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The Daily Journal - Farm Bill Sparking Crop Insurance Debate

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By Sally Schilling

The disastrous drought plaguing much of the country has put agriculture issues front and center. Farmers in the Midwest are losing crops, and much of their livestock is getting to be too expensive to feed. Farmers are blaming more than Mother Nature for their woes.

Congress has gone on its August recess without passing relief measures, or, more importantly, a farm bill. Farmers anxiously await the passing of a new five-year farm bill that they hope will renew government financial support for food growers.

Congress did not pass a farm bill before the recess because of conflicting views on how taxpayer money should be spent. Republicans in the U.S. House of Representatives are trying to reduce spending, while Democrats are against proposed cuts to food stamps. U.S. Rep. Jackie Speier, D-San Mateo, criticized the House farm bill, which would cut more than $16 billion from food assistance programs.

This cut would amount to a two percent reduction in the $772 billion budget for the Supplemental Nutrition Assistance Program over the next 10 years, according to the House Committee on Agriculture.

In response to proposals to cut spending on food stamps, Speier is shining a light on the large payouts that agribusinesses are securing through crop insurance subsidies.

"It's ridiculous for Big Ag interests to claim they need all these taxpayer subsidies -- $9 billion in 2011 alone -- to feed people, while they support a bill that would cut nutrition assistance by $16.5 billion," Speier wrote in an email to the Daily Journal.

Crop insurance

Speier's office says a more accepted crop insurance system is replacing the traditional direct subsidies to farmers.

Farmers pay private companies for crop insurance on yields, prices and revenue. Taxpayer money covers on average 62 percent of farmer's crop insurance premiums, according to Speier's office.

"The government doesn't cut farms a check -- it pays the insurers directly -- but these mega farms are getting below market insurance courtesy of taxpayers every year," said Speier.

Thomas Zacharias, president of National Crop Insurance Services, recently wrote a letter to the editor of the Washington Times in which he stated relying on crop insurance rather than direct payments will save taxpayers money.
"This year, most farmers will be able to rebound from historic drought, thanks to crop insurance," he wrote. "Unlike in the past, taxpayers will not stand alone to shoulder the costs. Farmers will pay more than $4 billion in premiums, and insurance companies will incur billions in underwriting losses."

The Congressional Budget Office estimates getting rid of direct payments to farmers would save taxpayers more than $66 billion over the next 10 years, but crop insurance subsidies will cost more than $90 billion over that same time period.

Transparency

Under current law, the U.S. Department of Agriculture must keep private the names of the farmers who receive crop insurance subsidies. Speier recently introduced the Crop Insurance Subsidy Transparency Act, which would require the USDA to disclose names of farmers receiving crop insurance subsidies.
"It's not fair that taxpayers foot the bill for $9 billion a year in crop insurance premiums and payouts, but we are not allowed to see who benefits from government funded discounts the way we are able to see which agribusinesses receive direct payments," Speier said in a press release.

She criticized the past farm bill for primarily subsidizing insurance of the five big commodity crops -- corn, wheat, soy, rice and cotton -- versus small fruit, nut and vegetable farmers that are crucial to California.

"We know Big Ag is getting the lion's share of premium subsidies compared to small family farmers -- including our farmers in San Mateo County -- but we don't know who the big interests are, because they can hide behind a veil of government secrecy," she wrote in an email.

While the names of the farmers are not available, the Environmental Working Group has researched how the funds are allocated. The EWG found that in 2011, more than 10,000 individual farming operations received more than $100,000 in crop insurance subsidies, with 26 farming operations receiving more than $1 million in subsidies.

National Crop Insurance Services declined the Daily Journal's requests for comment on Speier's bill. A representative from the California Farm Bureau said the bureau has yet to take a position on the bill.


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