New Trump Budget Proposes Big Cuts to Crop Insurance and Emergency Aid to Farmers

Christopher Walljasper March 2, 2020

Unharvested corn rots in a field near Monmouth, Illinois in November 2019.

Edi­tor’s Note: This sto­ry was orig­i­nal­ly pub­lished on The Mid­west Cen­ter for Inves­tiga­tive Reporting.

Crop insur­ance and oth­er farm sup­port pro­grams are set to receive big cuts in Pres­i­dent Trump’s pro­posed 2021 budget.

The Pres­i­den­t’s pro­posed 2021 bud­get, released on Feb. 10, slash­es spend­ing on crop insur­ance, com­mod­i­ty pur­chas­es and emer­gency aid to farm­ers fac­ing nat­ur­al disasters―three sources that con­tributed to near­ly a third of farm income in 2019.

Don­ald Trump has repeat­ed­ly expressed his appre­ci­a­tion for and ded­i­ca­tion to Amer­i­can farm­ers,” said Roger John­son, pres­i­dent of the Nation­al Farm­ers Union in a state­ment. Yet year after year, his bud­get has failed to address the very real eco­nom­ic chal­lenges fac­ing rur­al com­mu­ni­ties. There are a num­ber of pro­grams and agen­cies that can help farm­ers and rur­al res­i­dents with these difficulties―including the Con­ser­va­tion Stew­ard­ship Pro­gram, the Agri­cul­tur­al Research Ser­vice, and the Sup­ple­men­tal Nutri­tion Assis­tance Program―but the Trump admin­is­tra­tion is look­ing to cut fund­ing from all of them.”

The President’s pro­posed bud­get is unlike­ly to pass both hous­es of Con­gress in its cur­rent form, Sen. Shel­don White­house (D‑RI) told Reuters in an interview.

In 2019, farm­ers across the coun­try faced chal­lenges plant­i­ng, replant­i­ng and har­vest­ing as volatile weath­er pum­meled grow­ers from North Dako­ta to Ohio. Farm­ers were unable to plant more than 19 mil­lion acres, up from 1.9 mil­lion acres in 2018, accord­ing to U.S., Depart­ment of Agri­cul­ture data.

Crop insur­ance indem­ni­ties reached $8.7 bil­lion for 2019, accord­ing to data pub­lished by USDA’s Risk Man­age­ment Agency on Jan. 27. That’s up 51% from 2018, and more than dou­ble pay­outs from the 2017 crop year.

The past year has brought seri­ous eco­nom­ic dam­age to farm­ers and rur­al com­mu­ni­ties, yet the Admin­is­tra­tion is propos­ing to cut bil­lions in pro­grams that they count on in many dif­fer­ent ways,” said U.S. Rep. Collin Peter­son (D‑MN) in a Feb. 11 state­ment. Peter­son serves as the Chair­man of the House Com­mit­tee on Agriculture.

Adding in USDA’s $16 bil­lion Mar­ket Facil­i­ta­tion Pro­gram, designed to off­set ongo­ing trade wars, and $4.5 bil­lion in dis­as­ter relief for farm­ers, 2019 saw pay­outs of more than $20 bil­lion above tra­di­tion­al farm safe­ty net pro­grams such as fed­er­al crop insurance.

Trump’s 2021 bud­get would cut crop insur­ance by $12 mil­lion the first year, then bal­loon, slash­ing between $2 bil­lion and $3 bil­lion each year through 2030. In all, the doc­u­ment claims it’ll reduce crop insur­ance pay­ments by near­ly $25 bil­lion in the next decade.

The bud­get also promis­es to save $9.1 bil­lion over ten years by stream­lin­ing con­ser­va­tion pro­grams, $6.4 bil­lion by elim­i­nat­ing redun­dant Farm Bill Pro­grams, and near­ly $2.7 bil­lion by tight­en­ing farm pay­ment eligibility.

These moves are not new. Trump’s bud­gets from the past two years have includ­ed sim­i­lar pro­vi­sions, though none as deep as this cur­rent draft.

The bud­get also out­lines sup­port for rur­al hos­pi­tals and expand­ed broad­band inter­net access, while cut­ting fund­ing to pro­grams that dole out gov­ern­ment-backed loans for expand­ing inter­net and health­care access in remote parts of the country.

Deficit dou­ble-speak

The doc­u­ment, titled A bud­get for America’s Future,” speaks to fis­cal respon­si­bil­i­ty, call­ing the ris­ing fed­er­al deficit unsus­tain­able.”

The 2019 deficit was $985 bil­lion — the largest since the Great Reces­sion — and will climb above $1 tril­lion this year and for years after,” accord­ing to the doc­u­ments. Such high and ris­ing debt will have seri­ous neg­a­tive con­se­quences for the bud­get and the Nation.”

The 2021 bud­get then sets forth a series of vague ways in which the admin­is­tra­tion aims to stream­line agen­cies, reduce inef­fi­cien­cies and stop waste­ful and unnec­es­sary spending.”

The bud­get would increase spend­ing by $100 bil­lion more than the 2020 fis­cal year, to $4.8 tril­lion in 2021.

