Crop Insurance Reform Talk Gaining Steam

There was a flurry of activity this week related to reform proposals for federally subsidized crop insurance. Following the Land Stewardship Project's November/December release of our three white papers on crop insurance (“How a Safety Net Became a Farm Policy Disaster”), 2015 has seen continued attention to the need for major reform of this largest of agriculture-related farm bill programs.

On Feb. 3, Senator Patrick Toomey (R-PA) and Senator Jeanne Shaheen (D-NH) introduced a bill in the U.S. Senate that would cap crop insurance premium subsidies at $50,000 per entity. That aligns well with LSP’s thinking — there should be a limit to how much of these public funds any one crop operation can rake in. Such limits are one way of diminishing the concentration of land ownership in fewer hands that is fueled by the current crop insurance program. The National Sustainable Agriculture Coalition (NSAC), to which LSP belongs, has a good description of the bill and NSAC's (positive) assessment of it here. The Toomey/Shaheen bill is estimated to save $2.2 billion over 10 years.

The USDA then offered its own proposal, modifying the structure of the crop insurance program relating to prevented planting and revenue protection. USDA has not provided much detail, but the proposal, which is in President Barack Obama's budget, was estimated to save up to $16 billion over 10 years.

U.S. Secretary of Agriculture Tom Vilsack, however, also this week criticized the Toomey/Shaheen proposal to put a cap on the public handouts to the largest crop operations, saying such measures “could potentially impact participation” in the crop insurance program and require ad hoc disaster legislation to meet the demands of the largest crop operations for bailouts with public dollars.

This week actually began with a reminder of the negative environmental impacts of having an unreformed crop insurance program. On Sunday, the Star Tribune newspaper reported on the disastrous deforestation of central Minnesota being driven by the R.D. Offutt Corporation’s acquisition of land to plant potatoes. LSP staff member Kaitlyn O’Connor has submitted a letter to the newspaper pointing out the role of federally subsidized crop insurance in driving such destructive actions on the land.

Offutt is a major beneficiary of crop insurance premium subsidies. That means, like many of our largest crop producers, it's using public funding to guarantee income on land that otherwise would be too erosive, wet or otherwise marginal to generate profitable yields. Whether it be in southwestern Minnesota's prairie region or the pine forests that grow in the central part of the state, crop insurance is incentivizing environmental harm.

The dialogue over crop insurance reform is off to a good start in 2015—now we need to make sure all this talk turns into action. Stay tuned…

Mark Schultz is LSP's Policy and Organizing Program director. For more on LSP's crop insurance work, e-mail him or call Mark Schultz at 612-722-6377.