Ag Committees Secure Agreement to Negate Crop Insurance Cut

Posted: 10/25/2015

By Dale Thorenson

The House and Senate Agriculture Committees, along with help from commodity and crop insurance industry groups, secured an agreement from Congressional leadership to reverse the $3 billion crop insurance cut contained in the Bipartisan Budget Act.

On Oct 27, the agriculture community learned that the budget deal contained a $3 billion cut to crop insurance obtained by imposing an 8.9 percent cap on the rate of return for crop insurance companies (from the current 14 percent). While not a direct cut to producers, if left in place, this reduction would have undermined the crop insurance delivery system over time because more companies would choose to divest their crop insurance business due to unprofitability. The language containing the cut was not stripped from the legislation passed, but Congressional leadership agreed to allow language reversing the cut to be included in the FY 2016 Omnibus that must be passed by Dec. 11, when the current Continuing Resolution funding the government at FY2015 levels expires. Congressional leadership assured the agriculture community that it will be like this "never happened."

Once the agreement was reached, Agriculture Committee Chairs and Ranking Members - Senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI); and Congressmen Mike Conaway (R-TX) and Collin Peterson (D-MN) - voted for and urged other members of their committees to vote for the Bipartisan Budget Act. The Act passed the House Oct. 28 by a vote of 266-167. The Senate passed the deal at 3 a.m. on Oct. 30 by a vote of 64-35.

The budget deal will increase federal spending by $80 billion - equally divided between defense and domestic spending - by negating the Sequester over two years and extend federal borrowing authority until March 2017. However, not all Sequester cuts are negated - ARC and PLC program payments provided by the 2014 Farm Bill will still be subject to reduction.

Dale Thorenson is assistant director of the USCA.
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