Home > News > Perdue-Expect Big Cuts in Trump Budget

Agriculture Secretary Sonny Perdue expects the White House to once again propose deep cuts in USDA’s budget — and Perdue is expressing frustration with the document that’s expected to be released in March.

Perdue won’t say how deep the proposed cuts will be, but he told reporters the budget will be

Deputy Budget Director Russ Vought wrote in a recent op-ed that the overall fiscal 2020 budget will propose “one of the largest spending reductions in history” in non-defense spending.

The good news for agricultural interests is that the president’s budget is expected to be dead on arrival on Capitol Hill and USDA officials appear to be getting the message.

Perdue, a former governor, suggests that making budget proposals each year that are “totally disregarded” by congressional appropriators makes it harder to negotiate with lawmakers.

“It’s like buying and selling a piece of land,” said Perdue, who has long been a loyal Trump “soldier.” A proposed price must be in a realistic negotiating range “for people to take you seriously.”

Regardless, industry groups are already working to counter expected proposals from the Trump administration to further cut crop insurance as part of the president’s 2020 budget proposal.

In a letter addressed to Perdue on Tuesday, a coalition organized by the Crop Insurance and Reinsurance Bureau which included about 60 groups, argued that now is not the time to ask for more cuts. “An over-reliance on budget savings from the agriculture community and from crop insurance will unquestionably undermine rural economies,” the letter says. “It’s also important to note that in a time of uncertainty in the farming and ranching community — from natural disasters to trade disputes to government shutdowns — the public-private partnership that is crop insurance has been a consistent and reliable risk management tool,” the letter goes on. A similar letter was sent to the House and Senate budget committees.

Threats are likely to come in a lot of different forms, noted Rep. Dan Kildee, D-Mich., during his recent speech to the Crop Insurance Industry Convention. The president’s budget is just one of several forms of expected attacks on the industry.

“As we go through the appropriations process, some members will take a run at crop insurance,” he added. Congress is expected to raise the debt limit again later this year and approve a new budget deal by the end of September.

The good news for the crop insurance industry and all of the farmers and ranchers who rely on this risk management tool for a good share of their safety net is that their industry appears to be in good shape. Consider these recent statistics:

The public-private partnership continued to expand last year, covering more than 334 million acres of farmland in 2018 — a 20 million-acre increase over 2017. Other industry successes:

• Crop insurance came in $2 billion under federal budget projections for the 2014 Farm Bill.

• With more than 1.1 million policies covering 551 crops and livestock, farmers paid $3.7 billion in premiums last year.

• Improper payment rates declined again, dropping from 1.96 percent in 2017 to 1.81 percent in fiscal 2018.

• The 2018 loss ratio is projected to be 0.58, as of Feb. 4, meaning 58 cents has been paid out on claims for every $1 of premium paid in. That’s slightly above the 2017 loss ratio of 0.53 but far below the 2012 drought year’s loss ratio of 1.57, when payments far exceeded premiums.

“The public-private partnership that defines crop insurance has been successful in providing the important safety net for our farmers and the rural areas where they live,” said Jim Korin, chairman of National Crop Insurance Services and president of NAU Country Insurance Co. during the Crop Insurance Industry Convention in San Diego earlier last week.

Source: Sara Wyant, Agri-Pulse

Subscribe

Be among the first to learn about the ever-changing crop insurance industry by subscribing to the ProAgMessaging system.