Gearing Up for the Big Fight

January 5, 2016 Leave a comment


By Traci Bruckner, tracib@cfra.org, Center for Rural Affairs

Crop insurance is an important and necessary component of an effective farm safety net. However, it is a very complex program that will work more effectively with much-needed, commonsense reforms.
Under current law, we are subsidizing crop insurance at an average rate of 62% on every acre without limit regardless of farm size or wealth. We have an issue with that. Our tax dollars – the public trust – subsidize the largest operators no matter how big they get.
To be certain, crop insurance is a valuable and necessary tool for farmers. Fundamentally, we believe in government helping family-scale farmers manage risk. But, we think there ought to be a limit.
One federal study points to a single farming corporation that insured crops across eight counties and raked in $1.3 million in taxpayer subsidies in just one year. In turn, the largest and wealthiest farms use their premium subsidies to bid land away from smaller farmers and beginning farmers.
We are working to develop policy reforms that cap subsidies, create opportunity for beginners and diversified farmers, and link meaningful stewardship practices to enrollment in the program. The nation’s largest farms must carry their fair share of the cost of doing business, like any other economic sector.
This will be a tough fight. We don’t expect to win easily. But for over 42 years we’ve been fighting for family farmers and ranchers. We’re not backing down when it comes to crop insurance reform.

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Budget Deal has Implications on Agriculture

October 28, 2015 Leave a comment


This week, the White House and Congressional leaders struck a tentative budget deal that provides a framework and additional funding needed to allow Congress to complete the annual appropriations funding legislative process.
According to Traci Bruckner, Senior Policy Associate at the Center for Rural Affairs, the budget deal contains significant implications for agricultural and Farm Bill programs. “This bill takes a small step in reforming federally subsidized crop insurance programs by reducing the cap on the profits that crop insurance companies extract from administering the program from 14.5 percent to 8.9 percent,” said Bruckner. “In addition, it also indicates that the Standard Reinsurance Agreement must be renegotiated by December 31, 2016 and once every five years thereafter.”
“This is a small but a positive step forward,” noted Bruckner. “Insurance companies have been one of the largest beneficiaries of the subsidized crop insurance program. They witnessed double digit returns over the last decade or more, with one year being as high as 34%. During belt-tightening times, it is most appropriate to ask crop insurance companies to accept a reduction in the profits from federal subsidies that they receive.”
“Moreover, the budget deal scraps the Farm Bill provision that prevented taxpayers from benefiting from government negotiations with the private sector over the delivery of crop insurance,” added Bruckner. “This was an outrageous gift to the crop insurance lobby and it is a policy that should never have seen the light of day.”
Bruckner noted further that while there is a great deal more crop insurance subsidy reform needed to support and protect family farmers and the environment, renegotiation is a small but important first step toward much needed comprehensive reform.
“And with the additional funding the budget deal provides to the appropriators to finish the fiscal year 2016 funding bills, Congress has the opportunity to turn back the tide on cuts to conservation,” Bruckner continued. “Congress should move quickly to eliminate the 23 percent cut to the Conservation Stewardship Program in the pending House bill and the $300 million cut to the Environmental Quality Incentives Program that is currently included in both the House and Senate bills.”
“Opponents of cuts to crop insurance company profits have criticized ‘opening up the Farm Bill’ but those criticisms ring hollow when compared to how often Congress has opened up the Farm Bill to cut conservation programs,” concluded Bruckner. “It is disingenuous to use rhetoric about family farmers to protect crop insurance company profits while at the same time cutting the conservation programs that farmers and ranchers depend upon to improve soil and water quality, conserve water, and prepare for extreme weather events.”

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Federal Crop Insurance Gets Failing Grade

July 21, 2015 Leave a comment


By John Crabtree, johnc@cfra.org, Center for Rural Affairs

At the Center for Rural Affairs, we’ve heard from farmers across the Midwest and Great Plains about the negative impacts of federally subsidized crop insurance for over a decade. A farm safety net is important to help family farmers mitigate risks, but there are real concerns with the current crop insurance program. The best way to begin addressing those concerns is through honest assessment of the crop insurance system.

