Senate Bill to Cap Federal Crop Insurance Premium Subsidies

In February Senators Jeanne Shaheen (D-NH) and Pat Toomey (R-PA) introduced a bill to cap federal crop insurance premium subsidies at $50,000. The Congressional Budget Office estimates the cap would save roughly $2.2 billion over 10 years.

On average, federal crop insurance subsidies cover 62% of the premium cost. These premium subsidies are completely unlimited, meaning the largest and wealthiest farms receive premium subsidies on every acre they farm. A Government Accountability Office study from 2012 pointed to an example of one farmer who insured crops in eight counties and received about $1.3 million in premium subsidies.

The same study suggested that only 2.5% of producers nationwide would have been affected by a $50,000 premium support limit in 2011. Those are the largest and wealthiest farms. They use their premium subsidies to bid land away from beginning and small and mid-sized farms.

The cost of the federal crop insurance program has risen sharply over the past few years. According to a 2012 Congressional Research Service report, crop insurance costs have gone from $3.9 billion in 2007 to over $14 billion in 2012.

While we firmly believe crop insurance is an important tool to help farmers manage risk, it isn’t the only tool. Conservation practices and systems are also a critical tool to help farmers manage risk.

Congress continues to attack federal conservation program spending despite the fact there is more farmer demand than resources available. Putting a cap on premium subsidies not only saves money, it provides critical funding to reinvest in the ultimate farmer tool box – conservation.

We are developing our ideas for crop insurance reform. We want to see the program restructured so it works for beginning, and small and mid-sized farmers, not against them. We welcome your thoughts, so please join the discussion. Call me at 402.687.2103 ext 1016 or email tracib@cfra.org.