As Congress prepares to write a new farm bill, President Trump proposed a 36-percent cut in the federally subsidized crop insurance program over the coming decade, a far more sweeping set of reforms than what was proposed during the Obama era and rejected by farm-state lawmakers. Crop insurance is the largest of USDA’s farm support programs at nearly $8 billion a year.
The White House also said without detail that it would eliminate USDA’s rural economic development program and streamline conservation programs on its way to saving $46.5 billion on agricultural programs. Some of the savings would come through imposition of user fees for USDA inspection and regulatory programs, including a meat safety and inspection fee.
Crop insurance would yield the largest savings: $16.2 billion by limiting the government’s share of crop insurance premiums and $11.9 billion through elimination of the so-called harvest price option, which indemnifies growers for crop losses if the harvest-time price is higher than the price guaranteed at planting time. Last year, the Obama administration proposed that farmers pay a larger share of the premium for revenue insurance policies with the harvest price option to reduce the potential for windfall profits.
Some 80 percent of crop insurance policies carry the harvest price option. The Heritage Foundation has called for elimination of revenue insurance policies, which shield growers from the effects of low prices and poor yields. Environmental groups and deficit hawks also want to scale back the program. For their part, farm groups put a strong crop insurance program at the top of their list of priorities.
At present, the government pays an average 62 cents of each $1 in premium for crop insurance policies. The Trump budget would limit the subsidy to a total of $40,000 a year and deny subsidized crop insurance to people with an adjusted gross income above $500,000 a year. The two proposals would reduce or eliminate the benefit of the premium subsidy to the largest and wealthiest of operators.
The administration also proposed to limit access to crop subsides to people with less than $500,000 in adjusted gross income, roughly half the current level.
“The president’s proposed budget is an assault on the programs and personnel that provide vital services, research, and a safety net to America’s family farmers, rural residents and consumers,” said Roger Johnson, president of the National Farmers Union.
Farmers voted by landslide margins for Trump last fall because of his support for corn-based ethanol and promises of regulatory and tax relief. The administration says large cuts in domestic programs are needed in order to expand military spending, reform the tax code and balance the budget by 2027.
An administration table of proposed cuts in mandatory programs, such as food stamps and farm subsidies, includes the line item “eliminate small programs” at USDA for $3.1 billion in savings over a decade. It does not name the programs.
Here’s what Ag Secretary Perdue had to say about the cuts in a message sent to USDA employees this morning: