Conaway working on deal to stop crop insurance cut
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WASHINGTON, Oct. 28, 2015 - House Agriculture Chairman Mike Conaway was leading last-minute negotiations with congressional GOP leaders on a deal to avert a $3 billion cut to crop insurers contained in a two-year budget agreement.“We're working on a solution,” the Texas Republican said as he emerged from a brief, closed-door briefing of committee members at about noon. The House vote on the bill was scheduled for late Wednesday afternoon.
Conaway declined to discuss details of the discussions. But earlier, at a news conference on child nutrition, Senate Agriculture Chairman Pat Roberts, R-Kan., said that the GOP leadership had agreed with Conaway “on four points that would really help us.” Roberts added, “We're trying to take care of it. This proposal would have devastating effects on rural areas.”
Two sources familiar with the talks said it wasn't clear at the time of the noon briefing whether Conaway was going to have to come up with an alternative way to produce the $3 billion in savings. Conaway has argued that the $3 billion could easily be found in non-agricultural programs.
The budget agreement would impose a target rate of return of 8.9 percent for the 17 insurance companies approved to write crop insurance, down from the current 14.5 percent.
The cut would be made through renegotiating the Federal Crop Insurance Corporation's Standard Reinsurance Agreement (SRA) with the companies. Since 2011 the rate of return has varied from a loss of 15 percent in fiscal 2012, a drought year, to a gain of 13 percent in fiscal 2014. Insurance companies argue that their real rate of return is closer to 4 percent.
The cut would help offset the cost of raising limits on defense and domestic spending in fiscal 2016 and 2017.