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October 26 – INSURANCE INDUSTRY AND AFBF OPPOSE REVENUE
ASSURANCE: The grower and consumer friendly concept of a revenue assurance based farm bill seemed well on its way to reality in the Senate, only to see it seriously modified after intense opposition from the influential crop insurance industry and the American Farm Bureau Federation.
After reaching a framework agreement with Ranking Member Saxby Chambliss
(R-GA) and Kent Conrad (D-ND), Senate Ag Committee Chairman Tom Harkin (D-IA) announced the inclusion of a state level revenue-based counter cyclical Average Crop Revenue (ACR) in The Farm Safety Net
Improvement Act of 2007. But Sen. Pat Roberts and several of his Republican colleagues orchestrated an assault on the ACR to prevent its integration with federal crop insurance, a benefit that would have
lowered crop insurance premiums by an estimated overall 24 percent after the re-rating of policies.
The optional program, modeled after the Durbin-Brown Bill supported by the
Illinois Corn Growers Association, would have lowered participants’ direct payments to a fixed rate of $15 per acre (for all crops) to help offset the costs of providing producers a state revenue counter
cyclical program and significantly reduce crop insurance premiums.
It appears the Roberts’ amendment removes most grower benefits
from Chairman Harkin’s Revenue-Based proposal. The Senate Committee on Agriculture, Nutrition and Forestry adopted an amendment by Sen. Pat Roberts of Kansas on a voice vote that fundamentally changed the Average
Crop Revenue (ACR) program that was included in the proposed farm bill text Chairman Harkin put before the Committee earlier this week.
Observers said the amendment by Sen. Roberts took the Committee by surprise
because of its sweeping nature. The amendment would make ACR more unattractive to growers by 1) making ACR payments on 85% of base acres, rather than planted acres; 2) requiring that producers make a single
election to participate for the 2010 to 2012 crop year period that ACR would be offered, rather than an election for each of the three years; 3) raising producer insurance premiums over what the Chairman’s mark
would make available by striking the provision that would integrate the ACR and require re-rating of policies to rebalance the risk between ACR and the individual policy.
Senators Conrad and Chambliss objected to using additional reductions in
projected spending resulting from the Roberts’ amendment to raise the 85% payment acreage back to 100% of planted acres, instead insisting that they be used to improve Food Stamp benefits.
By discouraging participation, the Roberts’ amendment would cut grower ACR
payments by $10 billion over 10 years, according to the Congressional Budget Office, raise projected counter cyclical and loan deficiency payments $1.5 billion and expenditures from the Federal Crop Insurance
Corporation of nearly $7 billion.
Sen. Roberts’ argued for the reduction to 85% payment acres on grounds of
World Trade Organization (WTO) compliance, despite Administration assurances that ACR payment on planted acreage was not a compliance problem.
Now that a bill has cleared the Senate Ag Committee, the National Corn
Growers Association will begin to secure a more thorough analysis of the Roberts’ amendment and assess the opportunities to improve the ACR when the bill is taken up by the Senate the week of November 5. A
team or growers from the Illinois Corn Growers Association will be in Washington,DC next week working on this and other issues on your behalf.
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