The government has spent nearly $70 billion on disaster, trade war, and pandemic relief since the 2018 farm bill was enacted, a huge amount that shows the need for a strong farm safety net that’s written into law rather than on the fly, said farm-state senators on Thursday.
They called for a stronger and expanded crop insurance program as the first line of support for farmers and ranchers against uncertain weather, volatile commodity markets, and rising production expenses.
Crop insurance has surpassed the traditional crop subsidy and land stewardship programs as the largest source of support to agriculture, with indemnities of $16.2 billion paid so far for 2022 crops.
When the farmer share of premiums is deducted, the net gain from indemnities is $9.3 billion. Farm subsidy and land stewardship programs cost about $5 billion apiece in fiscal 2022.
“I will continue to focus on expanding and strengthening crop insurance for all farmers — including specialty crop growers, organic producers, beginning and diversified farmers,” said Chair Debbie Stabenow of Michigan at a Senate Agriculture Committee hearing.
“There are still gaps in the farm safety net,” she said, and stopgap measures, such as the trade war payments of the Trump era, “are often unfairly distributed.”
During the hearing, Agriculture Undersecretary Robert Bonnie said there were no plans to expand the USDA’s $3.1 billion in pilot projects to develop climate-smart commodities and markets for them.
Two Republican senators called for limits on foreign ownership of U.S. agricultural land, particularly by China, Russia, Iran, and North Korea. Canadians and Europeans hold two-thirds of the 40.8 million acres of U.S. agricultural land owned by foreign entities, equal to 3% of the country’s private land.
“The current safety net is frayed and is in dire need of meaningful reinforcement,” said Arkansas Sen. John Boozman, the senior Republican on the committee. “We’re spending it anyway. How do we capture some of that $70 billion and put it into programs people can rely on?”
Half a dozen other committee members pointed to the importance of crop insurance as a tool for farmers to offset the risk of poor yields and low prices.
“It should be a top priority for Congress to protect crop insurance,” said Nebraska Sen. Deb Fischer. South Dakota Sen. John Thune, No. 2 in Republican leadership, said that “crop insurance and the safety net must be improved” if possible.
Funding is expected to be tight as Congress writes the 2023 farm bill. Farm groups have asked for higher reference prices, a key factor in calculating subsidy payments, and for a strong crop insurance program.
While so-called ad hoc spending on agriculture has been high, much of it may have been one-time outlays. Trade war payments totaled $21 billion, pandemic aid was running at $31 billion, and disaster relief has accounted for $13 billion since 2018, according to Stabenow.
The federally subsidized crop insurance program has grown by more than 70 percent in the past decade, according to USDA data.
A record 493.5 million acres were insured in 2022, with a liability of $194.5 billion. The government spent $12 billion — a record — as its share of the $19.2 billion in premium payments. In 2012, by comparison, 283 million acres were insured and the premium subsidy paid by the government was $7 billion.
“Two major trends have defined the federal crop insurance program over the past 12 years: the replacement of farm yield-based insurance with farm revenue-based insurance and the explosion of area- and index-based insurance for pasture, rangeland, and forage crops,” said an American Enterprise Institute paper. “Thus, enrolled acreage and total premiums for crop insurance hit record highs in 2022, with continued enrollment growth in area- and index-based policies expected in 2023.”
To watch a video of the hearing and to read written testimony by Bonnie, click here.