Top Ag Congress Leaders Suggest $23B in Cuts

DC Dialogue

Top legislators defend crop insurance cuts and groups voice support for revenue-based farm programs.

Published on: October 21, 2011

Leaders of the House and Senate Agriculture Committees sent a long awaited letter to the Super Committee Monday indicating an agreed upon $23 billion in farm program cuts over the next 10 years.

Following its submission, the House and Senate committees released a joint statement declaring they would be working in a bipartisan effort to prepare a more detailed proposal that outlines policy recommendations to achieve the $23 billion is savings, which is expected to be sent to the Super Committee by Nov. 1.

The bipartisan letter from Senators Debbie Stabenow, D-Mich., and Pat Roberts, R-Kan., chair and ranking member of the Senate Agriculture Committee, and Representatives Frank Lucas, R-Okla., and Collin Peterson, D-Minn., chair and ranking member of the House Agriculture Committee, identified that commodity program spending represents less than one quarter of one percent of the Federal Budget, and actual Commodity Title spending has been almost $25 billion below Congressional Budget Office projections at the time the 2002 and 2008 Farm Bills were passed. 

“Crop insurance underwent $6 billion in reductions through the most recent renegotiation of the Standard Reinsurance Agreement, $6 billion in cuts in the last Farm Bill and $2 billion in the 2002 Farm Bill. This totals $14 billion since the passage of the Agriculture Risk Protection Act in 2000,” the leaders wrote. “Conservation has been cut by over $3 billion during the last five years.  The Supplemental Nutrition Assistance Program (SNAP) was cut by nearly $12 billion in the last Congress to offset other spending.  In addition, there are also 37 programs, totaling nearly $10 billion, which expire and have no baseline into future years. “

A statement from Roberts noted, while he has strong concerns that this agreement disproportionately favors some programs over others, he has long stated that the most important program to our farmers and ranchers in managing their risk is crop insurance.

“I am pleased this agreement protects the crop insurance program by keeping its baseline whole, regardless of any interactions from other programs. We have consistently heard from producers, lenders and agriculture industries that crop insurance programs are the cornerstone to agriculture’s foundation and their top risk management priority. This agreement protects that foundation while contributing to the overall effort of deficit reduction,” Roberts said.

Currently on the table

Ahead of the committee’s suggestions, the wheels have been turning to help provide budget savings while also improving the current safety net.

One receiving plenty of traction is The REFRESH Act introduced by Senator Dick Lugar, R-Ind., and Rep. Marlin Stutzman, R-Ind. The REFRESH ACT’S safety net proposal draws on the Aggregate Risk and Revenue Management (ARRM) program put forward earlier this month by Lugar and Senators John Thune, R-S.D., Sherrod Brown, D-Ohio, and Dick Durbin, D-Ill. This program would provide a viable safety net for commodity producers that is fiscally responsible and reflects modern agriculture. Overall the bill was projected to cut $40 billion in spending, higher than the committee’s final recommendation of $23 billion.

Farm groups continue to throw their support behind the revenue-based farm program concept.

According to a joint letter signed by the National Corn Growers Association, American Soybean Association and National Farmers Union, the groups state, "A new revenue-based program should be designed to complement rather than overlap or replace the existing crop insurance program, which is a key part of the farm program safety net."

"We would note that, under a revenue-based program, compensation for losses that exceed a certain threshold would only be made as they are incurred, on all production and only on a portion of the loss," the letter stated. "This stands in contrast with the current Direct Payment program under which farmers receive payments regardless of whether they produce a crop or incur a loss."

According to an excellent analysis by Ohio State University economist Carl Zulauf of proposals on the table, 90% of the current farm bill proposals address both an existing hole in today’s crop insurance program: multiple-year revenue declines that are not the fault of the farm, and, the current imbalance in the farm safety net, shallow revenue losses. These nine proposals would in effect make the risk management safety net more equitable across crops and regions.

Let us know what your thoughts are about discussion you’ve heard on the cuts coming and where money could or should be saved. Thanks for your interest.