Trump's Gamble With Farmers: Crop Insurance At Risk?

In 2018, President Trump proposed a budget that would reduce funding for crop insurance subsidies by a third, or $26 billion over a decade. This was part of a fiscal 2019 budget package that included cuts to other agricultural programs. Trump's proposal faced criticism from farmer groups and lawmakers from both parties, who argued that crop insurance is essential for farmers, especially in times of low farm incomes and tariffs. Despite the pushback, Trump continued to propose cuts to crop insurance and other agricultural programs in his fiscal 2020 and 2023 budgets. However, these proposals were largely ignored by Congress, and Trump also stated his support for crop insurance at the American Farm Bureau's annual convention in 2023.

Trump's proposed cuts to crop insurance

In 2018, President Trump proposed a 33% cut in crop insurance as part of his fiscal 2019 budget. This would have reduced the program by $26 billion over a decade. The proposal was met with criticism from agricultural groups, who called it "anti-rural" and "anti-farmer". Despite this, the Trump administration gave precedence to its ideas for infrastructure spending.

In 2019, Trump again proposed cuts to crop insurance in his fiscal 2020 budget. This time, the proposed cut was for $25.7 billion over 10 years, or a 31% reduction. The White House argued that this would "optimize crop insurance and farm subsidies" by eliminating subsidies for higher-income farmers and reducing premium subsidies. However, the National Farmers Union criticized the proposal, stating that it failed to acknowledge the sharp decline in farm income.

Trump's 2020 budget called for a 15% funding drop for the Department of Agriculture, with the president seeking one of the largest-ever cuts to domestic discretionary spending. This included a reduction in the USDA budget by $3.6 billion, lowering subsidies for crop insurance premiums from 62% to 48%, and limiting subsidies for growers earning less than $500,000 annually. The budget proposal was criticized by agricultural groups and politicians, who argued that it would hurt farmers already struggling with low prices and declining incomes.

The impact on farmers

President Trump's proposed budget cuts to crop insurance could have a significant impact on farmers, particularly those who rely on funding for their operations. Farmers would be forced to pay a much larger share of crop insurance premiums—an increase from 38% to 52%. This shift would result in a significant financial burden for farmers, especially those already struggling with low prices and declining incomes due to factors such as trade wars and tariffs.

The proposed cuts to crop insurance subsidies are part of a broader set of reductions in federal agricultural funding, including a $46.54 billion cut proposed in May. These cuts have angered farm groups and farmers themselves, who argue that crop insurance is essential for their financial stability, especially in challenging economic times. The National Farmers Union, for instance, has criticized the White House budget proposal, calling for the recognition of the financial pain in farm country.

The impact of these proposed cuts would be felt most acutely by small farmers, who often rely on crop insurance and federal subsidies to sustain their livelihoods. The National Sustainable Agriculture Coalition, representing small farmers, characterized the package of cuts as "the most anti-rural, anti-farmer proposal the agriculture community has seen in years." The proposed budget would reduce funding for agricultural research and rural economic development, further straining the resources available to farmers.

However, it is important to note that Congress has the power to accept, reject, or modify the President's budget proposals. In the case of Trump's proposed cuts to crop insurance, there is bipartisan opposition in Congress, with some representatives committed to maintaining a strong safety net for agricultural producers. Despite this, the proposed cuts have caused uncertainty and concern among farmers, who worry about their ability to manage risks and maintain their operations without adequate financial support.

Overall, the potential impact of Trump's proposed budget cuts on farmers is significant. While the administration argues that the cuts are necessary for optimizing spending and reducing overly generous subsidies, farmers and their representatives argue that these cuts could have devastating consequences for an already struggling agricultural community. The outcome will depend on the back-and-forth between the administration and Congress, leaving farmers in a state of limbo regarding their future financial security.

The White House's reasoning

The White House has argued that the proposed cuts to crop insurance are necessary to save billions of dollars and reduce the federal deficit. In his 2020 budget proposal, President Trump called for a reduction in “overly generous” subsidies for crop insurance, which he believed would optimize the program and make better use of taxpayer resources. The White House also stated that the cuts would eliminate subsidies for higher-income farmers, reduce premium subsidies, and limit payments to private insurance companies.

The Trump administration argued that the crop insurance program was bloated and that farmers were not taking enough measures to prevent losses. They believed that by reducing the government's support for crop insurance, farmers would be incentivized to be more proactive in managing their risks. Additionally, the administration proposed to deny farm program benefits to individuals with an adjusted gross income (AGI) above $500,000 per year, down from the previous cutoff of $900,000 AGI. This change aimed to target support towards smaller and medium-sized farmers who may need it the most.

