WASHINGTON, March 5, 2013 – Sen. Jeff Flake (R-Ariz.) and Rep. John Duncan (R-Tenn.) introduced legislation (S. 446, H.R. 943) today that aims to cut about $40 billion in federal crop insurance subsidies over 10 years.
The Crop Insurance Subsidy Reduction Act would return federal crop insurance premium subsidies to their pre-Agriculture Risk Protection Act (ARPA) levels of 2000.
“The current U.S. fiscal crisis makes a strong argument for a common sense roll back of crop insurance subsidies,” Flake said, during a press conference to announce the introduction.
Flake said, based on USDA data, taxpayers spent $7.1 billion in 2012 on federal crop and revenue insurance premium subsidies for farmers, up from $1.4 billion in 2000.
“[The program] loses money whatever way it goes … good crop or bad crop,” Flake said.
Duncan said the largest 10 percent of farming operations receive 50 percent of the premium crop insurance subsidies.
“The crop insurance program has turned into a huge taxpayer-funded boon for some of the biggest, multi-national insurance companies and multi-millionaire farmers,” Duncan said. “In a time of record deficits and an incomprehensible $16.5 trillion in debt, this program can no longer be justified in its current form.”
Duncan said while farmers pay 34 percent of the premiums, the federal government pays 66 percent of the premiums.
Also speaking at the press conference, Bruce Babcock, economics professor at Iowa State University, said the current program has taken too much of the risk out of crop production, which leads to higher cash rents and land prices.
“Some land is too risky and they overplant,” Babcock said.
The legislation received the support of many groups, including the Environmental Working Group (EWG).
“Crop insurance should be the core of a safety net for farmers and ranchers, but the program has gone seriously off track since passage of the 2000 Agriculture Risk Protection Act,” said Craig Cox, EWG senior vice president of agriculture and natural resources.
Meanwhile, National Crop Insurance Services (NCIS) recently reported that, as of Feb. 18, farmers and ranchers have received more than $14.7 billion in indemnity payments.
NCIS said that farmers will invest more than $4.1 billion to purchase more than 1.2 million crop insurance policies.
The organization said farmers invested more than $4.1 billion to purchase more than 1.2 million crop insurance policies in 2012, protecting 128 different crops. Farmers have spent $28.6 billion to buy crop insurance in the past 10 years to protect more than 281 million acres of planted land, according to NCIS.
Updated 12:53 p.m., March 6
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