Crop Insurers Comment on President’s Proposed Budget
WASHINGTON (May 23, 2017)—The White House today released details of its FY2018 proposed budget, which included steep cuts to crop insurance and other farm policies.
The American Association of Crop Insurers, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Independent Insurance Agents and Brokers of America, National Association of Professional Insurance Agents, and National Crop Insurance Services released the following joint statement in response:
“Weakening crop insurance and making it more difficult for farmers to bounce back during tough times will jeopardize rural jobs and will find little support in rural America or on Capitol Hill. The rural economy is already suffering through a period of low prices and a multitude of spring weather disasters. Yet, the Administration’s budget proposal targets the primary tool farmers use to handle these risks.
“Lawmakers favor crop insurance because it reduces taxpayer risk exposure and has come in under budget since the 2014 Farm Bill was passed. Farmers are willing to help fund their own safety nets – collectively spending $50 billion out of their own pockets on crop insurance since 2000 – because they know private-sector efficiency will speed aid when it is needed most.
“Destructive cuts to crop insurance have been proposed by past Administrations and soundly rejected by Congressional leaders, who recognize the importance of maintaining a strong farm safety net. We fully expect that to be the case again this year, and we are hopeful to engage in meaningful dialogue about how to support America’s hardworking farmers and ranchers in difficult times like these.”
Affordability Key to Crop Insurance Success
“Congress cemented crop insurance’s role as the centerpiece of the farm safety net during the 2014 Farm Bill,” explained Tom Zacharias, president of National Crop Insurance Services. “However, that safety net will collapse if crop insurance policies aren’t widely available, aren’t affordable to producers, and aren’t economically viable to be administered by efficient private insurance providers.”
Just the Facts
Q: How does crop insurance benefit taxpayers?
A: Crop insurance is an effective taxpayer investment that helps ensure the stability of America’s food, feed, fiber and fuel producers and promotes rural economic growth.
Absent crop insurance, the cost of natural disasters that cripple America’s farmers would fall directly on the laps of taxpayers, which happened repeatedly before the widespread use and availability of crop insurance. In fact, 42 emergency disaster bills in agriculture cost taxpayers $70 billion from 1989 to 2012, according to the Congressional Research Service.
The 2014 Farm Bill cemented crop insurance as the cornerstone of farm policy. Under this policy, farmers shoulder a portion of the risk along with private-sector crop insurance companies. Farmers must first purchase crop insurance before being protected, and must shoulder a portion of the losses through deductibles before receiving an indemnity for the verifiable loss. On average, a farmer in the United States must lose at least 25 percent of the value of their crop before a crop insurance policy kicks in. This ensures that farmers are active participants in risk management and that taxpayers are not being asked to bear all the burden of natural disasters in farming.
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