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Proposal Would Reform Bloated Crop Insurance Program

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For Immediate Release: 
Thursday, November 5, 2015

WASHINGTON, D.C. – Legislation introduced in Congress today would ease the burden placed on taxpayers and the environment by the bloated federal crop insurance program, according to the Environmental Working Group.

The bill was introduced in the Senate by Sens. Jeff Flake (R-Ariz.) and Jeanne Shaheen (R- N.H.) and in the House of Representatives by Reps. Ron Kind (D-Wis.) and Jim Sensenbrenner (R-Wis.). It endorses the new target rate of return for crop insurance companies prescribed in last month’s budget deal, making the bill especially timely. The budget deal approved by the House would lower the guaranteed rate of return from 14 percent to 9 percent, saving taxpayers $3 billion over 10 years.

“The cuts included in the budget deal are a step in the right direction, but more needs to be done if we want to reform crop insurance to protect family farmers, taxpayers and the environment,” said Scott Faber, EWG’s senior vice president of government affairs. “The Flake-Kind bill demonstrates that reasonable reforms could generate significant savings and still provide farmers a robust safety net."

The legislation introduced today, titled the Assisting Family Farmers through Insurance Reform Measures (AFFIRM) Act, would subject crop insurance premium subsidies to means tests, payment limits and greater transparency in order to achieve additional savings. Adopting these reforms – which are already applied to other farm subsidies – would save taxpayers more than $24.5 billion over 10 years.

“The crop insurance savings laid out in the budget deal are just the tip of the iceberg,” said Craig Cox, EWG’s senior vice president for agriculture and natural resources. “The last farm bill ended the much derided direct payment program but re-directed those funds toward the crop insurance program, guaranteeing big profits for crop insurance companies and virtually guaranteeing payouts to farmers.”

EWG released a new report today that debunks the argument made by the industry that crop insurance is less costly than ad hoc disaster relief bills for agriculture. The analysis found that over the six years that Congress authorized large ad hoc disaster relief programs, the total cost to taxpayers for crop insurance was almost $20 billion, nearly a third more than disaster payments.