Congress rejects proposal to restore $3 billion cuts to crop insurance program

The Senate on Thursday rejected a proposed effort to restore $3 billion in cuts to the crop insurance program, Philip Brasher reports for Agri-Pulse. "The cut, which was part of the two-year budget agreement enacted in November, would be repealed by the highway legislation to fulfill a pledge the House GOP leadership made to House Agriculture Chairman Mike Conaway (R-Texas) before votes on the budget deal."

Sens. Jeff Flake, (R- Ariz.), and Jean Shaheen, (D- N.H.), forced a vote on the cut Thursday by raising a point of order against including the repeal provision in the transporation measure," Brasher writes. "The Senate rejected their move, 75-22, and then approved the legislation, 83-16. The bill replaces the $3 billion through a reduction in the Federal Reserve dividend that goes to big banks."

"The budget agreement requires the Agriculture Department to cap the insurance companies' rate of return at 8.9 percent, down from the current 14.5 percent," Brasher writes. "The cut was supposed to be made through renegotiating the Federal Crop Insurance Corporation's Standard Reinsurance Agreement (SRA) with the companies. Since 2011 the rate of return has varied from a loss of 15 percent in fiscal 2012, a drought year, to a gain of 13 percent in fiscal 2014. Insurance companies argue that their real rate of return is closer to 4 percent." Legislation now goes to President Obama for his signature.

The two-year budget deal "worked out by Republicans and the Obama administration included a provision to cut $3 billion over 10 years from the crop insurance program to help offset increases to defense and domestic programs," Charly Haley and Donnelle Eller reported in October for The Des Moines Register. While the proposed cuts were in the bill, it was expected that the crop insurance program would be restored to the bill this month.