Farmers could see another round of cuts to crop subsidies underrecent proposed changes to the Federal Crop Insurance Program(FCIP). Estimated cuts over the past 10 years total $12 billion.Senate legislation includes a provision for establishing a meanstest for crop insurance payments, but the provision was notincluded in a recent report by the House Agricultural Committee.Under the Senate's proposed amendment, premiums would rise 15percent for farmers with incomes of more than $750,000.

The FCIP is a primary risk management tool for farmers. Eighteenthousand agents serviced 1.15 million crop insurance policies in2011. IIABA warns that limiting crop participation will havenegative effects such as reducing producer financing, forcingfarmers to look for disaster assistance elsewhere. IIABA wants toensure that crop insurance agents can continue to advise farmersabout coverage choices within the program.

The amendment comes while ongoing Midwestern drought and heatconditions continue to wreak havoc on crops, especially potentialcorn bushel yields for 2012. The USDA originally projected 166bushels of corn per acre in June. The current projections now sitat 146 bushels, but agricultural meteorologists for AccuWeather.combelieve the yield could be as low as 138 bushels.

A Milliman report focused on Illinois, Indiana, Iowa, Kansas,Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio andSouth Dakota projects a 147 loss ratio for those states in 2012based on projected corn and soybean yields and prices. It warnsthat drought conditions in the Midwest could cause more than $2.8 billion in underwriting losses and havealready resulted in indemnity payouts totaling $822 million as ofmid-August.