Budget cuts target crop insurance; Monsanto, Cargill already left the business

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Photo by Darrell Hoemann/Big Ag Watch

A field of corn near Mansfield, Ill., on Aug. 20, 2013.

Cargill, John Deere and Monsanto all sold their crop insurance businesses over the past year, but the mass industry exodus may not be too surprising.

Earlier this week, President Barack Obama proposed cuts to the federal crop insurance program as part of his 2017 budget proposal. The U.S. Department of Agriculture’s federal risk management programs protect farmers from losses caused by bad weather and low prices.

Specifically, the budget proposal seeks to reduce the subsidies farmers get from policies that insure revenue and reform the program that compensates farmers forced to delay planting.

The proposed changes to crop insurance would cut $18 billion over 10 years, according to the USDA.

The federal crop insurance program costs American taxpayers about $9 billion each year.

“You know, the fact is, if you surveyed the United States, if you surveyed the population of the United States, and you posed the question to them about this, I would be surprised if there wasn’t support for the administration’s position,” said Secretary of Agriculture Tom Vilsack during a Feb. 9 conference call.

Yet, some say there’s little to no chance a republican-controlled Congress will authorize the cuts.

Sen. Pat Roberts (R-Kan.) in a statement called the budget proposal an attack on America’s agriculture producers and said it will be “essentially dead on arrival.”

“The President is hitting rural America where it hurts most,” Roberts said.

Past attempts to trim the crop insurance program have been unsuccessful, as well.

Last year, Congress voted against a measure to cut $3 billion from the crop insurance program.

“The harmful changes to U.S. farm policy contained in the Obama administration budget come on the heels of attempts by the administration last year to kill federal crop insurance,” said Rep. Michael Conaway (R-Texas) in a statement.

There were 17 companies authorized by the USDA to sell crop insurance in 2016.

That list used to include a handful of major agribusiness corporations, but now just features Archer Daniels Midland, which runs Agrinational Insurance Company Inc.

Companies that sell and service crop insurance receive significant funds from the government for their administrative and operating expenses.

A 2014 analysis by the Government Accountability Office found that these allowances accounted for roughly a fourth of the crop insurance program’s overall costs – about $12.5 billion – from 2003 through 2012.

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