Wednesday’s handshake agreement to possibly stave off cuts to subsidies to insurance companies for administering the crop insurance program was a master class in how to defend federal turf.
Food movement types would do well to study and start to replicate the conventional agriculture sector’s response. It was a wonder to behold. While it’s a teachable moment, the swirling debate over crop insurance company subsidies also offers an opportunity for a growing “Food Party” to join the policy fray.
The bipartisan budget deal announced on Monday the 26th of October, delivers a nice big election cycle pause from the inane, costly and damaging brinkmanship around the debt ceiling. It includes cuts to the crop insurance program in order to make the deal work by doling out a big pot of federal goodies to both parties. The proposal will cut $3 billion over eight years from tax dollars paid to insurance companies to manage the program. It’s a small slice of the $80 billion total package. The cuts will lower insurance companies rate of return from 14.5% to 8.9%.
The taxpayer-funded crop insurance program – dubbed Obamacare for corn by Stephen Colbert – is deeply coveted by agribusiness and tenaciously defended by some of the most conservative members of Congress.
Agriculture committee members still decompressing after the painful, marathon 2014 farm bill did not appreciate the surprise fiddling with their work. As soon as the cuts were announced, flares went up and forces were marshaled. No one likes getting his or her pocket picked, especially production agriculture. And the Ag Lobby fights hard for its money.
Farm state members inundated congressional budget negotiators with threats to vote against the critical budget deal if the cuts remained. The orchestra of noise from farm groups was a fine-tuned accompaniment to the congressional chorus.
Now we’re told that ag committee leaders in both houses have extracted promises from leadership that the cuts will be restored. All is well-ish in heavily subsidized ag-land, and the Ag Lobby has a fresh pelt to nail to their wall. It will look grand next to the recent pelt harvested from USDA over a proposal over sustainability in federal dietary guidelines.
It was also a shot across the bow for those who think agriculture’s influence has waned in Congress because none of the cuts were directed at farmers. First there was no cut to the 60% of farmer premiums picked up by taxpayers – arguably the centerpiece of the program. There was also no means test to generate savings by weeding out wealthy recipients and profitable mega farms.
The big question remains – what will make up that $3 billion shortfall if the cuts are truly reinstated?
Instead of the negotiated cuts to insurance companies there now could be “across the board cuts” to some or all programs authorized under the farm bill. Including cherished food movement programs. No one is making a peep about where the cuts are coming from, but they do have to come from somewhere.
That could mean cuts to conservation programs that are the current only line of defense against soil erosion, water pollution and habitat loss. These programs have been chronically cut and underfunded for years even though the checks go to farmers, not environmentalists. They are also what we’re told by the Ag Lobby and government officials as essential to the notion of “voluntary conservation” as opposed to regulation to deal with issues like the Des Moines Water Works suit.
It could mean cuts to nutrition programs like SNAP/food stamps. SNAP in particular is the largest expenditure under the farm bill and has a whole bushel of enemies in the GOP even though it’s credited for feeding families and veterans through the recession. Money for community food projects and for more fresh fruits and vegetables in school lunches could be under the axe. All because farm state lawmakers and the Ag Lobby have convinced their colleagues that insurance corporations should enjoy a higher rate of taxpayer backed return than most farmers.
(It’s telling that in the joint leadership release from the Senate agriculture committee-ranking member Stabenow (D-MI) vowed to protect “all farm bill programs” while Chairman Roberts (R-KS) made no such promise.)
Agrbiz does have a shaky case defending doing away with cuts considering they were not aimed at farmers. Here are some observations of ongoing vulnerabilities and ways the broader food movement can still jump into this fight and have an impact:
There still is some uncertainty about the doneness of the deal. No one knows yet how the $3 billion is going to be restored. All that has been extracted are promises between career politicians. USDA Secretary Vilsack didn’t sounds like a total backer of nixing the cuts telling reporters when asked about reinstatement “There are ways in which the crop insurance program can be reformed and improved while also saving money.”
There’s a big climate change angle. One of the concerns coming out of heart-burned aggies over the initial crop insurance proposal is the notion that it will hurt the insurance sector at a vulnerable time. Several corporate sellers of insurance have sold off their divisions as claims have risen — claims that involve more crop damage from volatile weather, floods and drought. If this really is about protecting the integrity of crop insurance than we better get federally motivated on mitigation and adaption strategies.
