R Street urges lawmakers to support Harvest Price Subsidy Prohibition Act

WASHINGTON (Feb. 12, 2015) – The R Street Institute applauds today’s introduction of the Harvest Price Subsidy Prohibition Act, sponsored in the U.S. Senate by Sen. Jeff Flake, R-Ariz., and Sen. Jeanne Shaheen, D-NH, and in the U.S. House by Rep. John Duncan, R-Tenn.

The legislation would rein in the most costly and extravagant federal crop insurance product, known as the harvest price option (HPO) policy. Because HPO policies give farmers the option to claim the higher of either the standard locked-in price for a crop or its market price at harvest, they can actually result in a farmer’s revenues exceeding the expectations when the crop was planted.

“Federal crop insurance payments repeatedly cost far more than projected, and this bill will go a long way toward securing vital protections for the American taxpayer,” said Andrew Moylan, R Street’s executive director. “These significant savings can be achieved while still allowing reasonable protections for farmers who rely on crop insurance as their main source of support.”

The Congressional Budget Office estimates the Flake-Duncan bill would save more than $18 billion over the next decade, with no effect on the premium subsidies farmers receive for standard crop insurance policies.

“We praise Rep. Duncan and Sen. Flake for their leadership on this important issue, and encourage their colleagues to both support the measure and to continue to look for ways to limit taxpayer exposure by shifting more risk into the private market,” said Moylan.