Senate Farm Bill Amendment Would Rein in Crop Insurance Subsidies for the Rich
A new amendment to the Senate farm bill that limits crop insurance subsidies for the wealthiest farmers would save taxpayers more than $490 million dollars over the next 10 years.
The amendment championed by Sen. Dick Durbin would reduce crop insurance premium subsidies to farm couples who make more than $1.4 million a year in adjusted gross income, or AGI, by 15 percent.
Currently, there aren’t any income limits on crop insurance subsidies – even though farm couples are completely ineligible for commodity subsidies if their yearly income is above $1.8 million. The version of the farm bill passed by the Senate Agriculture Committee last week lowered that income limit to $1.4 million – but the bill only applies the new limit to commodity subsidies, not crop insurance subsidies.
Since there is no income test – or payment limit – for crop insurance subsidies, the wealthiest farmers get most of these subsidies. As the chart below shows, on average, the top 1 percent of farms by crop sales receive $50 per acre in crop insurance subsidies.
What’s more, the top 10 percent of farms by crop sales get close to 70 percent of all crop insurance subsidies.
Opponents of the amendment claim that reducing premium subsidies by 15 percent for the wealthiest farmers – those with AGIs greater than $1.4 million – might cause them to leave the program.
But, research from the USDA Economic Research Service found that the biggest farmers would not leave the program just because of a small subsidy cut.
The Congressional Budget Office also discovered that farm couples with an AGI greater than $1 million would not exit the program if premiums were reduced by 15 percent.
At most, a few wealthy farmers might lower their crop insurance coverage levels to reduce the costs of their premiums, but they wouldn’t exit the program.
Even if the big guys did leave the program – which experts say they wouldn’t – the Government Accountability Office said this would not impact other farmers buying crop insurance because less than 1 percent of farmers would be impacted by the AGI limit.
Durbin’s amendment would simply ensure that farm couples who have made millions in the marketplace pay a fairer share of their crop insurance subsidies. The farmers would not leave the program because they would still receive millions in premium subsidies. But it’s a step in the right direction that would save taxpayers almost half a billion dollars.