Mr. Chairman, I thank my friend from Ohio for yielding me this time. I thought his summary was very accurate on what our amendment would do. What Mr. Gibbs didn't point out, though, is this would also save $12 billion over 10 years by a…
Mr. Chairman, I thank my friend from Ohio for yielding me this time.
I thought his summary was very accurate on what our amendment would do. What Mr. Gibbs didn't point out, though, is this would also save $12 billion over 10 years by a more fiscally responsible approach, one that we feel is market-based, and one that we think is economically feasible, one that also maintains an important safety net for farmers if commodity prices do drop.
But, listen, the supporters of the Price Loss Coverage program, as currently drafted, will claim the program is necessary to ensure farmers have a safety net for when the market collapses. But, instead, the program in the FARRM Bill before us sets target prices so high that some commodities are guaranteed an 8 percent profit. We don't guarantee any other business in
the country that type of a profit margin other than crop insurance companies that are guaranteed a 14 percent profit under this bill.
By setting the target prices for programs at this historically high level, it will all but ensure a much higher likelihood of government payouts in the future.
In fact, implementation of the Price Loss Coverage program will already require government payouts for the five top commodity crops. Rice alone would pay out $14 per hundred while the current price is at $10.50 today. So it's outrageous that while we're cutting over $20 billion in the nutrition title of the FARRM Bill, we're adding on this additional high target price with additional taxpayer subsidies in an area where it's not economically needed or feasible.
And since farmers receive these payouts on their planted acres, we are encouraging them to overplant and to plant marginal lands that probably wouldn't be brought into production anyway because their losses would be covered and the profit margin would be assured.
Also, given the fact that we're still trying to work our way out of the WTO complaint from Brazil on the cotton subsidy program, this program sets up another potential WTO trade case against us.
I encourage our colleagues to keep working with us to improve the program.
Will the gentleman yield an additional 30 seconds?
I want to thank the gentleman for his leadership on this issue. As the former past Farm Bureau president in the State of Ohio and someone who is intimately familiar with these commodity programs, his lead has been crucial. He knows how the market works. And I think this program is setting up a lot of market distortions, unnecessary taxpayer subsidies that aren't economically justifiable. Our Amendment is a way of providing a safety net in a fiscally responsible manner. I hope we can continue working with the leadership of this committee to make this right.
Mr. Chairman, I have an amendment at the desk.
Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I offer this bipartisan amendment with my friend and colleague, Representative Petri from Wisconsin, that would call for further reforms in tightening of the crop insurance program. By the steps we take with this reform amendment, we would save the American taxpayer over $11 billion over the next 10 years. It was based on bipartisan legislation that Representative Petri and I offered earlier this year that was supported by Representatives McGovern, Sensenbrenner, DeLauro, Radel, Blumenauer, Conyers, Cooper, DeFazio, Connolly, and Waxman, and supported by a variety of outside groups.
What we're trying to do is maintain an element of risk in farming, again, in a fiscally responsible manner, by tightening up crop insurance programs that we feel have become too excessive with the shifting of title I commodity money and direct payments into the crop insurance category. We'd save over $11 billion over the next 10 years by doing the following:
We'd call for a limit of Federal crop insurance subsidies to $50,000 per farmer per year. Currently, there are no limits, no cap on the amount of taxpayer subsidies going to farm entities. Last year alone, over 26 entities received over $1 million in taxpayer premium subsidies alone. We think that's wrong, and we're trying to correct it with this amendment.
We'd also extend the adjusted gross income limit of $250,000 per farm entity to apply to crop insurance programs. The concept there is simple. If you're a farm entity with a gross profit of over a quarter of a million dollars, you really ought not be receiving taxpayer subsidies. This is after you back out the operating expenses of doing business. We're talking a quarter of a million dollars worth of profit.
It would promote crop insurance company efficiency by ending the 100 percent government subsidy of the administrative and operating costs that the private insurance companies currently enjoy today. Last year we spent over $1.3 billion on these insurance companies just for their A&O expenses alone. We're asking them to live with the total spending of $900 million, which is consistent with what the Obama administration is offering in its budget.
This would also guarantee that the crop insurance companies do not pass along the riskiest policies back to the American taxpayer, which is currently the practice.
