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Common-Sense Reforms Will Strengthen, Not Weaken, Crop Insurance

Monday, May 20, 2013

Opponents of crop insurance reform contend that common-sense reform designed to level the playing field for family farmers and protect taxpayers and the environment will “weaken” the farm safety net.

These defenders of the status quo have it exactly wrong.

Common-sense amendments to the farm bill to place reasonable limits on how much of a premium subsidy a farm operator can receive will strengthen the program while still providing farmers with a generous safety net. The very same reforms – payment limits, means testing, greater disclosure requirements and ending tobacco subsidies –already apply to other farm programs. And every measure of farm wealth – household income, net income and farm equity – is off the charts.

Limiting premium subsidies to $50,000 per farmer, reducing premium support for the largest and most successful farm businesses,  ending tobacco subsidies and allowing USDA to disclose who gets these subsidies to the public – all of these will make crop insurance much more equitable, transparent and fiscally defensible.

No wonder a coalition of environmental groups, food advocates and family farm organizations came together to call for crop insurance reform last week, saying:

We believe that reforms designed to require basic environmental protection, improve transparency and place reasonable limits on the amount of premium subsidies for the largest and most profitable farm businesses would not impact program participation but would create a more equitable, sustainable and fiscally responsible safety net.

And the White House weighed today (May 20) in support:

The Administration looks forward to working with the Congress to achieve crop insurance and commodity program savings that are not contained in S. 954, while at the same time strengthening the farm safety net in times of need and supporting the next generation of farmers.

The current program is in desperate need of reform.

Few Americans believe that some farm businesses should annually receive more than $1 million apiece each year in premium support, or that more than 10,000 policyholders should receive more than $100,000 each in annual insurance subsidies. And no one seems to think federal subsidies should still flow to tobacco farmers.

But under current law, the playing field is badly tilted in favor of the largest and most prosperous farms. While the largest 1 percent collect about $220,000 a year each in subsidies, the bottom 80 percent get only about $5,000 apiece.

Adopting reform amendments to the farm bill will strengthen a subsidy program that is slated to cost $90 billion over the next 10 years and making federal crop insurance easier to defend in the face of deficit reduction efforts. The absence of reform will bring only more scrutiny.