Crop insurance juicy target in 'fiscal cliff' deal

By MARY CLARE JALONICK Published: December 17, 2012
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Agriculture Secretary Tom Vilsack warned the congressional committees this past week that, if they don't strike a deal soon, the White House and Republicans working to avert the fiscal cliff may cut farm programs that lawmakers want to protect.

“Don't let somebody else craft the farm legislation who may not fully understand all of the implications,” he said.

Sen. Debbie Stabenow, who leads the Senate Agriculture, Nutrition and Forestry Committee, agreed.

“It's one of the many reasons we need to get a five-year farm bill done so people who don't support crop insurance don't come back at it and try to cut it,” said Stabenow, D-Mich.

Farmers buy crop insurance to protect against weather-related losses such as drought or flooding. Farmers pay a percentage of the premium cost and the federal government covers the rest. Companies selling the insurance also get direct subsidies from the government.

Both the House and Senate made room for the new insurance program by eliminating a different type of subsidy called direct payments, in which farmers collect money from the government whether they farm or not and regardless of prices or crop yields. Cutting that program would save almost $5 billion annually and contribute to the overall savings in the bill.

Supporters of crop insurance say fewer subsidies would mean fewer farmers would buy coverage.

“Crop insurance proved its value once again this year by helping keep the rural economy on track and helping farmers pick up the pieces after a crippling drought,” said Tom Zacharias, president of National Crop Insurance Services, an industry trade group. “Farmers are telling lawmakers to `do no harm' to crop insurance.”

Critics say farmers could survive with much less federal help.

Crop insurance isn't farm-state lawmakers' only concern in the fiscal cliff negotiations. Milk prices could double if expiring dairy support programs aren't renewed before Jan. 1. Stabenow said she's also concerned there will be less money for a farm bill next year.


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