The cuts to the federally subsidized program are facing consideration by Senators this week.
This week, the Senate is now debating the proposed cuts to the federally subsidized crop insurance program, as an element of the enormous farm bill which is also being considered.
On Monday, the Obama administration said that it wanted greater cuts to the subsidies and coverage.
They stated that they wanted more crop insurance cuts in the legislation, and that the farm subsidies should also be reduced. The current proposal would cost nearly $100 billion per year over a period of five years. This bill would determine the policy for both farm programs and additional assistance such as food stamps.
The crop insurance program would actually be expanded by the farm bill, which would experience large overall cuts.
The current state of the farm bill would reduce the overall farm spending by approximately $2.4 billion. However, some of the subsidies would actually rise – such as for peanut and rice farmers – and the federally subsidized crop insurance program would be broadened. When the White House made its announcement on Monday, it did not say exactly how large of a cut it wanted to the program.
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Just about $80 billion of the yearly cost of the farm bill is directed toward food stamps. The majority of the rest of the money is divided among federal assistance for crop insurance, farm subsidies, and programs that are designed to provide protection for land that is environmentally sensitive.
Last year, the government spent an estimated $15.8 billion on the program, following the destruction of a tremendous number of plants due to the droughts. This was a considerable increase over 2011, when the spending was $9.4 million. Approximately 62 percent of the crop insurance premiums are subsidized for the farmers by the government. Moreover, the government also subsidizes the insurers that sell those policies to the growers.
Over the last few years, the cost of the crop insurance program has been steadily rising due to record high food prices and catastrophic weather events. The Senate debate for the farm bill started on Monday and a number of amendments are expected to be made to the coverage program.