There’s a crew of stalwart reformers already working on it and they need help. The National Sustainable Agriculture Association, the Environmental Working Group, the National Black Farmers Association, the Center for Rural Affairs and Congressman Ron Kind (D-WI) are right in the thick of it. But they’re always there doing the dirty work. There’s also a respectable group of conservative minded think tanks and groups who think reinstating the cuts stinks. The current challenge is how to expand this core niche of policy reformers into a comparable counterbalance to the Ag Lobby.
New House Speaker Paul Ryan (R-WI) really really really wants to cut crop insurance. Even though the new House Speaker signed-off on reinstating the cuts, there are indications that much of these proposals that made the deal possible were “already on the shelf.” Some even allegedly written by Ryan’s staff.
Ryan has voted to cut crop insurance before and his own budget proposal in 2014 cut the program. While the Senate remains the better battleground to engage, there’s an opportunity to drive a wedge between Ryan and House aggies. Friday morning the Washington Post editorial board said “The Republican leadership’s swift reneging on this attempted reduction of corporate welfare is…an inauspicious sign regarding the new speakership of Paul Ryan.”
Agriculture “gave at the office?” A lot of the rhetoric being thrown around is that agriculture shouldn’t be subjected to cuts because they “voluntarily” gave up direct payments. Direct payments went away because they were indefensible and embarrassing. But instead of returning that money to taxpayers, the agriculture committees plowed the funds back into crop insurance and then created two whole new farm subsidy programs — the Agriculture Risk Coverage program and the Price Loss Coverage program. USDA announced this week that both programs would pay out $4 billion in crop subsides due to low market prices for 2014 crops.
Pound “Obamacare for Corn” into the national dialogue. No one tops the overreaction to the cuts like Rep. Kevin Cramer (R-ND). He announced he would have opposed the deal because of an overwrought conspiracy theory that the White House wanted to put insurance companies out of business to make the government the only insurer or the “Obamacare of Crop Insurance.”
It was a great opening for food reformers to ask candidates crisscrossing Iowa that oppose the Affordable Care Act why Iowa’s corn crop deserves better insurance than most Americans. Speaking of presidential campaign issues…
There’s an income inequality and the erosion of the middle class angle. The crop insurance program lavishes subsidies on mega farms and the “one percent.” In a sliver of available public data we learned that in 2011, twenty-six massive U.S. farms each received over a million-dollar crop insurance subsidy. According to a GAO report released this spring, they identified four crop insurance subsidy recipients each with 2013 net worths of $1.5 billion. They also found over 70 high-income, extremely wealthy recipients that weren’t farmers but were instead executives, attorneys and physicians. The farm subsidy regime has also contributed to pushing mid-sized family farms off the landscape by putting taxpayer funded capital in the hands of big farms, enabling them to get bigger by outbidding their neighbors.
If there was ever the opportunity to tie food policy debates to a national, presidential issue, the fight over tax dollars going to the agriculture one percent is a ripe one.
Crop insurance is an opaque program. Other farm subsidy programs have recipient transparency and we knew that taxpayer dollars went to sports stars and members of Congress. Crop insurance has no such transparency or accountability.
Crop insurance also has a fraud problem. That matters because a major criticism of food stamps is fraud, even though USDA says it has a lower fraud rate than many other government programs.
Lay down a farm bill marker on “back-room deals.” House agriculture committee chairman Mike Conaway (R-TX) and others bemoaned the “back-room deal,” that lead to the cuts. Surely the chairman realizes every farm bill has been at least partially written and passed behind closed doors. Or that the very crop insurance provision that froze USDA negotiating power over rates that the budget deal would eliminate was in the words of NSAC “inserted in the dark of night.”
The federal government has a role in crop insurance if properly managed. Farmers need government support, especially with the vagaries of climate change barreling down on them. To that end improvements to the system should include nutrient pollution and GHG reductions in exchange for taxpayer help.
But right now this crop insurance fight is a tractor-sized opening for the food movement to dive into a federal policy debate.
At the very least it would be a good dress rehearsal for the coming farm bill campaign.