Crop Insurance Cuts Proposed


by Chris Clayton, DTN Ag Policy Editor and Todd Neeley, DTN Staff Reporter 

OMAHA (DTN) — The White House budget proposal for 2016 seeks to cut crop insurance under the argument that such cuts are needed to offset higher projected direct farm-program subsidies.

In what would be a major shake-up, the Obama administration also calls for consolidating food-safety inspection under one agency, which would effectively remove meat and poultry inspections from USDA's turf. The plan would require Congress to give the administration authority to consolidate food-safety oversight.

The crop-insurance cut is smaller than in earlier budget proposals, but it would take an average of $1.6 billion a year out of crop insurance, or $16 billion over the next decade. Agriculture Secretary Tom Vilsack said in a discussion Monday with reporters that the crop-insurance proposal was a way to help keep projected farm-bill savings on track.

Vilsack said one of the challenges of passing the farm bill was how to create sufficient savings. Lower commodity prices indicate higher spending for the new commodity programs — Agricultural Risk Coverage and Price Loss Coverage.

“What we see is clearly the possibility that payouts could be $1 billion to $1.5 billion higher than anticipated, but that's the point,” he said. “The point of having a safety net is if prices come down to a point where they are at or below the sort of breakeven point. You don't want folks to have to lose the farm.”

To offset that higher spending, the White House proposes changing its policies for prevented-planting claims and modifying the harvest-price option for crop insurance. Vilsack noted the harvest-price option “has received some criticism in terms of the level of subsidy and the opportunity it creates for a very significant payout.”

Higher payments for ARC or PLC combined with lower insurance payouts means “you end up with pretty much the same ballpark” of the original farm-bill spending projections, Vilsack said.

Still, Senate Agriculture Committee Chairman Pat Roberts, R-Kan., a staunch defender of the crop-insurance industry, said the budget proposal “ignores the concerns of the nation's farmers and ranchers.” Roberts said farmers tell him crop insurance is their key risk-management safety net.

“The President's budget again turns a deaf ear to our nation's farmers and ranchers by directly cutting the very tool that helps growers produce a safe and affordable food supply year after year. We have seen these types of proposals from this administration before and Congress has been right to ignore them.”

The entire White House budget for Fiscal Year 2016 is pegged to cost $3.99 trillion, which includes a $474 billion budget deficit. The White House argues its deficit level is OK because it is under 3{18648621dc58566f60964eb5074c58f5f97501fe95033d5d25ee4862e704a74a} of gross domestic product. White House budget documents emphasize “middle-class economics.” Barely a paragraph goes by in the document without the term “middle-class” sprinkled in.

The White House also continues to champion higher taxes on wealthier individuals. The budget would raise the rate on capital gains to 28{18648621dc58566f60964eb5074c58f5f97501fe95033d5d25ee4862e704a74a} from the current 23.8{18648621dc58566f60964eb5074c58f5f97501fe95033d5d25ee4862e704a74a} top rate. All told, the administration's tax plans would increase taxes on upper-income Americans and financial institutions by $395 billion over the next five years.

Congress generally excels in offering swift criticism of a presidential budget under the old adage that the White House proposes while Congress disposes. This budget, given the animosity between the president and congressional Republicans, will also have a hard time finding traction in particular areas until lawmakers are forced to again pass funding for Fiscal Year 2016.

Compared to the FY 2010, Vilsack said this year's budget proposal is below that level for discretionary spending. Overall, the USDA budget would be projected at $156 billion, of which $131 billion would be for mandatory spending programs.

Another aspect of the White House budget is agency consolidation. For USDA, the White House proposes moving the Food Safety Inspection Service into a new, consolidated food safety agency that would be housed in the Department of Health and Human Services. Vilsack defended the proposal, citing that the country has 15 different agencies dealing with some aspect of food safety. Moving the task of food safety under one umbrella makes sense, he said.

“It's not about tradition. It's not about turf,” he said. “I think people have to get over that. It's about food safety. It's about efficient and effective food safety.”

The budget also calls for reorganizing six agencies responsible for trade into a single agency.

The proposal would also force a cut in mandatory spending for the Conservation Stewardship Program, scaling back the level of enrollment. The proposal would cut CSP by $54 million a year.

Vilsack noted that CSP would still grow by 20 million acres under the farm bill. He said USDA continues to “look for creative ways to leverage the resources within conservation programs.” Vilsack cited the Regional Conservation Partnership Program as a way to add acres to conservation.

The budget calls for enacting multiple new fees, including a fee for services from the Grain Inspection, Packers and Stockyards Administration that would generate $30 million a year.

The Animal Plant and Health Inspection Service would enact a $20 million fee that would grow over time to as much as $34 million annually.

A Food Safety and Inspection Service fee would generate $4 million to $5 million a year annually.

In other budget areas, the White House calls for boosting infrastructure spending through a reauthorized highway bill that would increase spending $61.4 billion over the next five years. However, that also requires transferring $92.9 billion over that same time to ensure the Highway Trust Fund remains solvent.


The Environmental Protection Agency's proposed budget for 2016 stands at $8.6 billion, or about $452 million above the agency's enacted 2015 budget. The 2016 budget would be the agency's largest since 2011 when the EPA spent $8.7 billion.

It is believed EPA will see increasing demands for making Clean Water Act determinations and enforcement once the agency finalizes the proposed waters of the U.S. rule this spring. Yet EPA's latest request calls for no appreciable increase in its clean water budget for 2016.

In 2015, EPA spent about $4.1 billion to protect human health and to protect and restore watersheds and aquatic ecosystems. Though the proposed 2016 budget leaves the overall number intact, the agency proposes reshuffling its budget to bolster activities designed to protect human health by about $400 million.

If you dig deeper into the EPA proposed budget, however, the agency has shuffled the deck to include proposed budget increases in civil enforcement from a 2015 enacted budget of $173.9 million to a requested $188.8 million in 2016. That includes a $7.6 million bump to support technical analyses of data in support of enforcement cases, settlement agreements, oversight activities and others.

In addition, EPA proposes a $5.1 million increase in funding to improve the quality and efficiency of compliance inspections in the field, to include e-reporting for the National Pollution Discharge Elimination System, or NPDES.

In other agriculture budget issues, EPA has proposed an increase in its 2015 enacted budget to protect human health from pesticides risks from $58.9 million to a proposed $63.3 million in 2016. In addition, the agency is asking for a $5.9 million increase in its budget to protect the environment from pesticides risks, from $37.8 million to $43.7 million.

In addition, EPA proposes increases in its budgets for research on air, climate and energy by about $8.4 million, and by about $3.6 million on research for safe and sustainable water resources.




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