Trump again proposes large cuts in crop insurance

Three weeks after President Trump boasted of protecting crop insurance in the 2018 Farm Bill, the White House proposed a 31% cut in the federally subsidized program on Monday. The cuts, part of the administration's budget package for fiscal 2021, were proposed — and rejected by lawmakers — in previous years.

This time, the White House said the wealthiest operators, with an adjusted gross income of more than $500,000 a year, should pay full price for crop insurance. And it said producers with an AGI of less than $500,000 annually should pay a larger share of the premium. At present, the cutoff for access to subsidized coverage is an AGI of $900,000, and the government, on average, pays 62¢ of each $1 of premium payments on crop insurance.

READ MORE: Steep cuts to crop insurance in 2021 budget

The White House said it wants "to modify and target crop insurance, conservation, and commodity programs in a way that maintains a strong safety net, saving $36 billion over 10 years." Some $25.5 billion of it would come from crop insurance.

In mid-January, speaking to the largest U.S. farm group, Trump enumerated his successes — tax cuts, regulatory relief, and the Phase One trade agreement with China, along with enactment of the 2018 Farm Bill. "We also protected the crop insurance programs that producers rely on in times of disaster. Through fires, floods, and freezing weather, we will always support our great American farmers," he said. "You can count on it."

A half-dozen crop insurance groups said the proposed cuts were "inexplicable" and "will make crop insurance unaffordable for farmers, seriously undermining the farm safety net." In dollar terms, crop insurance is the largest support in the farm program, although it was dwarfed by the multibillion-dollar Trump tariff payments used to offset the impact of the trade war on 2018 and 2019 production.

Besides using a lower AGI to determine access to subsidized crop insurance, the White House proposed higher premiums: an increase of 15 percentage points for policies with the Harvest Price Option, the most popular policies sold, and a 10-point increase in premiums for all other policies except so-called catastrophic coverage. Higher premiums would save the government $21.4 billion over 10 years, it estimated. The $500,000 AGI limit would save $652 million. A cap on underwriting gains would save $2.8 billion, it estimated. A trio of other changes would save an additional $700 million.

The administration said it would apply the $500,000 AGI limit to commodity and conservation programs, with savings estimated at $1.3 billion over 10 years. It proposed eliminating the so-called commodity certificates used to skirt payment limits and said only one "manager" per farm should be eligible for crop subsidies of up to $125,000 a year — a reform that small-farm advocates sought in the 2018 Farm Bill.

"We are pleased that this change would likely direct more support to the farmers who need it the most," said Roger Johnson, president of the National Farmers Union. "However, this gesture seems hypocritical following the USDA's recent doubling of payment limits for trade assistance payments."

Also proposed by the White House were limits on enrolling whole fields in the Conservation Reserve, with the exception of grasslands, and a reduction in rental payments for farmland idled under the program. The administration proposed a payment of 80% of local rents for farmland. The 2018 Farm Bill set rates at 90% for land entering under "continuous enrollment" for high-priority practices and 85% for "general" enrollments, which include large tracts.

The administration also asked for a 25% cut in funding for the Economic Research Service and a narrowing of the work performed by the agency, which was relocated to Kansas City last year. The White House proposed an end to donations of U.S.-grown food for hunger relief through the PL 480 program and elimination of the McGovern-Dole school food program for children in developing nations.

The White House budget package is available here.

The USDA budget summary for fiscal 2021 is available here.