Community Bankers Association of Illinois

CBAI ACTION ALERT: Call Senators Durbin and Kirk to oppose Harmful Farm Bill Amendments
June 19, 2012

The United States Senate is debating the 2012 Farm Bill. Included in the 150 amendments are several that could harm community banks, their farm customers and agriculture communities. We are encouraging all community banks (not just our ag bank members) to call Senator Durbin’s office at 202-224-2152 and Senator Kirk’s office at 202-224-2845 and ask them to oppose the following harmful amendments to the Farm Bill. Please call today. Thank you!

Background

As the development of the 2012 Farm Bill progresses, farm groups representing the vast majority of farmers and ranchers, and lending organizations representing the vast majority of the country’s banks have stated their support for federal crop insurance protection. Crop insurance is the cornerstone of most farmers’ risk management portfolios. Congress has taken significant steps to improve crop insurance coverage in order to provide personalized risk management tools for producers to reduce the need for ad hoc disaster assistance. Crop insurance is not a government giveaway or bailout. Unlike other programs in agriculture, producers pay premiums for this insurance protection against risks beyond his or her control.

The USDA has many popular programs including business and industry, community facility, rural housing, operating and real estate loans. These programs have been very beneficial to producers, lenders, and agricultural communities.

OPPOSE the Gillibrand Amendment (#2156)

The Gillibrand Amendment threatens the private sector delivery of crop insurance.

    Crop insurance has already sustained over $12 billion in cuts since 2008. Credit providers have stated their support for the current private sector delivery system that works very efficiently and effectively. Some 16,000 currently licensed agents and nearly 5,000 certified crop adjusters have a solid record of reducing fraud, waste, and abuse. This Amendment restores food stamp cuts of $4.5 billion from the current Senate bill by reducing crop insurance delivery by $5 billion. The cuts as proposed in this Amendment would negatively impact the program by seriously threatening the private sector delivery of crop insurance.
OPPOSE the Shaheen/Toomey Amendment (#2201)
OPPOSE the Coburn (Durbin is a co-sponsor) Amendment (#2186)

The Shaheen/Toomey and the Coburn (Durbin) Amendments limit availability of crop insurance protection to producers.

    Sound insurance programs require a broad base of participation to effectively transfer risk. When risks are pooled across a large number of individuals the law of “large numbers” applies and insurance risks can be reduced by spreading losses across many individuals. Actions that drive farmers out of the programs not only reduce protection of the U.S. farm production but also impair the ability of crop insurance programs to function effectively and efficiently

    Arbitrary caps on producer premium supports, as proposed in the Shaheen/Toomey Amendment, and reduced premium supports via a “means test” as proposed by the Coburn (Durbin) Amendment are inconsistent with the crop insurance goals of treating farmers equally and ensuring a flexible and consistent program regardless of income, size, and value of commodities produced. With the proposed test and caps, crop insurance will become unaffordable as producers reduce their program participation, resulting in a higher risk pool of insured producers, higher loss ratios over time, and increased premiums for those that remain in the program. Additional negative consequences of these Amendments include a reduced availability by producers to obtain needed operating credit and increased calls for ad hoc disaster assistance.

    Update: There is a new Coburn (Durbin) Amendment being circulated that would require a study before a “means test” would be applied. The study would be conducted by the GAO but would be worded in such a way that the amendment would almost certainly take effect.

OPPOSE the Cardin Amendment (#2219)

The Cardin Amendment links conservation compliance with crop insurance.

    Farmers are exceptional stewards of their land and water because their livelihood depends on these resources. This Amendment would reduce participation by farmers in crop insurance. Crop insurance depends on a wide pool of participants to be actuarially viable. Linking conservation compliance requirements to crop insurance has been tried before and was abandoned. Crop insurance is not a government giveaway or bailout. Farmers pay premiums for this insurance to protect against risks beyond their control. It makes no sense penalize farmers in a way that reverses the great progress Congress has made in providing crop insurance.

OPPOSE the DeMint Amendment (#2268)

The DeMint Amendment eliminates all USDA guaranteed lending programs.

    The USDA has many popular programs including the guaranteed business and industry, community facility, rural housing, operating, and real estate loans. These programs have been very beneficial to producers, lenders, and agricultural communities. These programs, offered in conjunction with lenders, provide a credit enhancement in the form of a government guarantee which may range between 80% and 90%. The program includes a guarantee fee paid by the participants that helps fund the programs and are not government bailouts or giveaways. The DeMint Amendment would eliminate all USDA guaranteed lending programs and should be vigorously opposed.
If you have any questions regarding the opposition of harmful farm bill amendments, please contact David Schroeder at 847/909-8341.

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