Toward that end, the Center for Rural Affairs recently released a crop insurance report card, entitled:Promises vs. Performance: A Report Card Evaluating Federal Crop Insurance. Most of the grades awarded are not what parents would hope to see on their own child’s school report, and the accompanying Policy Brief offers further analysis and recommended reforms to improve the performance of the crop insurance system. In overall performance, crop insurance received a failing grade (www.cfra.org/crop-insurance-reform).
Subsidizing the nation’s largest and wealthiest farms on every acre, every year, regardless of crop prices, production or farm profitability, puts America’s natural resources at risk. And, absent reform, crop insurance gives mega-farms an advantage in bidding up land costs, driving their smaller neighbors out of business, and preventing the next generation of farmers from ever getting started.
The impact crop insurance will have on future years of farming practices is significant, making reform of the federally subsidized crop insurance system vitally important to the future of rural and small town America.

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Conservation, Crop Insurance and Tax Dollars

June 16, 2015 Leave a comment


By Rachael Meyer, rachaelm@cfra.org, Center for Rural Affairs

America loves farmers. Our government loves them so much that they subsidize, on average, 62 percent of their crop insurance premiums. Crop insurance provides a safety net for farmers when things go wrong, and premium subsidies were intended to get more farmers interested in using crop insurance.
 
Crop insurance guarantees income year after year, but does not require much at all in terms of good soil and water conservation from farmers. Since farmers know they are guaranteed income, there is nothing stopping them from increasing insured acreage by planting marginal land, or land that is unsuitable for farming. Insurance companies ultimately hand farmers a nice cash reward for damaging the heartland.
 
To cut the budget, congress took money out of programs that support conservation such as the Conservation Stewardship Program. At the same time that they made this decision, they had spent $58.7 billion (from 2003-2012) on premium subsidies and administrative and loss reimbursements for insurance companies like Wells Fargo, which had $1.4 trillion in assets in 2013, and Ace, which had a $2.7 billion net income in 2012. But why put money toward conserving the soil and water we rely on for food when so much money goes to the very companies that are paying farmers through insurance regardless of their conservation efforts?
 
America needs to reexamine the effect crop insurance is having on our food industry or else taxpayers will continue to pour money into supporting farming practices that only destroy our environment.

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It’s Time to Reform Crop Insurance

May 20, 2015 Leave a comment


By Traci Bruckner, tracib@cfra.org, Center for Rural Affairs 

At the Center for Rural Affairs, we’ve heard from farmers across the Midwest and Great Plains about negative impacts of federally subsidized crop insurance for over a decade. A farm safety net is important to help family farmers mitigate risks, but there are real concerns with the current crop insurance program.

The federal government subsidizes crop insurance, paying 62% of premiums, on average, in 2012. Insurance policies are sold and completely serviced through 19 approved private insurance companies. Not only does the federal government pay the majority of producers’ premiums on every single acre, regardless of how large they are or how much money they make, insurance companies’ losses are also reinsured by USDA. In addition, the federal government reimburses the insurance company’s administrative and operating costs. In total, these insurance companies have lobbied and negotiated for guaranteed profits approaching a 14 percent return on their investment.
However, the current government subsidized crop insurance program is working against the very farmers we all believe deserve a safety net. The program is not transparent, props up private insurance company profits, and puts our natural resources at risk. Moreover, unlimited crop insurance subsidies result in mega-farms driving up land costs, driving their smaller neighbors out of business, and barring the next generation of family farmers from even getting a start.
The time has come for crop insurance reforms that emphasize conserving soil and water, put real limits on subsidies to the nation’s largest farms, and ensures these subsidies are transparent to taxpayers.

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