Crop insurance a post-election target

For more than two years now, we have been talking about how "it’s time to talk about the farm bill."

Now that the election is over, guess what? It’s that time again.

Reuters reports that lawmakers probably will not be able to break their deadlock over enacting a five-year, $500 billion farm bill in the lame-duck session of Congress, which opens next week. But federally subsidized crop insurance will be a big target for lawmakers looking to cut the budget deficit, agriculture experts say.

"Odds are against a five-year farm bill in the lame duck (session) unless it's part of a budget agreement," and a budget deal is also unlikely, said Pat Westhoff of the think tank Food and Agricultural Policy Research, based at the University of Missouri.

Crop insurance already is the biggest part of the farm safety net, costing the government around $7 billion a year. The cost was expected to jump to $15 billion or more this year because the government will shoulder most of the underwriting losses for the 16 insurance companies in the field.

The full cost of the drought indemnities will be revealed during Congress' post-election session, which could direct more attention to crop insurance. So far, farmers have collected $3.6 billion in indemnities that ultimately could hit $25 billion., meanwhile, shares the views of Ohio State University ag economist Carl Zulauf, who points out that the Farm Bill debate involves the same issues as the country at large faces - how to build an appropriate and affordable safety net.

"Interestingly, the debate over the 2012 farm bill involves many aspects of this broader policy discussion: debate is occurring over both the form and cost of the farm safety net, as well as whether the safety net should be delivered through private agents, i.e., crop insurance, or via government agencies, e.g., the Farm Service Agency," Zulauf said Wednesday. "While entirely speculative, it is possible that history may reveal that the 2012 farm bill ultimately served to guide the resolution of the policy issues surrounding the broader U.S. safety net for the twenty-first century.

"In short, it may be fortuitous that during the forthcoming lame-duck session of Congress the debate over the so-called fiscal cliff of automatic budget cuts and tax increases coincides with the debate over the farm bill."