Crop Insurance Critics Make Last Push to Curb U.S. Subsidies

Critics of the U.S. crop insurance program are calling for cuts to it and other agribusiness subsidies as Congress revamps farm policy.

A bipartisan group of lawmakers plans to meet today in Washington to re-examine U.S. farm spending for the next five years. Wisconsin Representatives Tom Petri, a Republican, and Ron Kind, a Democrat, will use a Capitol Hill rally to call for an “end to handouts,” Petri’s office said in a statement.

Under the insurance program, the U.S. taxpayer subsidizes the majority of premiums paid by farmers, covers much of the administrative costs tallied by insurers to run the program, and guarantees that all losses are covered, according to a series of articles published by Bloomberg News this week.

Crop insurance covered $117 billion worth of product in 2012, including almost all the corn, soybeans, cotton and wheat produced in the country. The U.S. Department of Agriculture spent about $14 billion last year on the program as the worst drought in a half century devastated plantings.

Supporters of crop insurance are stepping up their lobbying to preserve the program’s funding levels.

Richard Gibson, founder of American Agrisurance Inc. and a business consultant, told agents of NAU Country Insurance Co. in an e-mail this week to lobby their lawmakers. He said crop insurance had become a target as Congress faces a Sept. 30 deadline to pass a 2014 budget or a stopgap spending measure to keep the government operating.

“I’ve been around this business since it started, and the bottom line to it is, it’s been a political process since day one,” Gibson said in a phone interview yesterday.

Kind, the Wisconsin Democrat, said he isn’t surprised by the lobbying push. “It’s a very powerful, well-organized lobby out here to try to circle the wagons,” he said in a phone interview.

Petri and Kind co-sponsored legislation in May to cap the total value of crop insurance subsidies to $40,000 per individual annually, and eliminate support for those with adjusted gross incomes of more than $250,000. That measure, which the lawmakers said would save $11 billion over a decade, failed in the House.

“What we’re recommending is not unreasonable,” he said. “This is an area that we can reform” to find cost-savings in the farm legislation.

In e-mails to agents, Gibson criticized Bloomberg News stories that examined the program’s costs and vulnerability to fraud. Crop insurers and the USDA said subsidized insurance helps stabilize food prices and protects farmers from the vagaries of weather.

“The program is working, so why does Bloomberg put on the negative ad campaign to destroy it?” Gibson said. He told agents in a Sept. 9 e-mail “to stay engaged with our political representatives” and warned that detractors of the program “will be out in force when and if the farm bill ever reached the conference level.”

Adjustments to the farm bill are still possible as both houses of Congress reconcile separate measures in a conference to shape the final law.

New Hampshire Democratic Senator Jeanne Shaheen, who also proposed curtailing payments, said re-examining the program was a “smart way” to reduce the deficit.

“Limiting federal spending on crop insurance is a common- sense fix to some of the government’s most egregious spending and waste,” she said in a statement.

The U.S. Public Interest Research Group, which is organizing today’s event, plans to deliver tens of thousands of petitions urging members of Congress to overhaul the program.

“We’re using taxpayer money to pay big companies to buy insurance that they would buy themselves,” Dan Smith, tax and budget advocate for Washington-based U.S. PIRG, said in a phone interview.

President Barack Obama sought this year to cut almost $12 billion from the program in the next decade while Republican House Budget Committee Chairman Paul Ryan has called subsidized insurance “crony capitalism” that needs to be reduced in an effort to curtail federal spending.

Tom Zacharias, president of National Crop Insurance Services, the main lobby for crop insurers, defended spending levels in a statement that said the Bloomberg series showed an “obvious bias” against the program.

Crop insurance “forces farmers to manage risk before, not after it happens, which saves taxpayers money,” Zacharias said.

Gibson said he wasn’t authorized to speak to the press on behalf of NAU Country, a unit of QBE Insurance Group Ltd. of Sydney, Australia and was expressing his own views.

The House legislation is H.R. 2642; Senate is S.954.
(With assistance from Derek Wallbank and Alan Bjerga in Washington. Editors: Steve Geimann, Jon Morgan)