House, Senate Propose Generous Farm Bills
R.J. Lehmann, a senior fellow at the R Street Institute, a conservative think tank, says the House Farm Bill is even more generous than the Senate version. He says, according to projections from the nonpartisan Congressional Budget Office, the House bill would increase federal spending on crop insurance by $8.91 billion over the next decade, compared to a $4.98 billion increase in the Senate bill.
“While pitched by its sponsors as the more ‘fiscally responsible’ of the two bills, largely due to its projected $20.5 billion in cuts to the Supplemental Nutrition Assistance Program, the House bill actually calls for even larger increases in corporate welfare to mega-farms,” Lehmann says.
Congress is acting under a virtual ultimatum from the politically powerful American Farm Bureau Federation. In a letter to Congress in April, the Farm Bureau said one of its key priorities in the reauthorization bill is to “protect and strengthen the federal crop insurance program.”
“Given the pressing long-term fiscal challenges facing our country, the Farm Bill offers a perfect opportunity for Congress to demonstrate fiscal responsibility by slashing programs that waste taxpayer money, raise costs for consumers and damage the environment,” Lehmann says. “It’s an opportunity that neither the House nor the Senate has yet stepped forward to seize.”
The Senate Agriculture Committee is dealing with the issue today, and the House Agriculture Committee will begin work on its version Wednesday, and is expected to complete work by the end of the week.
This is good news for crop insurers, which include Wells Fargo, ACE Ltd., XL Group, Everest Re Group and Starr International, amongst the 17 players in this market.
Lehmann says that among the largest disparities is a more generous Supplemental Coverage Option, which covers up to 90 percent of a farmer’s crop revenue when elected in combination with a conventional policy.
The House bill would increase spending for the SCO by $3.85 billion over the next decade, compared to $2.25 billion in the Senate bill.
According to Lehmann, the House bill also calls for more generous “yield plugs” in the adjustment for average producer history yields, leading to a $936 million increase in spending over the next decade, compared to the Senate’s $406 million. It also includes crop insurance provisions not in the Senate bill to provide $205 million of equitable relief for specialty crop producers and create a $283 million program for beginning farmers and ranchers.