Crop insurance a key part of Obama’s federal deficit remedy.

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Crop InsurancePresident Obama unveiled his plans to tackle the federal deficit Monday. One of the ways the administration will confront the federal deficit is by making changes to the overarching agricultural infrastructure of the nation. Obama is looking to provide farmers with a $5 billion annual subsidy that will help them regulate the price of crops and purchase crop insurance in order to guard against natural disasters. This will remove the direct payment structure that has been in place in the industry since 1996, however, a move that has garnered a fair share of opposition.

Abolishing the direct payment system would net the federal government savings of $30 billion. Crop insurance reforms will bring in more than $9 billion worth of savings as well. Changes to crop insurance regulations will be geared toward helping independent farmers obtain affordable and expansive coverage. Agriculture companies may find new regulations a bit stifling, but will not be left out of any changes made to the insurance system and are likely to find some benefit in the reform.

Those opposing the removal of the direct payment system say that the government subsidy would be unnecessary for the majority of the nation’s farmers, many of whom, allegedly, make more than $100,000 a year. The National Corn Growers Association also levied concerns about the plan, saying that making cuts to the direct payment system would make it more difficult for small farming operations to obtain adequate coverage.

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