SHAHEEN: CAPPING INSURANCE ASSISTANCE TO LARGE FARMS COULD SAVE $1 BILLION A YEARApril 25, 2012
(Washington, D.C.) – Cutting excessive insurance subsidies to large farms could save taxpayers billions of dollars, U.S. Senator Jeanne Shaheen (D-NH) said today.
Shaheen called on the U.S. Senate Committee on Agriculture to consider implementing crop insurance reforms recommended in a recent General Accountability Office (GAO) report. The program helps farmers pay their insurance premiums to protect against risks associated with farming. The GAO report found that about a third of premium supports go to a few large farms, which make up approximately just four percent of farms in the program. In 2011, the largest single recipient of funding was a corporation that received $2.2 million, more than six times the amount provided to all the farms in New Hampshire combined. The report found that large farms like these can afford to pay their insurance without the high level of taxpayer funding they receive under the current program.
Shaheen recommended that Congress consider capping insurance support at $40,000, the same amount placed on other farm programs. The change would have affected no New Hampshire farms in 2011 and would save taxpayers approximately $1 billion a year.
“This program is not using taxpayer dollars effectively or efficiently,” Shaheen said. “At a time when we are facing severe across-the-board budget cuts, we have to review all programs to see if they are a smart use of resources. Given our budget constraints, it simply does not make sense for large farms to receive unlimited government help in paying for their insurance. We should put the same common-sense limits on this insurance program as we put on other farm programs.”
The taxpayer costs associated with the crop insurance program have seen a significant rise over the past decade. While it cost taxpayers $2.4 billion ten years ago, the Congressional Budget Office estimates that the current program will cost taxpayers almost $9 billion a year for the next decade.
Shaheen has been a strong advocate for reducing wasteful spending through the elimination of outdated programs. She cosponsored a measure last year to end unnecessary ethanol subsidies and has introduced bills to phase out federal supports for U.S. sugar growers and eliminate double subsidies for gold and silver mining.
The full text of Shaheen’s letter is below:
April 25, 2012
Dear Chairwoman Stabenow and Ranking Member Roberts,
As you consider the 2012 Farm Bill, I urge you to consider ways to reform the federal crop insurance program to save billions of dollars for taxpayers in the coming years while ensuring that the program helps the farmers who need it.
The federal crop insurance program helps producers mitigate the risks associated with farming, including natural disasters and price volatility. Without this premium support, crop insurance would be unaffordable for many farms in New Hampshire and across the country.
However, the growth in cost for the federal crop insurance program has raised concerns about its long-term sustainability. Just ten years ago, the program cost taxpayers only $2.4 billion. Last year, the program cost $8.9 billion. The Congressional Budget Office estimates that the program will continue to cost taxpayers almost $9 billion every year for the next decade.
With the Farm Bill, Congress has an opportunity to reduce the cost of the crop insurance program while ensuring that it remains an effective tool for the farms that truly need it. Recently, the Government Accountability Office (GAO) found that limiting payments to large farms could significantly reduce the burden of this program on taxpayers. In an effort to find ways to limit the costs of this program, GAO modeled a $40,000 payment limit for premium subsidies—a level common to other farm programs. Applying this threshold, GAO found the program would have saved $1 billion in 2011 while affecting less than four percent of all farms participating in the program.
The GAO report makes clear that the crop insurance program disproportionately benefits large farms; GAO found that about a third of premium subsidies go to farms receiving over $40,000 in premium support. In 2011, the largest single recipient was a corporation that received $2.2 million. This one corporation received over six times the amount of support provided to all farms in New Hampshire in 2011. This situation is hard to justify at any time, let alone in this difficult budget climate.
I urge the Committee to consider ways to reduce the program’s burden on taxpayers while ensuring the program works for both large and small farms. Limiting the amount of taxpayer assistance provided to large producers is one way to reduce future deficits while also creating a more level playing field for smaller farms.
I appreciate your leadership in advancing a Farm Bill this year, and I hope to see commonsense changes to the crop insurance program as the Committee considers this important legislation. I look forward to working with you as the Farm Bill advances to the Senate floor.
United States Senator
Press Office, (202) 224-5553
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