Washington, D.C. — The Obama Administration is proposing to cut payments to many commercial-scale farms and also wants to slash payments to the crop insurance industry.
President Barack Obama’s proposed 2011 budget would cut $9.8 billion over the next decade by phasing out fixed annual payments received by grain and cotton farmers with sales of more than $500,000 a year. Congress quickly scuttled a similar proposal a year ago when farm groups complained that the cut could hit some mid-size farms as well as large operations.
Crop insurance companies would see a cut of $5.2 billion over 10 years. The administration had been circulating a plan to cut nearly that much over just five years to much protest from the 15 insurance companies, four of which are based in Iowa. An industry trade group offered to take a cut of just $100 million over five years.
The White House said the industry’s government earnings from the program amount to a “corporate subsidy” that has grown disproportionately large.
Crop insurance premiums are heavily subsidized by the federal government. Companies and agents are paid for overhead costs, and the companies also pocket most of the profit from the policies when premiums exceed losses. The program’s profitability has soared in recent years as premiums have soared along with the prices of the insured commodities.
The president’s budget also includes cuts in several other Agriculture Department programs. One that subsidized overseas marketing promotion of U.S. food would be reduced by $358 million over 10 years.
Also proposed for a cut is a program that subsidizes hunting leases on private land.