Tuesday, May 23, 2017

Proposed budget would cut farm programs by $38 billion; crop insurance would take big hit

President Trump's proposed budget would hurt agriculture, making "more than $38 billion in cuts to farm programs, crop insurance and conservation over 10 years," Chris Clayton reports for DTN The Progressive Farmer. "The plan proposes tighter caps and means testing for crop insurance subsidies and eligibility for commodity programs. It also would eliminate the Harvest Price option for crop insurance."

Concerning crop insurance, the budget "proposes limiting the premium subsidy to $40,000, which would generate $16.2 billion in savings over 10 years," Clayton writes. "Such a cap in premium subsidies was pushed in the Senate during the last farm bill but was defeated. The White House scores out another $11.9 billion in savings over 10 years by eliminating the Harvest Price option on crop insurance. Roughly 76 percent of all crop insurance plans last year had that Harvest Price option, accounting for the bulk of covered crop acres and premiums in the crop-insurance program, according to U.S. Department of Agriculture data."

"Crop insurance cuts may be hard for Congress to swallow," Clayton writes. "In 2015, lawmakers reversed $3 billion in cuts to crop insurance over 10 years almost immediately after they were enacted after the Obama administration cut a budget agreement with Congressional leaders. The Trump administration's proposals call for significantly more cuts to crop insurance than proposed by the Obama White House. Obama had pushed for $16 billion in cuts to crop insurance over 10 years by lowering the premium subsidy for the Harvest Price Option and reducing payments for prevented planting claims. Those proposals never got anywhere in Congress."

"The Trump administration also wants to eliminate both direct commodity payments and crop-insurance eligibility for farmers with more than $500,000 in adjusted gross income," Clayton writes. "Combined, the two proposals would generate just over $1 billion in savings over 10 years. Under the 2014 farm bill, farmers are eligible for commodity payments as long as their adjusted gross income averages under $900,000 a year over a three-year period. There is no income means testing for crop insurance. The plan also would 'streamline' conservation, leading to $5.75 billion in cuts to conservation programs over 10 years."

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