This is what hap­pens when ide­o­logues decide to cut pro­grams just for the sake of cut­ting,” said Peter­son. We will make sure that the farm bill isn’t cut dur­ing this year’s bud­get process. What’s worse is the Pres­i­dent is propos­ing all these cuts with­out any attempt to bal­ance the budget.”

Sec­re­tary of Agri­cul­ture, Son­ny Per­due praised the bud­get in a state­ment.

Pres­i­dent Trump’s bud­get con­tin­ues to reign in an over­grown Fed­er­al gov­ern­ment with fis­cal­ly respon­si­ble cuts in spend­ing,” said Per­due. USDA is doing its part to improve our cus­tomer ser­vice while reduc­ing our eco­nom­ic and reg­u­la­to­ry impact. We will con­tin­ue to serve and deliv­er our pro­grams on behalf of America’s farm­ers, ranch­ers, pro­duc­ers, foresters, and the food inse­cure with improved cus­tomer ser­vice and respect for tax­pay­er dollars.”

Fray­ing the farm safe­ty net

The doc­u­ment seems to acknowl­edge the need for farm safe­ty pro­grams, even as it calls for their reduction.

Farm­ers are expe­ri­enc­ing high lev­els of finan­cial stress due to chal­leng­ing mar­ket and grow­ing con­di­tions. To help farm­ers sur­vive the mar­ket shocks, the Admin­is­tra­tion has pro­vid­ed $28 bil­lion in trade mit­i­ga­tion assis­tance and $5.7 bil­lion in sup­ple­men­tal and ad hoc dis­as­ter assis­tance (2018 and 2019). This unprece­dent­ed lev­el of sup­port under­scores the President’s com­mit­ment to the Nation’s farm­ers and ranchers. 

In total, rough­ly one-third of farm income will come from Gov­ern­ment pay­ments and crop insur­ance ben­e­fits this year. As a result, USDA is pro­ject­ing that farm income will rise for the third year in a row,” the bud­get said.

One notable absence from the 2021 bud­get was any caps to under­writ­ing gains by pri­vate crop insur­ance com­pa­nies. A 2017 report from the Gov­ern­ment Account­abil­i­ty Office said insur­ance com­pa­nies’ prof­its aver­aged $1.3 bil­lion per year for 2011 through 2017.”

Those prof­its are sub­si­dized by the USDA’s Risk Man­age­ment Agency, and are locked in by Con­gress through the Farm Bill.

The nego­ti­at­ed rate of return was 14.5%, at least 3.5% high­er than mar­ket con­di­tions would sug­gest it should be,” said the GAO in its report. 

By low­er­ing the guar­an­teed rate of return for insur­ance com­pa­nies, GAO said the agency could save an esti­mat­ed $364 mil­lion each year.

Divest­ment in rur­al America

In addi­tion to pro­posed cuts to safe­ty nets for farm­ers, the President’s bud­get sends mixed mes­sages on fund­ing for rur­al health­care and access to reli­able broad­band inter­net access.

The Bud­get includes pro­pos­als to address the health­care needs of rur­al Amer­i­ca. The Bud­get pro­pos­es to expand access to telemed­i­cine ser­vices,” the bud­get explained.

Dig­ging into the doc­u­ment, line items for expand(ing) and enhanc(ing) access to Medicare tele­health ser­vices” and preserv(ing) access to rur­al emer­gency hos­pi­tals” receive no addi­tion­al fund­ing in the bud­get. Near­ly $1.8 bil­lion is removed from the rur­al health­care expen­di­tures by 2030 through moderniz(ing) pay­ments for rur­al health clinics.”

The bud­get said the USDA will fund $690 mil­lion in telecom­mu­ni­ca­tions loans and con­tin­ue imple­men­ta­tion of the Rur­al e‑Connectivity Pilot Pro­gram to fos­ter thriv­ing agri­cul­tur­al economies.” But it also plans to make cuts to USDA’s Rur­al Busi­ness Ser­vice Pro­grams, cit­ing one pro­gram viewed as wasteful.

These pro­grams have spent over a bil­lion dol­lars dur­ing the last 10 years sup­port­ing already suc­cess­ful busi­ness­es that could qual­i­fy for pri­vate sec­tor cap­i­tal,” accord­ing to the doc­u­ment. For exam­ple, the Val­ue-Added Pro­duc­er Grant pro­gram has pro­vid­ed over $3 mil­lion to winer­ies and vine­yards in 2018, includ­ing grant fund­ing to pro­mote wine slushies.”

These pro­grams also pro­vide loans for bio­fu­el pro­duc­ers, broad­band for rur­al com­mu­ni­ties left out by pri­vate sec­tor providers and telemed­i­cine grants.

The Mid­west Cen­ter for Inves­tiga­tive Report­ing is a non­prof­it, online news­room offer­ing inves­tiga­tive and enter­prise cov­er­age of agribusi­ness, Big Ag and relat­ed issues through data analy­sis, visu­al­iza­tions, in-depth reports and inter­ac­tive web tools. Vis­it us online at www​.inves​ti​gatemid​west​.org

Christo­pher Wall­jasper is an inves­tiga­tive reporter and audio pro­duc­er in Chica­go and across the Mid­west. He has cov­ered a vari­ety of issues, includ­ing rur­al Amer­i­ca, busi­ness, tech­nol­o­gy, real estate and nation­al security.
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