Concerns Over Trump Ag Budget Proposal Persist– Crop Insurance, SNAP

Recent news articles have pointed to ongoing concerns with respect to President Trump’s budget proposals, specifically when it comes to proposed cuts to crop insurance and the SNAP program (food stamps).  Late last month, lawmakers on the House Ag Appropriations Subcommittee discussed these issues with Secretary of Agriculture Sonny Perdue, and today’s update provides additional perspective on these budget items.

Crop Insurance

Associated Press writer David Pitt reported on Saturday that, “Farm groups and some members of Congress from farm states are decrying proposed cuts to crop insurance and other safety net programs for farmers included in President Donald Trump’s budget.

“The proposed cuts come even as farmers are facing their fourth straight year of falling income, and could particularly affect farm states such as Iowa, Kansas and Nebraska that helped Trump win the November election.”

Mr. Pitt explained that, “The proposed budget would cap the amount of money the U.S. government provides to help farmers pay insurance premiums and eliminate insurance coverage for lost revenue when crop prices and per-acre yields fall. That would reduce the federal insurance program’s budget by $28 billion over 10 years.

“Trump has also proposed reducing subsidies to farmers, cutting those programs by $9 billion by decreasing the maximum income level from $900,000 to $500,000 for a farmer to be eligible. The budget would also cut 5,263 jobs at the U.S. Department of Agriculture, a 5.5 percent reduction in staff.

“Farmers, economists and agriculture experts say it is important to support the agriculture sector, which makes up about 11 percent of U.S. employment, or about 21 million jobs, and contributes nearly $1 trillion to the nation’s domestic productivity.”

“Agriculture and its related industries account for 11.1 percent of U S employment.” (Selected charts from Ag and Food Statistics: Charting the Essentials, 2017 (USDA-ERS)).

The AP article pointed out that, “Republican U.S. Sen. Charles Grassley, who owns a farm in Iowa and is a member of the agriculture and budget committees, doesn’t expect the crop insurance cuts to make it through Congress. Grassley considers Trump’s budget a non-starter, much like the budget proposals of Presidents George W. Bush and Barack Obama, who also suggested farm program cuts that never materialized.”

Saturday’s article added that,

Subsidies for crops and crop insurance have sustained grain farmers in recent years as prices plummeted for wheat, corn and soybeans thanks to favorable weather that boosted harvests.

Graphs from Agricultural Prices report, February 2017 (USDA-NASS).

Similarly, Karen James Sloan reported late last week at CNBC Online that, “President Trump’s budget would slash several programs at the U.S. Department of Agriculture — including crop insurance — that farmers say have been a lifeline in recent years. About $28 billion is on the chopping block from crop insurance alone.”

The article noted that, “[Kansas farmer Derek Sawyer] took out his first crop insurance after his grandfather passed away and said he wouldn’t be farming right now if it weren’t for the protection.

‘It’s definitely not a program that helps you get rich,’ Sawyer said. ‘But crop insurance will come close to helping us cover the expenses of the crop.’

The CNBC item added that, “American Farm Bureau, an industry lobbying group, said the proposal would ‘gut’ the crop insurance program. The group’s chief economist, Bob Young, said kicking people out of the pool could make insurance more expensive.”

And Chandler Goule, the CEO of National Association of Wheat Growers, indicated in a column on Friday that, “Just like any other type of insurance program, producers must pay a premium and they only get an indemnity payment when they suffer a loss. More and more farmers from across the country are joining the crop insurance program, proving that the current structure is working. This large participation means that risk can be spread across a lot of acres. Should Congress attempt to reduce the federal cost-share or restrict participation, risk would then spread over less area, increasing premiums for all producers, big and small, causing them to lower their coverage.”

SNAP Program (Food Stamps)

Associated Press writer Candice Choi reminded readers late last month that, “President Donald Trump is proposing a roughly 30 percent reduction in the federal budget for the program formally known as the Supplemental Nutrition Assistance Program, or SNAP. His overall budget proposal met a chilly reception from lawmakers, and is unlikely to be passed as is. But it suggests increasing work requirements for SNAP recipients, and says states should both share in the cost of the program and determine the level of benefits they provide. That would lead to fewer people in the program, or could reduce how much help they get.”

