Congress restores $3bn in crop insurance funds

OREANDA-NEWS. December 09, 2015. Congress restored an estimated \\$3bn to the federal crop insurance program last week with the passage of the Fixing America's Surface Transportation (FAST) Act.

The return of the \\$3bn overturns lawmakers' decision to cut the funds as part of a bipartisan budget deal in October. Many farm groups applauded the restorationas the funds will help crop producers continue their operations in the face of a forecasted long-term downturn in the commodities market and unforeseen weather events resulting from a strong El Nino and possible La Nina.

"Crop insurance is a lifeline for jobs and families across rural America. It was unfair to try forcing even deeper cuts on hardworking farmers," US senator Heidi Heitkamp (D-North Dakota) said last week.

Crop insurers had already withstood \\$12bn in cuts since 2008 and were adamantly against an additional \\$3bn drop in funding. The proposed cuts would have likely led to more industry consolidation and a dramatic decline in available services, according to a joint statement from the Crop Insurance and Reinsurance Bureau, American Association of Crop Insurers, and the National Crop Insurance Service.

Agricultural groupssaid the bill was a victory for rural farmers.

"The draconian cuts included as part of the budget agreement, which were reversed last night, would have increased the cost of delivering the program, reduced options for producers, and ultimately made premiums more expensive," National Association of Wheat Growers president Brett Blankenship said.

The crop insurance risk-management tool helps in pre-harvest marketing and can be used as collateral for loans, allowing producers to borrow money for operating costs, including fertilizer.

Knowing the price floor for the projected harvest helps producers hedge their grain bid in order to receive top dollar. The 2016 base pre-harvest prices, prior to the close of price discovery in February, are \\$3.944 for corn, \\$8.873 for soybeans and \\$5.412 for wheat, according to the US Department of Agriculture Risk Management Agency. The 2015 harvest prices were \\$3.79 for corn, \\$8.76 for soybeans and \\$5.47 for wheat.