Some Republicans on the Senate Agriculture Committee are calling for increasing premium subsidies for crop insurance policies that will cover up to 85% of a farmer’s revenue risk without jeopardizing their eligibility for farm bill commodity programs.
The Federal Agriculture Risk Management Enhancement and Resilience (FARMER) Act, led by Sen. John Hoeven, R-N.D., and supported by the Ag Committee’s ranking Republican John Boozman, is intended to counter a proposal that Senate Ag Committee Chairwoman Debbie Stabenow, D-Mich., has been pushing for several months.
Hoeven’s plan, which he said would cost $4.1 billion over 10 years, would increase the premium subsidy for 85% coverage from the current 53% to 63%. Subsidies on crop insurance policies generally average about 62%.
“We need more farm in the farm bill. … That means we've got to enhance crop insurance, which is exactly what this bill does,” Hoeven said at a Capitol news conference Tuesday.
He said it would also reduce the need for ad hoc disaster aid, although he acknowledged that it would not prevent a future Congress from passing additional assistance for farmers.
“It is the most cost-effective way to make sure that farmers are much better covered year in and year out, both in terms of weather and price. … Common sense tells you that's going to mitigate the need for ad hoc disaster packages,” he said.
Stabenow’s plan is to make all farmers eligible for a policy along the lines of the STAX policy, now limited to cotton growers. STAX allows farmers to insure 75% to 90% of their county’s expected revenue, with the government picking up 80% of the premium, but farmers who sign up for STAX can’t enroll the same commodity base acreage in the farm bill’s two main commodity programs, Price Loss Coverage or Agriculture Risk Coverage.
Senate Ag Chairwoman Debbie Stabenow, D-Mich.PLC triggers payments when the average annual market price for a commodity falls below its PLC reference price for that year. ARC provides payments when crop revenue falls below a five-year rolling average.
Hoeven’s bill also would make cotton growers eligible for the Supplemental Coverage Option, a product similar to STAX that lacks the PLC prohibition. SCO covers up to 86% of county-level revenue with a 65% federal subsidy. Farmers can increase their coverage further by purchasing the Enhanced Coverage Option on top of SCO.
Hoeven’s bill has the endorsement of several major farm groups, including the American Farm Bureau Federation, National Corn Growers Association, American Soybean Association and the National Association of Wheat Growers, and National Cotton Council, as well as the Crop Insurance and Reinsurance Bureau and the Crop Insurance Professionals Association.
“The FARMER Act makes a wise and targeted investment into the importance of yield and revenue protection policy, helping farmers afford to purchase higher levels of crop insurance,” Kenny Hartman, an Illinois farmer who is first vice president for NCGA, said at the news conference with Hoeven, Boozman and two other Senate Ag members, Cindy Hyde-Smith, R-Miss., and Roger Marshall, R-Kan.
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Hoeven said the estimated 10-year cost of the bill at $4.2 billion was relatively insignificant for a bill that is projected to cost $1.5 trillion. More than 80% of the bill’s total cost is in SNAP and other nutrition assistance programs.
“We can pay for that all day long and twice on Sunday,” he said of the crop insurance proposal. “It's the most cost-effective big-time benefit we could possibly have in the bill.”
The legislation also authorizes a study meant to address concerns about SCO in states such as North Dakota, where counties are larger. The study is supposed to review the feasibility of providing coverage for counties larger than 1,400 square miles “at a level smaller than county-wide; and at a level greater than individual coverage.”
Stabenow said in a statement that crop insurance was the "No. 1 tool in the farm safety net, and I’m glad that Senator Hoeven and others are exploring ways to improve it rather than just focusing on reference prices. I floated a proposal in January that would give farmers an additional choice of enhanced crop insurance to try to shake things loose on farm bill negotiations. I’m glad this worked."
Stabenow had told Agri-Pulse her proposal was intended to “jump start” negotiations on the farm safety net. She said that allowing growers to participate in ARC or PLC at the same time they’re getting increased insurance at lower cost would open the insurance program to new attacks from industry critics.
Anne Schechinger, Midwest director for the Environmental Working Group, which has called for reducing premium subsidies, said in a statement to Agri-Pulse that the higher coverage levels were “already highly subsidized and are very expensive for taxpayers. Because they are the largest coverage levels available, the total dollar amounts of subsidy for these policies [are] already often very large.”
Joshua Sewell, director of research and policy for Taxpayers for Common Sense, said it would be irresponsible for Congress to increase premium subsidies “when we’re trying to enforce fiscal restraint in other parts of the farm bill.” The cost of the increase should at least be offset by cuts to other farm programs, he said.
It remains unclear whether Congress will pass a farm bill this year.
House Agriculture Committee Chairman Glenn “GT” Thompson, R-Pa., told Agri-Pulse Tuesday he plans to move a bipartisan farm bill through the panel next month and that he has found a way to pay for changes farm groups want in their federal safety net.
Still, Senate Majority Leader Charles Schumer, D-N.Y., omitted the farm bill from a list of priorities that the Senate needs to consider in coming weeks and months.
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