The AP article explained that, “Last year, more than 44 million people received an average of about $125 a month in SNAP benefits, totaling about $66.6 billion, according to the U.S. Department of Agriculture;” and added that, “To qualify, a family of four’s take-home pay can be no more than $2,025 a month, while a two-person household can earn no more than $1,335.”

“Participation in SNAP varies across States, reflecting differences in need and program policies.” (Selected Charts from Ag and Food Statistics: Charting the Essentials, 2017 (USDA-ERS)).

New York Times writer Linda Qiu reported late last month that, “In congressional hearings over the budget,” President Trump’s budget director, Mick Mulvaney, “justified the president’s proposals to eliminate or tighten public programs that disproportionately affect the very people who voted for Mr. Trump.”

With respect to SNAP, the Times article stated that, “Justifying a $191 billion cut to the Supplemental Nutritional Assistance Program, which provides food stamps for households with low incomes, Mr. Mulvaney suggested a work requirement for ‘able-bodied’ adults to receive benefits.

“But such a requirement already exists. Adults who don’t have dependents or a disability must work at least 80 hours each month or participate in a work force program to qualify. Otherwise, they can receive food stamps for only three months over three years. States can apply for waivers in areas with high unemployment rates or a lack of jobs. Two-thirds of some 45 million SNAP participants were children, seniors and adults with a disability in the 2015 fiscal year, according to official data.”

Meanwhile, 

The population on food stamps has swollen drastically since the Great Recession of 2008, to a peak of almost 48 million in 2013, up from 28 million five years before.

With the economy improved and employment nearing capacity, the number of people receiving food stamps remains stubbornly high; 44 million people received the benefit in 2016. Social Security Disability Insurance rolls have also been sticky. About 11 million people, including workers, spouses and children, were on disability in 2016, up from nine million in 2008 and six million in 1996.

“Such numbers have convinced supporters of work requirements that far too many people are taking advantage of the system.”

The Times article noted that, “But advocates for the poor fear that Mr. Trump’s policies underestimate the difficulty of obtaining benefits — and could overestimate the capacity of some beneficiaries to work.”

Dana Milbank pointed out in an opinion column in last week’s Washington Post that, “Trump’s budget is dead on arrival in Congress, but the threat to food stamps is very much alive. House Speaker Paul D. Ryan (R-Wis.) has routinely proposed cuts to SNAP in his budgets. Three years ago, for example, he suggested a $137 billion cut to the program over 10 years by turning it into a block grant for states.

Until the past few years, food stamps had the support of Republicans and Democrats alike. They’ve been around since the Great Depression, but the modern program was a creation of then-Sen. Bob Dole (Republican from Kansas) and late Democratic Sen. George McGovern (S.D.), who, appalled by hunger and malnutrition in America, formed the Select Committee on Nutrition and Human Needs and worked jointly to expand food stamps in 1977.”

Budget Remarks From Agriculture Secretary Sonny Perdue

Eric Whitney reported on Thursday at Montana Public Radio (MTPR)Online that, “Perdue has only been on the job as ag secretary since the end of April, and part of his job is to help President Trump push forward a budget that calls for big cuts in the Department of Agriculture.

“Speaking to an audience of more than 700 mostly farmers and ranchers at an ‘agriculture summit’ convened by Senator Steve Daines, Secretary Perdue said the cuts include trimming SNAP benefits, better known as food stamps.

“‘It’s not in the heart of America to want to see anyone go hungry. And we don’t want that happen,’ Perdue said. ‘Americans are compassionate and USDA will be compassionate as we administer that program. On the other hand, I don’t think it ought to be a permanent lifestyle, either. It ought to be a hand up and help out to do that.'”

The MTRP item added that, “‘Now, I just want to say something in a kind of tough love kind of way.’

“Many lenders in farm country require crop insurance before they’ll make an ag loan, so it’s crucial to a lot of farmers.

“‘But just let’s face it, you don’t buy insurance on your house hoping it’ll burn down, do you? We don’t want to do that. And neither do we want to buy crop insurance hoping our crop fails so we can file,’ Perdue said. ‘So, we’ve got to get out of the mindset that, if I invest a dollar in crop insurance, I want to make sure I get a dollar-ten or plus out of that.'”

Keith Good

Keith Good is the social media manager for the farmdoc project at the University of Illinois. He is well known in agricultural circles for the daily FarmPolicy.com News Summary.