Will the FARMER Act Get Traction in the Senate?

By Paul Neiffer

Senator John Hoeven (R-N.D.) introduced the Federal Agricultural Risk Management Enforcement Act (FARMER) on April 9. This act tries to enhance participation in the federal crop insurance system by increasing subsidies on coverage at higher levels and making some changes to Supplemental Coverage Option (SCO).

The farm sector’s consistent yield areas are usually able to elect coverage at the 80-85% level, while other farmers with greater variability typically find the cost of insurance coverage at these levels to be too expensive.

This act would propose the following changes:

Increase the premium support by the federal government:

  • From 68% to 77% at the 80% coverage level,
  • From 53% to 68% at the 85% coverage level.
  • SCO support would increase from 65% to 80% and the coverage level would increase from 86% to 90%.
  • It also mandates a study on how to improve the effectiveness for SCO in counties greater than 1,400 square miles (likely due to greater variability in yields in counties of this size).

The increased premium subsidies would apply only if the farmer elects enterprise units or whole farm units (at least based on reading the Act).

It appears that the cost of the Act would be about $4.2 billion over 10 years. This is fairly minor sum, however, if annual deficits continue to approach $3 trillion, it will be a tough battle to get enough support.

It may also require some other offsets such as some type of means testing which is likely not to pass.

We will keep you posted.

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