The Hagstrom Report

Agriculture News As It Happens

Navigation

Bankers ask for no cut to crop insurance

The Independent Community Bankers of America today proved what agriculture leaders on Capitol Hill have been saying for weeks: that bankers want farmers to have crop insurance.

In a letter, the ICBA and other groups urged senators to maintain current funding levels for federal crop insurance and “avoid amendments that result in less participation, lower premiums or a weaker delivery system.”

“Crop insurance is the cornerstone of most farmers’ risk management portfolios,” the coalition wrote.

“After a very challenging 2011 crop year, and with increasing demands for food, fiber, feed and fuel worldwide, it makes little sense to reverse the great progress Congress has made in providing crop insurance protection to producers.”

Farmers do not receive subsidy checks for crop insurance but rather receive discounts on the checks they write to pay premiums and buy insurance from private sector providers, the bankers noted.

“Producers often pay premiums for years without collecting anything and only receive payments in the event of a loss. Congress should maximize participation to ensure the lowest rates possible for all producers in the program, which only occurs when risks are pooled across as many farmers as possible,” the letter said.

In addition to proposed crop insurance cuts, ICBA also opposes amendments to reimpose term limits or restrict access to USDA guaranteed farm operating loans and amendments to restrict or prohibit USDA guaranteed loans, the bankers said.

“Such approaches would needlessly force thousands of farmers and ranchers out of the program; cut off farmers’ income stream; inhibit their ability to repay lenders, suppliers and the USDA; and force many farmers into unnecessary liquidations,” the letter said.