WASHINGTON, D.C. (Reuters) — A coalition of fiscal conservatives in the United States is calling for a steep cut in federal subsidies for crop insurance, setting up a clash with U.S. farm groups that see the program as their top priority in a new farm bill.
Growers have collected more than $15 billion US in payments for 2012 losses resulting from the worst U.S. drought since the 1930s. Of that total, the cost to the government could be $10 billion.
Crop insurance is the biggest part of the U.S. farm safety net, thanks to high commodity prices and the popularity of policies that shield farmers from low prices and poor yields. The program is expected to cost $85 billion over the next decade.
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Senator Jeff Flake of Arizona and representative John Duncan of Tennessee, both Republicans, filed bills to save $40 billion by slashing the federal subsidy for buying crop insurance. The government now pays 62 cents of each $1 of the premium.
The Flake and Duncan bills would return the subsidy to the levels of the late 1990s, when it was around 38 percent.
“It’s a program that loses money for the taxpayers whichever way it goes,” Flake told reporters.
