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Repeal of sugar supports and reform of crop insurance would reduce unnecessary subsidies

(Washington, D.C.) – As part of her ongoing efforts to eliminate outdated programs and protect taxpayers, U.S. Senator Jeanne Shaheen (D-NH) has introduced two bipartisan, fiscally responsible amendments to the farm bill that would eliminate or reform unnecessary subsidy programs. The bill, S.3240, is currently under consideration in the Senate.

“As we look for ways to deal with our long-term deficits, and as families struggle with rising costs and flat incomes, we need to look at what policies have outgrown their usefulness,” Shaheen said. “The farm bill contains provisions that are no longer helpful to the U.S. economy and should be reformed or eliminated.”


The first amendment is Shaheen’s Stop Unfair Giveaways and Restrictions (SUGAR) Act (S. 25), which would repeal the federal government's costly sugar support program.  Current U.S. sugar policy price supports keep the cost of U.S. sugar artificially high, nearly twice the world price, which costs consumers and businesses an estimated $3.5 billion and 20,000 jobs each year.  The sugar program was notably the only agriculture commodity program that was not reformed by the Senate Agriculture Committee when it wrote the bill.  The amendment was introduced by Senators Shaheen and Mark Kirk (R-IL). The SUGAR Act is cosponsored by Senators Lamar Alexander [R-TN], Scott Brown [R-MA], Tom Coburn [R-OK], Bob Corker [R-TN], Richard Durbin [D-IL], Dianne Feinstein [D-CA], Frank Lautenberg [D-NJ], Rob Portman [R-OH], and Pat Toomey [R-PA].

“For years, the sugar industry has been getting a sweet deal, and American consumers and businesses have had to pay for it,” Shaheen said. “The sugar program should be eliminated to help small businesses in New Hampshire meet their bottom lines and put money back into the pockets of consumers.”

Supporters of the measure include a wide variety of business groups that represent sugar-using industries, as well as Americans for Tax Reform, Consumer Federation of America, Council for Citizens Against Government Waste, National Foreign Trade Council, National Resources Defense Council, National Wildlife Federation and the U.S. Chamber of Commerce.


Shaheen’s second bipartisan reform amendment would cut crop insurance premium subsidies for large farms. Introduced with Senator Toomey, the amendment caps crop insurance subsidies at $40,000 reducing the deficit by about $5.2 billion over ten years according to Congressional Budget Office (CBO) estimates.

“Cutting excessive insurance subsidies to large farms is a common-sense way to save taxpayers billions of dollars and help reduce the country’s deficit,” Shaheen said.

The $40,000 cap is similar to payment limitations that already apply to traditional farm subsidies.  Under the amendment, producers would still have full access to the crop insurance they need, including plans with premiums greater than $40,000. Less than four percent of producers would have been affected by a $40,000 premium support limit in 2011, according to the Government Accountability Office.

The federal crop insurance subsidy program was created in 1980 and expanded in 2000 to encourage farmers to purchase private crop insurance and avoid reliance on post-disaster federal support.  To encourage wider use of crop insurance, Congress increased subsidies for farmers and crop insurance companies and agents.  The average portion of the crop insurance premium paid by the taxpayer increased from 37 percent in 2000 to more than 60 percent in 2011. The total cost of the crop insurance program also increased – from $2 billion in 2001 to $9 billion in 2011. Over the next ten years, CBO estimates the crop insurance program will cost the taxpayers more than $90 billion. 

Premium subsidies to farmers are not currently subject to limits or means testing.  In 2011, 26 farm businesses received more than $1 million to reduce the cost of their crop insurance premium, and more than 10,000 farm businesses received more than $100,000.

The amendment is supported by a diverse coalition including Americans for Tax Reform, Council for Citizens Against Government Waste, the Environmental Working Group, the National Sustainable Agriculture Coalition, National Taxpayers Union, Taxpayers for Common Sense and U.S. PIRG.