It would lower the profit guaranteed to these private insurance companies from 14 percent to 12 percent. We don't offer that type of guarantee for any other business anywhere else in the country, and yet now they're guaranteed a 14 percent profit. We're saying can you at least live with a 12 percent profit for the sake of some savings within this program.
And it would also promote transparency to help the taxpayer know where the money is going and who's benefiting from it. It opens the sunshine up so we have greater disclosure of these programs and, therefore, greater scrutiny.
So we think this is commonsense reform. We think this is something that maintains the risk management tool of crop insurance. We're not proposing eliminating it, but we're just trying to propose making it more market sensitive and maintaining that element of risk.
Finally, one of the reasons we feel that this is so important is because of current commodity prices. There is great pressure on farmers now to plant everywhere, in the most fallow, highly sensitive, highly erodible land because they know if they experience any loss, their loss is covered. Therefore, the risk is taken out of it. That is leading to bad stewardship practices throughout our country. With this reform, we're trying to introduce that element of some second guessing, some risk in the most fallow, unproductive land that's right now being brought back into production.
So I would encourage my colleagues to support this amendment.
I reserve the balance of my time.
Mr. Chairman, I yield myself 30 seconds. Unless my good friend wants to include the National Taxpayer Union, Taxpayers for Common Sense, Citizens Against Government Waste, Americans for Tax Reform, Committee for Responsible Taxation, American Commitment for the Center for Individual Liberty, ``R'' Street Competitive Enterprise Institute in that category of radical environmental groups, they've all come out in support, endorsing this legislation.
But we're not taking the private insurance companies out. We're just asking them to carry some risk and to reduce their guaranteed profit margin from 14 to 12.
With that, I yield 1\1/2\ minutes to my good friend and colleague from Wisconsin, Representative Petri.
I yield the gentleman an additional 30 seconds.
Mr. Chairman, how much time do I have?
Mr. Chairman, at this time I'd like to yield 1 minute to the gentlelady from Connecticut (Ms. DeLauro), a champion for family farmers and for the nutrition program in the farm bill.
I yield the gentlewoman an additional 15 seconds.
How much time remains, Mr. Chairman?
I reserve the balance of my time.
Mr. Chairman, I yield myself such time as I may consume in response.
To my good friend in Minnesota, my average dairy herd size in western Wisconsin is 125 cows. I don't have the mega-dairy operations and that. So we'll have plenty of time to debate the federally run supply management program that he's been advocating for in the FARRM Bill, which I think will be a disaster and won't work.
But to my friend from Iowa, we're not talking about eliminating the crop insurance program. This risk-management tool will be in place. It won't touch 96 percent of the producers out there.
The last time I checked, we're running some record budget deficits, and there are areas in this farm program, especially in crop insurance, that we can go to for sensible, commonsense savings that's economically justifiable while maintaining risk within the program today.
It's a little ironic that we have such defenders of this crop insurance program when last year alone, the typical insurance company received $1.46 in taxpayer subsidies to every dollar that went into the pocket of our farmers. And five of the 10 biggest insurance companies offering these programs are foreign-owned entities. As the gentlelady from Connecticut just pointed out, many of them are using tax havens on the taxpayer dime. And how they can get up here and justify this program with a straight face is really beyond me.
With that, I reserve the balance of my time.
Mr. Chairman, how much time do I have remaining?
Mr. Chairman, at this time, I'd like to yield 1 minute to my good friend, the gentlewoman from Maine (Ms. Pingree).
I believe the chairman has the right to close.
Mr. Chairman, let me close by saying that, listen, I understand there's a lot of hard work that goes into the committee in producing a farm bill. I get that. But there are areas of cost savings that we can justify to the American taxpayer without jeopardizing the risk-management tools.
Crop insurance is ripe for that type of reform. And, again, what we're offering and what we're setting out is very commonsense, economically justifiable, and would save the American taxpayer over $11 billion over the next 10 years.
If the average taxpayer knew just how this crop insurance program is set up today, they'd be aghast in horror. It's not right. We're trying to correct that right now while maintaining the safety net in a viable crop insurance program that can work.
I encourage my colleagues to support the amendment.
Mr. Chair, I demand a recorded vote.