Federal crop insurance payments long have been a target for budget cutters. But the proposed reductions in the Trump administration’s 2018 budget exceed what came previously.
A few Midwest lawmakers contend the cuts have little, if any, chance of becoming law this time around. But some groups say this could be an area of concern when a new farm bill is written next year.
The Trump administration’s blueprint calls for $29 billion in cuts to crop insurance over the next 10 years. The government currently subsidizes, on average, 62 percent of premium payments.
The bulk of the cuts — $16 billion — would come from limiting the size of premium subsidies to $40,000. That would affect relatively few farmers, the administration says.
However, another $11 billion in cuts comes from jettisoning the subsidy for a widely used insurance option that helps farmers hedge their risk. The Harvest Price Option lets farmers insure their crops based on the higher of the price at harvest or at planting.
Farmers note this type of insurance allows them to make better decisions and takes some of the risk off the table.
The administration says farmers can find other ways to hedge risk — or they can do it without a subsidy.
The proposed cuts come at a difficult time in rural America. The U.S. Agriculture Department projected in February that net income would fall 8.7 percent this year, about half what it was at record highs in 2013.
Cuts in crop insurance would exacerbate those pressures.
Source: www.thegazette.com