With Congress nearing a vote on a new Farm Bill that will set agricultural policy for the next five years, the banking industry is urging lawmakers to resist efforts to weaken the federal crop insurance program.
Lawmakers have introduced several amendments that could reduce government payments to farmers to help pay crop insurance premiums. One would put income limits on subsidies and another would cap government subsidies at $40,000 a year, regardless of the farm's size.
According to a report recently released by the Environmental Working Group, a Washington research firm, more than 10,000 farming organizations received subsidies of between $100,000 and $1 million last year. In all, the government spends about $7 billion a year to cover about two-thirds of farmers' insurance premiums.
The banking industry argues that many farmers could not afford their premiums without meaningful government assistance. For banks, that means loans to farmers could go unpaid if crops are damaged and farmers don't have enough insurance to cover their losses.
"We cannot support amendments that limit risk management protection to farmers and ranchers who operate in a very risky environment," the American Bankers Association and the Independent Community Bankers of America wrote in a letter to Sen. Debbie Stabenow, D-Mich., who chairs the Senate Agriculture Committee.
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The Senate voted in early June to advance the latest farm bill and is now debating the bill and its various amendments.
