The U.S. House of Representatives approved the Bipartisan Budget Agreement of 2015 Wednesday that includes proposals to re-open the 2014 farm bill and subject crop insurance subsidies to severe cuts.
But strong opposition from agricultural interests resulted in an agreement that those cuts will be reversed in an upcoming omnibus spending bill. The omnibus could be done by Dec. 11, when the continuing resolution currently in place expires.
House Agriculture Committee Chairman Michael Conaway and Ranking Member Collin Peterson, said ag committee members were assured the cuts would be reversed.
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“I want to thank my colleagues who have made it very clear over the last 24 hours that the attempt to gut crop insurance in the budget agreement was not acceptable,” Conaway said. “Our nation's farmers and ranchers did their part in reigning in our nation's debt in the 2014 farm bill, saving an estimated $23 billion. It is imperative that we do not undermine their trust by attacking the primary tool they use to manage the tremendous risks involved in producing food and fiber.”
“I'm pleased that we have an agreement to fix the crop insurance cuts and not open the farm bill,” Peterson added. “We have assurances that the cuts will be removed and the farm bill will not be raided. We produced a fiscally responsible and bipartisan farm bill in 2014 that saved $23 billion. We've done our part. I can now support the Budget Agreement with these assurances."
“Leadership has heeded our concerns by agreeing to completely reverse this disastrous provision in the upcoming omnibus. Crop insurance is working as intended, and private industry deserves to be lauded, not thrown under the bus,” Conaway said. “I take our leadership at their word when they committed to me and many of my colleagues that we will eliminate these harmful provisions in the not-so-distant future. While not the easiest path forward, this is a win for rural America and should be viewed as such.”
Insurance "all we have left"
Steve Verett, Executive Vice President, Plains Cotton Growers, Inc., Lubbock, Texas, said the overall result of the last few days of disappointment and concern regarding loss of crop insurance subsidies may be good for agriculture. “Agriculture as a whole rose up and said enough is enough,” he said. “This could be a positive for agriculture.”
He said pressure from the ag industry, speaking in one voice, was instrumental in the agreement to reverse the insurance subsidy cuts in the omnibus.
“No one liked the way it happened. Congressional leadership and the administration dumped it on us without consulting USDA or the ag committees. How could they expect no one to be concerned?
“We didn’t need this fight,” he added. He said agriculture, and particularly cotton, gave up a lot of their traditional safety net in the 2014 farm bill, leaving crop insurance as the main recourse for price and crop loss disaster. Cotton was removed from the farm bill as a covered commodity and now depends entirely on crop insurance for loss protection.
“All we have left is crop insurance,” said PCG President Shawn Holladay. “The proposed cuts to crop insurance would be pretty radical considering the money we saved in the last farm bill. It’s frustrating to farmers to know we got thrown under the bus in the dark of night with cuts so onerous that they could put many farmers out of business.”
He agrees with Verett that crop insurance is farmers’ most important safety net. Losing crop insurance support, he said, could jeopardize many billions of dollars in the High Plains to save $6 billion out of the budget.
“The proposal showed a total lack of understanding of crop insurance, of what crop insurance does and how it works.”
Losing the insurance subsidy would put a severe hardship on farm lending, said Dan Jackson, manager of Meadow Farmers Co-Op Gin in Meadow, Texas.
“Financing the next crop would be a nightmare,” Jackson said. The hit to crop insurance on top of a struggling cotton crop, a costly production season and a low price likely would put some of his clients out of business.
He said it would be particularly hard on younger farmers who have not had time to build equity. “The only backstop cotton farmers have is crop insurance. We were set up to take a hit we didn’t need. And we were hit hard by the last farm bill.”
All agreed that the manner in which these cuts were determined rankled farmers and agricultural interests. No one consulted the ag committees or USDA. Jackson said no one would have liked the possibility of re-opening the farm bill but if it had to be done the best option would have been to consult the ag committees and at least discuss where cuts could be made with the least damage to farmers.
They now at least have assurance from congressional leaders that the cuts agreed to on Wednesday will be short-lived and reversed with the omnibus spending bill. And Congress has heard from a united agricultural front.