Following an agreement reached by the House and the Senate that would avoid more than $3 billion in cuts to the nation’s crop insurance program as part of the budget package, both chambers have passed the bill on to the White House. The agreement followed a tumultuous three-day fight over the bill’s inclusion of the proposal that would have accomplished the cuts by reducing the rate of return for crop insurance companies from 14 percent to 8.9 percent. Currently the cut remains in the version of the budget bill, but House and Senate Agriculture Committee leadership met with Congressional leaders and secured an agreement to eliminate the cuts as part of an omnibus spending bill either next month or in early December.

As you know, the American Soybean Association (ASA) was extremely and publicly critical of the original attempt to cut crop insurance, and we maintain our position against opening any part of the farm bill for further spending cuts. In light of the agreement, we are cautiously optimistic. While we are happy to see an agreement to remove the cuts, the language still remains in the bill, and we will watch House and Senate leaders closely to ensure that the agreement is honored and the cuts are eliminated or offset in the omnibus.

The cuts would have a distinct impact on farmers. Consolidation is already occurring in the crop insurance industry, and the cut would only speed up that consolidation, which will mean fewer choices and a less efficient private sector delivery system for producers. Compounding the pain of the proposed cut, agriculture is facing FY-2016 sequestration. While defense and most other domestic spending are exempted from this 6.8 percent cut in the bill, agriculture spending, including payments through the ARC and PLC programs are not.

ASA will keep you updated on this issue as it moves forward.