WASHINGTON, D.C. — President Obama’s proposed 2013 budget includes cuts in certain subsidies paid to farmers for crop insurance – and that could be a problem for producers, representatives of agricultural organizations said last week.

The president announced his $3.8 trillion budget in mid-February. He proposed reducing agricultural spending by $32 billion over 10 years, with $7.6 billion to be cut from crop insurance subsidies over the next decade.

The amount a farmer pays in crop insurance subsidies depends on the contract. Generally, the higher the level of coverage, the higher percentage the farmer pays. Under the president’s proposal, farmers who opt for coverage of 50-75 percent will be asked to pay 2 percent more in premiums, said Steve Wellman, president of the American Soybean Assoc. (ASA).

“Our organization encourages producers to buy as much crop insurance as is affordable,” he noted. “Many of our members are in the 70 to 75 percent range. The budget would do just the opposite of what we’re encouraging our members to do. This would increase (producers’) costs and they’d have to make the additional investment to be covered.”

The potential increase in premiums may mean some farmers might opt out altogether, said Dana Peterson, CEO of the National Assoc. of Wheat Growers (NAWG). Farmers in low-risk areas often buy higher levels of insurance because they can afford it and because their risk of loss is less, Peterson noted.

It’s not unusual for farmers in those areas to report 5-10 percent loss, and it’s unusual for them to have more than 20 percent loss, she explained. Farmers who live in higher-risk areas are only able to afford maybe 60-65 percent coverage, she said.

“This is the crux of the issue,” Peterson said. “The system had been built on the idea that the risks were shared across the nation. If you remove farmers who live in low-risk areas, the burden falls on farmers who live in higher-risk areas.”

Wheat farmers tend to farm in areas considered to be higher-risk, she noted. “Crop insurance is essential. It’s our No. 1 priority,” Peterson explained. “We’re fighting strong for it.”

Crop insurance is also the top concern of the National Corn Growers Assoc. (NCGA).

“Ensuring an effective, affordable crop insurance program is NCGA’s No. 1 priority for the next farm bill,” said Anthony Bush, NCGA Public Policy Action Team chair. “This program provides assurance to farmers when they are facing a loss beyond their control; however, uninsured gaps remain.

“That is why NCGA is also working with House and Senate ag committee leadership to create farm programs that provide additional risk management tools.” Bush spoke at the crop insurance industry’s recent annual convention.

NAWG isn’t asking its membership to contact Congressional leaders or to do anything else now, but that will probably change as the budget process moves along, Peterson said. A president’s proposed budget is just that – a proposal, she added.

“Generally, a presidential budget is dead on arrival regardless of which president it is,” she said. “But it gives us ideas about their priorities and is helpful in knowing what the president will sign.”

ASA isn’t asking its membership to do anything now either, Wellman said. Crop insurance has already been cut $12 billion since 2008, he noted.

“I think there’s broad support from senators and representatives from agriculture states for crop insurance as it’s set up now. They realize this will be the cornerstone for farm policy, and to weaken the cornerstone isn’t where we want to go,” he said.

Congressional leaders are waiting for guidance from the White House Office of Management and Budget and the Congressional Budget Office on the potential impact of sequestration, said Megan Provost, legislative assistant for U.S. Sen. Richard Lugar (R-Ind.).

Under the Budget Control Act of 2011, when Congress’ “Super Committee” failed to reach a budget deficit compromise by the end of last year, it triggered mandatory cuts in spending that are scheduled to go in effect starting in January 2013. It’s unclear which USDA programs, such as nutrition and long-term conservation, might be exempt, Provost said. The fiscal year ends Sept. 30 and a new budget, or another continuing resolution, needs to be in place by then, she added.