Crop Insurance Saves Taxpayers $8 Billion Over 5 Years07/11/2017
Agriculture lawmakers are on track to have about $130 billion less in funding for the next farm bill than they did when they wrote the last law, a reality the CBO solidified with its most recent 10-year baseline published last week. The CBO on June 29 predicted that farm and nutrition programs would cost about $822 billion over a decade, or $679 billion for SNAP and $143 billion for commodity subsidies, crop insurance, conservation and other ag programs. The last time around, the CBO told the House Agriculture Committee that its farm bill agreement with the Senate would cost $956 billion over a decade, which was enacted a month later in February 2014.
The money that agriculture lawmakers have to work with for the 2018 farm bill, due next September, could be cut even further should Congress pass a budget resolution this year. House Agriculture Chairman Mike Conaway made it his mission to shield the farm bill from massive mandatory spending cuts over a decade, which were being sought by Budget Chairwoman Diane Black and the House Freedom Caucus. Conaway and Black on June 29 agreed on a number that the Texas Republican said would allow him to write a farm bill.
While Congress and CBO may operate in 10-year budget windows, MA took a deeper look at the five-year costs of the 2014 farm bill — since that’s the length of time it’s supposed to be authorized for. Based on the CBO’s most recent baseline, here’s what we found (and as a note, the first three of years are actual spending, while fiscal 2017 and 2018 are estimates):
SNAP savings are huge. Between fiscal 2014 and 2018, the food stamp program will cost about $359 billion, or nearly $32 billion less than originally estimated by the CBO just before the 2014 farm bill was passed.
Commodity subsidies, not so much. None of the estimated savings are from the commodity support programs in Title I, such as Agriculture Risk Coverage and Price Loss Coverage, which send out subsidies to corn, soybean, wheat and other growers when revenue or prices drop. That title is on track to cost $8 billion more than expected, with a five-year total of about $31 billion.
Crop insurance costs are down. That $8 billion in extra spending on commodity supports is about how much the crop insurance program is saving taxpayers over five years. The CBO estimates the program, which subsidizes farmers’ premiums and private-sector administrative expenses, will spend $33 billion. That’s down from an original prediction of $41 billion.
Shored-up conservation programs. The conservation title of the farm bill is expected to cost $23.4 billion over 5 years, which represents about $4.8 billion in savings.