Kansas Corn Opposes Proposed Budget Deal with $3 Billion in Crop Insurance Custs

A $3 billion cut in crop insurance is part of the budget and debt ceiling agreement that has been negotiated for a vote in the House of Representatives is expected to take place tomorrow (Wednesday, Oct. 28).  The Kansas Corn Growers Association urged its grower members to contact their Representatives and tell them to reject this provision in what is being called the “Bipartisan Budget Agreement of 2015”.


This cut to the crop insurance program would come at a time of low commodity prices, when farmers’ incomes are already expected to take a significant dip, and also after the ag industry and Congress worked together in recent years to pass a package of farm policy that already cuts $23 billion from the U.S. budget. Essentially, this agreement violates Congress’s pledge not to reopen the 2014 Farm Bill.


“You only have to look at the state of the farm economy with today’s low crop prices to understand that this is the wrong time to make additional cuts to the crop insurance program,” KCGA CEO Greg Krissek said. “It is wrong for Congressional leaders to target agriculture, which accounts for less than one-quarter of one percent of federal spending and has already taken significant cuts in recent years.”


The bill forces a new SRA (Standard Reinsurance Agreement) directly targeting crop insurance companies and the delivery structure for savings.  By reducing the cap on the rate of return from 14 percent to 8.9 percent, the Congressional Budget Office has scored the impact at $3 Billion.


Talking Points:

–The proposed cut to federal crop insurance is yet another attempt to reopen the 2014 Farm Bill despite major reforms and $23 billion in budget savings.


–There is a reason that long ago Congress approved a private public partnership to deliver federal crop insurance – it is far more cost effective than any other alternative.


— The crop insurance industry and rural America are already facing a financial downturn due to lower commodity prices.  Additional cuts could very well put some of the insurers at risk and accelerate consolidation in the industry. Ultimately, corn growers will feel the impact of these cuts as our choices of insurers and agents decline.


–The federal crop insurance program is the most critical piece in growers’ risk management tool.  It is the main reason ad hoc disaster assistance is a thing of the past.


Senators Pat Roberts and Jerry Moran have both stated their opposition to the crop insurance cuts. Senator Roberts, Senate Ag Committee Chairman, made this statement today: “Farmers and ranchers have done more than their fair share to reduce government spending. To target the number one priority for producers with additional cuts will undermine the delivery of this important protection for agriculture. While Congressional leaders may sell this package as providing budget stability, it is anything but stable for farmers and ranchers. It took years to negotiate and pass a new Farm Bill. Producers have signed contracts and purchased policies. These proposals to make further cuts to the crop insurance program were not included in the House or Senate passed budgets, in any appropriations bills or in the President’s budget request. Once again, our leaders are attempting to govern by backroom deals where the devil is in the details. I will continue to oppose any attempts to cut crop insurance funding or to change crop insurance program policies.”