Crop Insurance and the 2018 Farm Bill www.CropInsuranceInAmerica.org
Presidents Love Farmers “It will not be doubted that “Cultivators are the most valuable “The planter, the farmer, the with reference either to citizens…they are tied to their country.” mechanic, and the laborer … individual or national President Thomas Jefferson are the bone and sinew of welfare, agriculture is of the country …” primary importance…” President Andrew Jackson President George Washington “…no other human “Prosperous farmers mean more employment, occupation opens so wide “Agriculture is now, as it’s always been, more prosperity for the workers, and the a field for the profitable the basis of civilization.” businessmen of every industrial area in the and agreeable combination President Theodore Roosevelt whole country.” of labor with cultivated President Franklin D. Roosevelt thought, as agriculture.” President Abraham Lincoln “The farmers are to be most highly complimented on the “Our farmers deserve praise, contribution that they made not condemnation; and their “In no other country do so few people to the war effort, and the efficiency should be cause for produce so much food, to feed so many, contribution that they are gratitude, not something for at such reasonable prices.” making to the peace effort now.” which they are penalized.” President Dwight D. Eisenhower President Harry S. Truman President John F. Kennedy 2
Presidents Love Farmers “The miracle of American "We start this Bicentennial year with There is no way that any other justifiable pride in our agricultural strength nation can challenge us in our agriculture is thus an example and progress … . I pledge to do everything in to all the world’s billions of capacity to produce food and my power of the Presidency to keep farm fiber, and there is no way that we the wisdom and the rewards income high and it will be.” can ever be deprived of this of our democratic system." tremendous advantage … We are President Gerald Ford President Lyndon B. Johnson stewards of that tremendous gift.” President Jimmy Carter “[Farmers] are the real miracle workers “Can you imagine a country of the modern world – keepers of an “Time after time, I’ve found that helping a that was unable to grow incredible system based on faith, enough food to feed the country meet its own food needs accelerates freedom, hard work, productivity, and people? It would be a nation economic growth in other sectors, creates profit – a system that feeds us and that would be subject to jobs, reduces reliance on imports, and sustains millions of the world's hungry.” international pressure. It would preserves social balances between urban and be a nation at risk.” rural areas.” President Ronald Reagan President George W. Bush President Bill Clinton “Not only does American agriculture put food on the “Our farmers deserve a government that table of American families at affordable prices … it also serves their interest and empowers them to do supports one out of every 12 jobs in the economy.” the hard work that they love to do so much.” President Barack Obama President Donald Trump 3
It’s No Wonder. Americans Support Farmers… Favorable Unfavorable 88% 87% 86% 86% 2% 2% 2% 3% Independents Democrats Republicans All I would like to read you a list of names of groups and have you tell me, for each one, whether you’ve heard of that group and , if so, whether you have a favorable or unfavorable opinion of them. If you haven’t heard of the group, just say so: Farmers. Source: National public opinion poll of 1,000 voters, North Star Opinion Research, April 2016 4
… Support the Thin Green Line … Agree Disagree 84% 82% 81% 78% 17% 15% 15% 13% All Republicans Independents Democrats Do you agree or disagree with each of the following Statements: A strong and thriving American farming industry is critical to American national security. Source: National public opinion poll of 1,000 voters, North Star Opinion Research, April 2016 5
… & Support Farm Policy Investments Important Not Important 93% 92% 92% 90% 9% 7% 7% 5% All Republicans Independents Democrats Now I am going to read you a list of policy areas that the federal government spends money on. For each one, would you please tell me if you view federal spending in that area to be important, or not important: Support for farms and farmers. Source: National public opinion poll of 1,000 voters, North Star Opinion Research, April 2016 6
Evolution of U.S. Farm Policy 1862-1917 – Focus on Education Every society in history has invested in feeding its citizens 7
Evolution of U.S. Farm Policy 1933-1985 – Focus on Farm Safety Net 8
Evolution of U.S. Farm Policy 1994-Today – Focus on Risk Management 9
1989 GAO: Setting the Stage “Crop insurance treats disaster victims more equitably” and “provides farmers disaster assistance more efficiently because farmers generally have more incentive to reduce risk under the program than they do under loan and direct payment programs.” “If the Congress chooses to rely on the crop insurance program exclusively to provide crop disaster assistance, a transition period for strengthening the program would probably be necessary.” “Crop insurance is a more equitable and efficient way to provide disaster assistance” than both direct disaster payments and emergency loans. 10
Transitioning to Risk Management Federal Crop Federal Crop Agricultural Act Ag Risk Insurance Act of Insurance Reform of 2014 Protection Act of 1980 Act of 1994 2000 • Made crop • Provided broader • Created the Risk • Expanded product insurance more Management offerings access to policies affordable Agency • Targeted waste, • Invested in • Created a • Promoted fraud and abuse beginning public-private participation with farmers partnership premium discounts 11
Crop Insurance Has America Covered 1.2 million policies provide $106 billion in coverage on 311 million acres in all 50 states 12
It’s Working As Designed Farmer-Paid Premiums Farmers help fund Year Amount their own safety 2014 $3.9B net by paying 2015 $3.7B 2016 $3.5B premiums and shouldering 2017 $3.7B deductibles TOTAL $14.8B 13
It’s Working As Designed Less than 1% of government spending goes to insuring America’s food and fiber production Did You Know? 10-year budget projections for crop insurance are down nearly $10 billion since the 2014 Farm Bill was enacted Source: Johnson, Renee, Previewing a 2018 Farm Bill, CRS, R44784, March 15, 2017 Source: Congressional Budget Office and Office of Management and Budget 14
It’s Working As Designed 20,000 private-sector workers deliver aid faster than the government Farmers lobby Lawmakers pass USDA delivers Congress a disaster bill payment Old-School $ Farm Policy 1–3 YEARS 1 – 3 YEARS Modern-Day Farmers customize Private-sector Farm Policy protection and purchase insurer verifies losses, insurance policies and provides assistance 30 DAYS 15
It’s Working As Designed Insurers have dollars at risk on every policy and are financially incentivized to reduce waste and improve efficiency Improper Payment Rates*: A Measure of Efficiency for Federal Spending Crop Insurance Government-Wide 2.2% 2015 4.4% 2.0% 2016 4.7% *An improper payment occurs when funds go to the wrong recipient; when a recipient receives too little or too much; or when funds are used inappropriately. Many errors are rooted in data entry and reporting mistakes. 16
Will It Continue to Work? That Depends Will crop insurance remain AFFORDABLE for farmers? Will crop insurance be widely AVAILABLE to all farmers? Will crop insurance be economically VIABLE for private-sector insurers? 17
2018 Farm Bill Fight There are a lot of unknowns SNAP Budget Elections Floor Time Cotton & Dairy 18
Attack on Affordability: The Plan PER PERSON LIMITATION — The Corporation shall not pay more than $40,000 for any reinsurance year to any person or legal entity for premiums under this section.” 19
Attack on Affordability: The Spin The Spin “Crop insurance is a handout. Farmers pray for drought, not rain.” The Truth Farmers get a bill, not a check most years. Only 19% of policies were indemnified in 2016. 20
Attack on Affordability: The Result Reduced participation only increases the likelihood of taxpayer-funded ad hoc disaster bills Acres to hit the proposed cap 1,239 1,497 South Dakota Wisconsin 981 1,592 New Hampshire Michigan 1,332 New York 1,155 Pennsylvania 553 1,205 California Virginia 1,254 South Carolina 1,224 1,149 Georgia Texas Source: Kansas State University 21
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