Federally subsidized crop insurance clouds farm bill
By ALAN GUEBERT
Food and Farm File
Federally subsidized crop insurance is the elephant in the farm bill pantry, and anyone who had any role in pushing the law through the zoo called Congress knows it. What most don’t know, however, was when Big Ag would finally acknowledge its huge appetite and suffocating presence.
Enter Mary Kay Thatcher, a long-time, well-respected Washington, D.C. lobbyist for American Farm Bureau Federation.
In a speech to the Iowa Farm Bureau convention in Des Moines earlier this month, Thatcher mentioned the unmentionable: the about-to-take-charge Republican Congress is sharpening its budget knife and one can’t-miss target is the indefensibly generous, completely uncapped federal crop insurance subsidies that compose the core of the 2014 farm law.
In fact, noted Thatcher – whose job is to see smoke before anyone spots flames – when it comes to crop insurance, “I feel like the bludgeoning is being done and the groundwork is being laid.”
She has three reasons for the concern. Two come courtesy of Congress’ non-partisan General Accountability Office; the other from a series of reports by the Land Stewardship Project, a Minnesota-based non-profit that promotes sustainable farms and communities. All see big flaws to today’s – and tomorrow’s – farm program dependence on federal crop insurance.
Links to all sources posted at http://farmandfoodfile.com/in-the-news
GAO’s two studies show, first, that climate change already has increased federal crop insurance losses and “may substantially increase losses by 2040;” and second, Congress could reduce today’s hefty federal insurance subsidies “with minimal impact” to farmers’ cost and their participation in it.
These two reasons are reason enough for Congress to revisit crop insurance.
However, a series of reports released during the past month from the Land Stewardship Project offer many more. The reports’ key findings include:
From 2003 through 2012, federal crop insurance cost taxpayers $58.7 billion; $42.1 billion to subsidize premiums paid by farmers, $12.5 billion covered “administrative costs” and $4.1 billion was spent on “underwriting losses and additional costs.”
Detailed crop insurance data is shocking. In 2011, “the only year of detailed, publicly accessible data,” “26 operations received over $1 million each in premium subsidies in the U.S. – each insuring from 20,000 to over 48,000 acres.”
Again, in 2011, “The top 10 percent of crop insurance subsidy recipients represent just 2.3 percent of America’s farmers,” but “they took in more than half – a whopping $4 billion – of all premium subsidies paid out of the public treasury …”
Since study after study has shown that federal farm program benefits mostly are capitalized in land prices, today’s “Crop insurance is the new vehicle for using public funds to concentrate agricultural wealth in this country.”
The group suggests several changes Congress needs to consider to refocus this “public policy” and its increasing “public resources” so it better “supports the long-term stewardship” of our nation’s farmland, family farmers and rural communities.
One key reform, suggests LSP, would be to move federal crop insurance back to “its roots” and become what it was originally designed to be – a risk management strategy for farmers “to protect themselves against a bad year,” not a program to eliminate nearly all risk while guaranteeing a profit. Congress, LSP explains, “should fully develop” and fully fund “whole farm crop insurance” that promotes more “resource-conserving, integrated diversified farms” and make the policies accessible “to beginning farmers.”
The program needs to use “conservation outcomes as a key measure” and stop insuring high yields “on marginal, low-yielding crop ground.” Also, suggests LSP, Congress should stop allowing farmers to “move yields” from good fields to “more fragile land” to gain higher “revenue assurance.”
None of these ideas are radical; most, in fact, are practical, responsible and just make good sense. As such – and because it’s the nation’s money that underwrites almost all crop insurance – Congress needs to re-examine their 2014 Farm Bill handiwork.
The groundwork is done and the question remains: why are taxpayers insuring elephants?
The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Alan Guebert may write to him in care of this publication.