Keeping the Farm in the Farm Bill

  April 26, 2024

Republicans on the Senate Agriculture Committee proposed a $4 billion injection into the crop insurance program so that the government would pay a larger share of the premiums on policies offering the highest levels of coverage. “We need more farm in the farm bill to get it passed,” said Sen. John Hoeven of North Dakota, the lead sponsor, on Tuesday.

Leaders of the Senate and House Agriculture committees were at an impasse over calls for more farm support spending — keeping “the farm in the farm bill” — when funding is tight. Democrats such as Senate Agriculture chairwoman Debbie Stabenow adamantly oppose cuts in climate or SNAP funding.

“Everybody is working in good faith, trying to get it done,” said Arkansas Sen. John Boozman, the senior Republican on the committee. But one of his colleagues said, “We’ve got to stick to our guns on this,” meaning an expansion of federal spending on crop insurance.

Under the so-called FARMER Act, the government-paid share of the premium would increase by roughly 10 percent for higher coverage levels, as an inducement to farmers to “buy up” coverage, said Hoeven. The government share of the premium also would go up for the Supplemental Coverage Option, an add-on to policies that provides more protection against losses.

The FARMER Act rejected one of Stabenow’s suggestions for the farm bill. In January, she said the way to provide higher levels of insurance coverage and streamline federal programs was to give farmers a choice: They could enroll in USDA crop subsidy programs or they could buy a highly subsidized revenue insurance policy.

At present, upland cotton is the only commodity where that sort of policy, known as STAX, for Stacked Income Protection Plan, is offered and growers are barred from enrollment in crop subsidy programs. The government pays 80 cents of every dollar in STAX premiums, while it pays 62 cents of each $1 in crop insurance premiums, on average. STAX provides coverage for up to 20 percent of expected crop revenue in a county or group of counties.

Hoeven and his cosponsors proposed the opposite of Stabenow’s suggestion — farmers could purchase “enhanced crop insurance coverage” if they wish, as well as signing up for the Price Loss Coverage or Agriculture Risk Coverage subsidies.

Cost of the FARMER plan was estimated at $4.2 billion over 10 years, said Hoeven. The most recent Congressional Budget Office projections say crop insurance would cost $124.7 billion over the same period.

“Ultimately, producers buying higher levels of coverage will lessen the need for ad-hoc disaster assistance in the future,” said Hoeven.

Farm groups have given priority to expanding crop insurance coverage and raising reference prices, which are the triggers for subsidy payments. Boozman and Hoeven said the farm bill needed to address reference prices as well as crop insurance.

The Environmental Working Group (EWG), which favors larger spending on stewardship programs, said the FARMER Act was a sop for the richest U.S. farmers. “The Senate should focus not on increasing crop insurance subsidies but instead on reducing the costs of the crop insurance program and protecting conservation funding for climate-smart agriculture,” said Anne Schechinger of EWG. “Only about 20 percent of farms participate in the crop insurance program but federal conservation programs are open to all farmers.”