Farmers know they’ll lose $5 billion in annual direct payments when a new farm bill passes. But up until now, few growers have complained about that prospect, because they know they can still count on buying federally subsidized crop insurance.
However, those popular crop insurance policies may start coming with some strings attached. The Senate farm bill (S 954) would add a means test to the insurance program for the first time and would also begin requiring policyholders to comply with rules for protecting wetlands and preventing soil erosion.
“There is consternation out here in the countryside,” said David Miller, director of research and commodity services for the Iowa Farm Bureau, that state’s largest and most powerful farm organization. The crop insurance restrictions are “making the Senate bill less attractive to people,” he said.
The crop insurance restrictions have become a key issue this year because some large farms are starting to drop out of traditional commodity programs and are relying exclusively on insurance. More growers may follow suit with the elimination of direct payments.
Commodity programs have long carried a number of restrictions, including caps on how much money an individual can receive, personal income limits for subsidy eligibility and conservation requirements. The names of subsidy recipients and the amount of money they receive also are made publicly available. But information on crop insurance beneficiaries is kept confidential, by law.
Critics of the insurance program say the means tests and conservation provisions are needed both to curtail farm consolidation — the concern is that the heavy premium subsidies enable mega-farms to get bigger than they otherwise would — and to prevent environmental problems.
Those provisions, plus others the House is likely to debate, would preserve “a generous safety net” but “reduce the incentive to plow up lands that farmers wouldn’t otherwise if they were responding to market signals and would make the farm safety net much more equitable,” said Scott Faber, vice president of government affairs for the Environmental Working Group.
The House Agriculture Committee’s farm bill (HR 1947) contains no new restrictions on crop insurance. But several amendments expected to be debated on the House floor include proposals to cap the amount of premium subsidies any one farmer can receive. The conservation compliance measure and adjusted gross income limit also are likely to be proposed as amendments.
March 6, 2014, 4:42 p.m.