As the House and Senate tackle competing versions of the farm reform bill, two congressmen from Wisconsin are proposing an alternative bill targeting excessive spending on agriculture subsidies.
Wisconsin Reps. Ron Kind, a Democrat, and Tom Petri, a Republican, put forward the Assisting Family Farmers through Insurance Reform Measures (AFFIRM) Act on May 15. The legislation has since been referred to committee, where it is gaining increasing attention from conservative lawmakers on Capitol Hill.
The alternative bill highlights the increasing costs of shallow loss and crop insurance programs, which cost the federal government $14 billion in 2012, according to the U.S. Department of Agriculture’s Risk Management Agency.
Crop insurance policy covers unexpected crop loss, with the more expensive portion providing business-level income for successful farmers. That coverage is extended even during high-profit years like 2011, when the agriculture industry recorded one of its highest profits ever amid the Great Recession at $100.9 billion, up 28 percent from 2010.
The program’s taxpayer-funded cost quadrupled over the past decade, including an additional $1.3 billion to subsidize private insurance companies at a higher rate than the industry average to cover crops.
The Congressional Budget Office estimates the 2013 farm bill will cost about $964 billion and save $35 billion in post-sequestration deficit spending.
The 2002 bill, however, was projected to cost $451 billion and ended up costing $588 billion. Similarly, the 2008 bill was projected at $604 billion and actually cost $913 billion. If the 2013 bill follows a similar pattern, the actual cost will land somewhere over the trillion dollar mark.
These programs would face re-authorization and expansion in the bills awaiting votes in both congressional chambers, with $27 billion of the $35 billion in savings going back into shallow loss entitlement programs, said Joshua Sewell, senior policy analyst for Taxpayers for Common Sense (TCS).
“It’s a subsidy sandwich, and one taxpayers can’t afford to swallow,” Sewell said Thursday on behalf of the 501(c)(3), non-partisan, non-profit TCS during a farm-bill panel discussion on Capitol Hill. “We have a gold-plated farm program, we can’t afford a platinum one on top of it.”
The projected savings incorporated into the 2013 bill would take place over the span of 10 years, with more than 50 percent occurring five years after its expiration. That savings would occur well after the passage of another future farm bill, when the current debated version is up in 2017.
The alternative AFFIRM bill would address overspending by cutting subsidies to agriculture businesses making more than $250,000 in adjusted gross income per year and limiting annual subsidies for premiums to $40,000 per producer — saving an estimated $6.1 billion.
The act would also cut the subsidies to private insurance companies providing crop insurance, slash the higher-than-industry-standard subsidized rate and reduce the coverage of high-risk policy losses — saving an additional combined $4.8 billion.
Tennessee Republican Rep. John J. Duncan Jr., along with Arizona Republican Sen. Jeff Flake, proposed similar crop insurance reform legislation in March. In it, Duncan pointed out that covering even one-third less of the cost of such premiums would still allow farmers to get through a year as damaging as 2012.
“I think government should help farmers manage their risk, just not as much as they do now,” Environmental Working Group vice president of government affairs Scott Faber said during the Capitol Hill panel Thursday. “That would be like paying Microsoft to sell me Windows.”