The White House also emphasized the need to prioritize spending and allocate resources efficiently. By reducing spending on crop insurance, the administration believed it could redirect funds towards other important areas, such as infrastructure development and defense spending. They argued that not all federal spending was equally beneficial and that cutting back on certain programs, including crop insurance, would allow for a more efficient use of taxpayer dollars.

Furthermore, the Trump administration highlighted the importance of free and fair trade deals and expanding the use of ethanol. They believed that by tackling overregulation and creating better trading relationships, farmers would have more opportunities to succeed and would be less reliant on government subsidies. The administration also pointed to the elimination of the "Waters of the United States" rule, which gave the federal government more control over private land, as a step towards reducing burdensome regulations on farmers.

While the proposed cuts to crop insurance were controversial and faced opposition from farmer groups and lawmakers, the White House maintained that the optimizations were necessary to balance the budget and ensure efficient use of taxpayer funds. They believed that the reductions would not compromise the safety net for agricultural producers and that other measures, such as trade deals and tax cuts, would ultimately benefit the farming community.

Congress's response

Congress has been critical of President Trump's proposals to cut crop insurance. In response to Trump's fiscal 2019 budget package, which included a $26 billion cut to crop insurance over a decade, the Republican chairmen of the Senate and House Agriculture committees issued a joint statement asserting their commitment to "maintaining a strong safety net for agricultural producers." Senator Pat Roberts, a stalwart supporter of crop insurance, stated that he “will hold [Trump] to his word" and plans to include funding for crop insurance in the upcoming farm bill.

Congressional representatives have also expressed their disagreement with Trump's proposed cuts to crop insurance in his fiscal 2020 budget. House Agriculture chairman Collin Peterson characterized the budget as being "concocted by a bunch of ideologues who can’t see what’s clearly going on in the farm economy," while Nita Lowey, the top Democrat on the House Appropriations Committee, stated that "the Trump budget has no chance of garnering the necessary bipartisan support to become law."

Despite Trump's proposals to cut crop insurance funding, Congress has maintained its support for the program, recognizing its importance for farmers. In response to the proposed cuts, Texas Rep. Michael Conaway, the senior Republican on the House Agriculture committee, expressed his expectation that "the president to be fully on board" in supporting farmers and rural America.

Overall, Congress has made clear its intention to maintain and strengthen crop insurance programs, even in the face of proposed cuts by the Trump administration.

Trump's other policies affecting farmers

While Donald Trump has repeatedly claimed that he loves America's farmers, some of his policies have negatively impacted them. Here are some of Trump's other policies that have affected farmers:

• Trade Wars: Trump's trade war with China has hurt American farmers, who bore the brunt of China's retaliatory tariffs. China is the biggest buyer of many US agricultural products, and these became targets for tariffs. While Trump has tried to ease the pain with aid packages, farmers have lost billions in exports.
• Ethanol Policies: Trump's ethanol policies have frustrated farmers, especially when his EPA granted 31 waivers to small refineries, exempting them from biofuel laws.
• Regulatory Rollbacks: Trump's administration rolled back environmental protections, including Obama's Waters of the United States (WOTUS) rule, which aimed to protect waterways from pollution by limiting the discharge of chemicals. Trump's rule excludes smaller streams and wetlands from protection.
• Postal Service Cuts: Trump has targeted the US Postal Service, which is critical for rural communities. His proposed cuts and changes to the service have delayed deliveries, affecting rural Americans' access to essential services like prescription deliveries.
• Budget Cuts to Rural Development: Trump's administration proposed eliminating rural development as a mission area of the USDA, stripping it of resources and budget. This would have hurt rural communities by reducing investments in infrastructure and support for rural businesses.
• Support for Agribusiness Over Independent Farmers: Trump's administration has been accused of siding with agribusinesses over independent farmers. They revoked Obama-era rules that protected livestock farmers from exploitation by powerful agriculture monopolies.
• Meatpacking Plant Regulations: The Trump administration issued regulations allowing meatpacking plants to speed up butchering lines, despite safety concerns for workers. This rollback of safety limitations puts rural workers and consumers at risk.
• Cuts to Agriculture Research: Trump's administration abruptly announced plans to move the USDA's primary research bodies, causing the loss of experts and delays in research grants and programs. This disrupted agriculture research and training, affecting farmers who rely on timely analyses and information.

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