As lawmakers prepare to write a new farm bill, ag groups are revisiting the idea of creating a permanent disaster aid program to supplement farmers’ crop insurance policies.
But congressional budget rules and ongoing concerns that a standing disaster program could undermine the crop insurance system will make it as difficult as ever for lawmakers to agree on a proposal.
Lawmakers face an even tougher budget challenge than they did in 2008, the last time they attempted to create a permanent disaster program.
In 2008, Sen. Max Baucus, a Montana Democrat whose farmers have long struggled with droughts and other disasters, was chairman of the Senate Finance Committee, which controls tax policy. The committee authorized the use of nearly $3.8 billion in tariff revenue to pay for a suite of new disaster programs including the Supplemental Revenue Assistance Program, or SURE, which was designed to supplement crop losses not covered by insurance.
But SURE had at least one fatal flaw: That $3.8 billion, while a large pot of money for farm programs, wasn’t even close to enough money to ensure SURE’s permanence, so lawmakers funded the program for only four years. Under congressional budget rules, if the program had been funded for any longer than four years, lawmakers would have had to come up with the money to keep it funded for a full 10 years.
Lawmakers will face an even bigger funding hurdle in 2023 when they are due to write a new farm bill. Baucus is long gone from Congress, and there is no obvious source of funding in or outside of the existing farm bill to pay for creating a major new program of any kind.
“Where do you get the money for anything in the farm bill? That’s a good question,” said former Rep. Collin Peterson, a Minnesota Democrat who was chairman of the House Agriculture Committee in 2008 and now advises the Midwest Council on Agriculture, a coalition that includes commodity groups and agribusiness interests.
Peterson doesn’t think there is much of a need for a SURE 2.0 either. Since 2008, the crop insurance system has been expanded to include more crops as well as livestock, dairy and other commodities, and some smaller livestock disaster programs that were authorized along with SURE were made permanent even as SURE was abandoned.
The crop insurance industry, meanwhile, worries that a permanent aid program would discourage the expansion of crop insurance participation.
“It is definitely harder to get folks interested in insurance when a free government check could be coming,” said an industry lobbyist who spoke on condition of anonymity. Existing law allows the creation of new crop insurance products — without additional funding from Congress — through a process known as Section 508(h), the lobbyist noted.
Jonathan Coppess, an assistant professor at the University of Illinois who oversaw the implementation of SURE as the administrator of USDA’s Farm Service Agency from 2009 to 2011, suggests that creating a new disaster program could discourage companies from developing insurance policies for additional crops.
“Why are you going to design an insurance program for those crops,” he said, "if there is at least the appearance” of a disaster aid program for them?
ERP is much less complex than SURE, which was triggered based on total crop revenue for an entire farm. ERP will provide supplemental payments for individual crops based on the amount of coverage a farmer paid for through crop insurance or the Noninsured Crop Disaster Assistance Program.
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The problem with making ERP permanent, but leaving it unfunded in the farm bill, is that the House and Senate Appropriations committees would then have to come up with the money to cover the payments, said Coppess. “I bet that would cause the appropriators no small amount of heartburn,” he said.
As long as disaster assistance is funded on a temporary, ad hoc basis under emergency spending rules, the Appropriations committees don’t have to find funding offsets to pay for the aid, Coppess said. The cost of the disaster aid is essentially added to the federal budget deficit.
There are few obvious places to find places to cut existing farm bill programs for a permanent disaster program. The Congressional Budget Office’s latest estimates for farm bill programs project lower spending levels for both commodity programs and crop insurance, shrinking the amount of money that could be trimmed from them.
The Supplemental Nutrition Assistance Program is growing significantly, but it would be politically risky, to say the least, for the Agriculture committees to be seen cutting nutrition spending to provide more money to farmers. Such a move could cause anti-hunger advocates and suburban and urban lawmakers to turn against farm programs.
The last major spending area in the farm bill is the conservation title, and there will be pressure on the Agriculture committees next year to find more money for conservation programs to help farmers adopt climate-friendly practices. President Joe Biden’s Build Back Better bill includes $27 billion in new funding for conservation programs, but the chance of those provisions becoming law continues to fade as the mid-term elections near.
Sen. Joe Manchin, a West Virginia Democrat whose support is critical to salvaging the bill’s climate-related provisions in the 50-50 Senate, told CNN this week that inflation is now his main concern. "The bottom line is how do we fight inflation?" Manchin said.
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