WASHINGTON, Feb. 15, 2012- Agriculture Secretary Tom Vilsack testified at the first Farm Bill hearing of the year today in front of Senate Agriculture Committee members. One of the first things Chairwoman Debbie Stabenow (D-Mich.) asked him to address was the reduction to crop insurance in President Obama’s budget proposal released this week.
“When the President looked at the agriculture budget, he had to decide whether to focus on an approach that took from all programs,” Vilsack said. “He opted not to take from nutrition programs.”
The nutrition title accounts for more than 75 percent of the entire Farm Bill. Its largest program, the Supplemental Nutrition Assistance Program (SNAP), serves more than 40 million Americans. The President’s FY 2013 budget proposal maintains all nutrition title funding, but cuts nearly $8 billion from the crop insurance program.
Vilsack explained the President’s crop insurance proposal as focusing on four elements. The first is to re-craft catastrophic coverage, which he said will not impact farmers. The second is to place a cap on administrative and operating expenses. The third is to adjust insurance companies’ return on investment (ROI) to a 12 percent return, which he said is adequate to support the industry. The fourth is a premium adjustment for farmers currently purchasing a policy that has a subsidy more than 50 percent of the premium.
“In the President’s view, these insurance companies are in a better position to withstand difficult times than people with tight budgets who can’t afford enough food for their families,” Vilsack said.
Senator Tom Harkin (D-Iowa) said he appreciated Vilsack’s comments about nutrition programs and that the President’s budget rightly keeps the safety net in place for low income people. Other Agriculture Committee members explained their constituents’ reliance on crop insurance in their farming operations, especially with the inevitable elimination of direct payments.
“We’re going to agree to disagree on crop insurance,” said Committee Ranking Member Pat Roberts (R-Kans.).
“What baffles me is that instead of looking for new and innovative ways to protect producers as well as taxpayers, the President’s budget dusts off old policy proposals that Congress has continually rejected,” Roberts said in his opening statement.
Senator Mike Johanns (R-Neb.), Secretary of Agriculture under President George W. Bush, asked the current Secretary about the President’s proposal to maintain the Supplemental Revenue Assistance Program (SURE). He said his constituents view crop insurance as their best risk management tool.
“I have yet to have a producer tell me he wants me to fight for SURE,” Johanns said. “It just doesn’t work very well.”
Vilsack agreed that SURE, as the program exists now, is not the best risk management program to support crop insurance. However, he added that some type of program is needed to protect farmers against multiple losses.
“The problem with SURE is it’s a dollar short and a day late,” he said. “If we continue with it, we clearly have to change the program so it’s relevant today. We see our role as working with you to improve it.”
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