Flake, Shaheen, Duncan introduce bill to cut crop insurance subsidies
Sens. Jeff Flake, R-Ariz., and Jeanne Shaheen, D-N.H., on Nov. 8 reintroduced a bill to eliminate subsidies for the Harvest Price Option crop insurance policies, and Rep. John Duncan, R-Tenn., introduced a companion bill in the House.
The Harvest Price Subsidy Prohibition Act would reduce the cost of the crop insurance program by $21.1 billion, according to the Congressional Budget Office, Flake said.
It would not prohibit the Agriculture Department from offering HPO plans provided that individual policyholders pay the full insurance premium, and would do nothing to limit, reduce or alter subsidies associated with other crop insurance plans, he added.
Flake saidhe first offered the Harvest Price Subsidy Prohibition Act in 2013 as an amendment to the farm bill.
“HPO is like insuring your car for $5,000, and getting a check for $10,000 after it’s totaled. It’s the kind of program that only makes sense in Washington,” Flake said.
“Making a living in agriculture isn’t easy or predictable, and there’s a case to be made for safety net programs such as traditional crop insurance,” he said. “But HPO isn’t a safety net, it’s a taxpayer-funded windfall. With a $20 trillion national debt, taxpayers shouldn’t be expected to pay Big Ag billions of dollars for profits that they never expected to earn in the first place.”
“We’re proposing a commonsense reform with the potential to save taxpayers $21 billion,” Shaheen said.
“This is a smart, pragmatic bill that will provide our current crop insurance program with a much-needed fix,” she said. “We ought to act on it immediately to save taxpayer dollars.”
“HPO is a bureaucratic name given to a subsidy program in our law which has allowed some foreign-owned insurance giants and the wealthiest farmers to get billions from U.S. taxpayers,” Duncan said.
“Senators Flake and Shaheen and I have reintroduced the Harvest Price Subsidy Prohibition Act to end this costly program which creates an unfair playing field for small family farmers.”
This measure also is supported by the Americans for Prosperity, National Taxpayers Union, Taxpayers for Common Sense, Coalition to Reduce Spending, The Council for Citizens Against Government Waste, Campaign for Liberty, R Street Institute and Environmental Working Group.
RISK MANAGEMENT TOOL
Tom Zacharias, president of National Crop Insurance Services, a research organization for the crop insurance industry noted that “crop prices are down” and farm families are “struggling,” and said this proposal “will make it nearly impossible for farmers to rebound.”
“The latest scheme specifically targets crop insurance policies that farmers pay more for out of their own pockets to provide some revenue stability amid price declines and low yields,” Zacharias said.
“These revenue policies are vital to farmers who forward contract crops and to farmers forced to purchase feed for livestock following the loss of their own crops,” he said.
“If proposals like this are enacted, farmers will lose an essential risk management tool and will again be forced to turn to Congress to pass expensive, taxpayer-funded disaster packages every time Mother Nature strikes.”
Scott Graves, the executive director of the American Association of Crop Insurers, said, “Crop insurance is a key component of the farm safety net and it is working well for both our nation’s farmers and taxpayers as evident by the latest figures from the Congressional Budget Office, which estimates savings at roughly $8 billion.”
“Further, there are no profit guarantees with crop insurance nor are their any hidden subsidies, so the premise of the arguments being made against the program are misleading as is their description of how basic crop insurance works,” Graves said.
“With crop insurance, farmers are spending their own money purchasing coverage and only receive an indemnity after suffering a loss and absorbing the policy deductible, which generally averages more than 25 percent,” he said.
“Farming is rife with risk and crop insurance policies are merely tools that farmers invest in to mitigate that risk.” ❖
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