WASHINGTON May 10 The federally subsidized crop
insurance program, the costliest part of the U.S. farm safety
net, would spin off at least three new types of coverage and
could cost 10 percent more under draft farm bills pending in the
U.S. House of Representatives and Senate.
Members of the Senate and House Agriculture committees are
scheduled to debate their respective bills next week. Both of
the five-year farm bills would cost roughly $500 billion, the
bulk of it to be spent on food stamps for the poor.
Overall, the government safety net for farmers is shrinking,
House Agriculture Committee staff said in a briefing on Friday.
Traditional crop subsidies in the House bill would be slashed by
$22 billion over 10 years, or 34 percent, while crop insurance
funding would go up by $11 billion, they said, based on
Crop insurance was projected by the Congressional Budget
Office to cost about $9 billion a year before any changes
ordered by the farm bill. Costs could rise by 10 percent under
the figures cited by House staff workers. The Senate farm bill
was projected last year to increase crop insurance by 5 percent.
As part of crop insurance, the government pays 62 cents of
each $1 in premiums, pays part of overhead costs for insurers
and shares in the loss in bad years. Insurers are required to
offer policies to all farmers.
A House Agriculture Committee spokeswoman said the insurance
system would be more efficient and market-oriented under the
provisions of the farm bill. Farmers pay for coverage and get a
payment only after substantial losses, she said.
The legislation in both chambers would create a so-called
revenue insurance plan for cotton to replace traditional
subsidies which are triggered by low market prices. They also
would create a revenue program for peanuts and a "supplemental
coverage option" to protect farmers from shallow losses in
"Fundamentally, the safety net has been expanded," said
agricultural economist Vince Smith of Montana State University,
after viewing the Senate and House drafts. "There is more
coverage for any downside (price) movement in the covered
Revenue protection can become hugely expensive if market
prices decline by 20 percent or more, said Smith, a frequent
critic of crop insurance.
In its first forecast for the 2013/14 U.S. corn marketing
year on Friday, the U.S. Department of Agriculture put the
season midpoint price for corn at $4.70 per bushel against $6.90
in 2012/13, a 32-percent decline.
The Environmental Working Group, which supports more money
for conservation programs, criticized the House and Senate bills
for "providing an especially generous insurance subsidy to
cotton farmers" and creating the supplemental coverage plan for
The government would pay 80 percent of the premium on the
cotton policy and 65 percent on the supplemental coverage
The Senate farm bill would require growers to practice soil
conservation to qualify for subsidized premiums and require the
wealthiest growers to pay a larger share of that premium.
The House Agriculture Committee leaders rejected those ideas
in their bill. The 576-page draft was unveiled on Friday and can
be viewed here: