Shaheen Introduces Bill to Eliminate $21 Billion in Hidden Ag Subsidies

November 08, 2017

(Washington, DC) – Today, U.S. Senator Jeanne Shaheen (D-NH) reintroduced the Harvest Price Subsidy Prohibition Act with Senator Jeff Flake (R-AZ). The bipartisan, bicameral legislation eliminates a costly but little-publicized crop insurance subsidy known as the Harvest Price Option (HPO). The bill would save taxpayers $21.1 billion according to the nonpartisan Congressional Budget Office. A companion bill was also introduced in the House of Representatives today by Congressman John J. Duncan, Jr. (R-TN).

Under a traditional crop insurance plan, farmers will only receive a payout if they earn less money at harvest time than they were projected to make when they planted their crop. By softening the blow of unanticipated losses, traditional crop insurance serves as a safety net. However, under an HPO policy, if that crop’s price at harvest time ends up higher than the insured planting price the insurance payout is recalculated based on the higher price. By paying out more money than the farmer ever anticipated earning, HPO policies go far beyond the safety-net concept – they are simply a taxpayer-subsidized profit guarantee.

While the bill would eliminate taxpayer-funded subsidies for HPOs, it would not prohibit the U.S. Department of Agriculture from offering HPO plans, provided that individual policyholders pay the full insurance premium. The bill would do nothing to limit, reduce or alter subsidies associated with traditional crop insurance plans.

“We’re proposing a commonsense reform with the potential to save taxpayers $21 billion,” said Senator Shaheen. “This is a smart, pragmatic bill that will provide our current crop insurance program with a much needed fix. We ought to act on it immediately to save taxpayer dollars.”

“HPO is like insuring your car for $5,000, and getting a check for $10,000 after it’s totaled. It’s the kind of program that only makes sense in Washington,” said Senator Flake. “Making a living in agriculture isn’t easy or predictable, and there’s a case to be made for safety net programs such as traditional crop insurance. But HPO isn’t a safety net, it’s a taxpayer-funded windfall. With a $20 trillion national debt, taxpayers shouldn’t be expected to pay Big Ag billions of dollars for profits that they never expected to earn in the first place.”  

“HPO is a bureaucratic name given to a subsidy program in our law which has allowed some foreign owned insurance giants and the wealthiest farmers to get billions from U.S. taxpayers,” said Rep. Duncan. “Senators Flake and Shaheen and I have reintroduced the Harvest Price Subsidy Prohibition Act to end this costly program which creates an unfair playing field for small family farmers.”

This measure is also supported by the following groups: Americans for Prosperity, National Taxpayers Union, Taxpayers for Common Sense, Coalition to Reduce Spending, The Council for Citizens Against Government Waste, Campaign for Liberty, R Street Institute, and Environmental Working Group.

In May, Shaheen and Flake reintroduced the Assisting Family Farmers through Insurance Reform (AFFIRM) Act, a bipartisan bill that would reform the current crop insurance system to save taxpayers nearly $34 billion over the next 10 years.