsidy programs are much-needed fixes that will save taxpayers billions of dollars and shield land and water from further abuse,” said Craig Cox, EWG’s senior vice president for agriculture and natural resources. 

Proposed cuts to conservation spending drew criticism from the National Sustainable Agriculture Coalition (NSAC).

“Just four days short of the one-year anniversary of the president signing the 2014 Farm Bill, the president now proposes to cut $859 million from the 2014 Farm Bill Conservation Title, including 3 million acres from the Conservation Stewardship Program in FY 2016 alone, which represents a five-year cut in farm bill mandatory spending of $486 million, according to the White House,” said Ferd Hoefner, NSAC policy director. “The budget request also includes a $373 million cut to the Environmental Quality Incentives Program for FY 2016.”

When asked about CSP, Vilsack said the administration still will be growing participation in CSP and that when new conservation partnerships are included, “I think you’re going to continue to see us add acres” protected by various conservation programs.

In contrast to USDA efforts to keep spending in check, the entire budget proposed by President Obama would raise federal spending by $259 billion, or 7% in the federal fiscal year that starts next October. 

That contributed to a skeptical response from Republicans in Congress who hold the federal purse strings.

“The President has the right to propose all manner of new spending and tax increases in his budget request, but I think a Republican-led Congress will insist on greater budget discipline,” said Senate Appropriations Committee Chairman Thad Cochran (R-MS). “Our country remains in a perilous fiscal situation, with debt levels projected to continue to rise to historic highs.  The president’s budget does not address that fact, and would actually increase our debt by trillions of dollars over the next 10 years.”

 “For its part, the Appropriations Committee will scrutinize the proposals under its jurisdiction and look closely at which programs are working well and which need to be improved or eliminated. We will work to ensure that tax dollars are used wisely and in the public interest,” he said.

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