Reformers hail limit on U.S. crop insurance subsidies

Reuters

By Charles Abbott

WASHINGTON, Oct 14 (Reuters) - Farm subsidy reformerspraised a vote by the U.S. House of Representatives to make thewealthiest growers pay more for federally subsidized cropinsurance, the first eligibility limit on a program that costs$9 billion a year.

The non binding House vote late on Friday will be a factorin upcoming negotiations with the Senate on a final version ofthe new farm bill, which is a year overdue. Senators put asimilar restriction on farmers with more than $750,000 adjustedgross income (AGI) a year in their bill.

One percent of farmers, or about 20,000 people, would beaffected by the provision, estimated to save $1.3 billion over10 years. Crop insurance is the costliest part of the farmsafety net. The farm bill would expand the program by up to 10percent while cutting conservation and food stamps for the poor.

Farm bill negotiations were expected to begin soon, althoughno date was set. The House named 29 of its members as itsconferees on the $500 billion, five-year farm bill on Saturday.The Senate appointed its conferees weeks ago.

Farm bills, written every few years, fund crop subsidies,conservation, public nutrition, food aid, research, agriculturalexports and rural economic development programs.

Crop insurance reform was the only farm bill "instruction"approved by the House during a series of votes that cleared theway to negotiations with the Senate. The "sense of the House"resolution, approved on a voice vote, is an indication oflawmaker sentiment but conferees are not bound by it.

To reform-minded groups, the House vote was a step to reinin subsidy spending and give a hand to family farmers. TheEnvironmental Working Group (EWG), which wants more money forconservation, said the $750,000 AGI limit was a "modest" reform"to bring a measure of fairness to crop insurance subsidies."

The National Sustainable Agriculture Coalition, a small-farmadvocate, and EWG said growers also should be required topractice conservation to qualify for subsidized insurance. Thesmall-farm group called for a cap on insurance payments tofarmers and restricting the program to active farmers.

Crop insurance is the only farm program without payment oreligibility limits, said sponsors of the plan to reduce thepremium subsidy by 15 percentage points for farmers with morethan $750,000 AGI. At present, the government pays an average 62cents of each $1 of the premium.

"Let's not subsidize folks at the high end as much and let'sprotect the family farmer," Budget Committee Chairman Paul Ryan,Wisconsin Republican said on Friday.

Agriculture Committee Chairman Frank Lucas, an OklahomaRepublican, said higher premiums could drive away largeoperators and, with a smaller pool of participants, drive upcosts for smaller operators.

Texas Republican Mike Conaway said the proposal "will punishsuccess, will punish efficiency."

Georgia Republican Tom Price, a Ryan ally, said 4 percent offarmers get one-third of crop insurance benefits. "It justdoesn't make sense," he said.

"In fact, it is ironic that there has been this attack onfood stamps," said Oregon Democrat Earl Blumenauer, "which has alower percentage of abuse than the crop insurance program."

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