This week we had the opportunity to hear an inside-the-beltway vision of this year’s farm bill (or next year’s farm bill, depending on the whims of our elected officials). Our man of the lobby said that with tens of billions of dollars slated to be paid out through federal crop insurance programs, the cries for means testing have become full-throated.
This is from the New York Times earlier this sumer:
“Obviously, crop insurance is important to an inherently risky business exposed to the vagaries of not only the world marketplace but the weather. But the purpose of insurance should be to protect farmers against losses, not to guarantee profits, especially for the bigger farms that command a disproportionate amount of the taxpayers money, and certainly not to guarantee the good life for the insurance companies.”
Perhaps. Then again, “bigger farmers” produce most of the product being insured. To remove them via means testing would greatly affect the risk pool. There is, after all, still a premium paid by the grower to obtain coverage.
Meanwhile, our friends over at the Heritage Foundation toss one of their frequent darts toward farm bill spending, in particular federal support for crop insurance, and, as always, “wealthy” farmers (also printed in the Washington Times).
The average American translates wealth through a very anecdotal series of paychecks—each with its tax and medical insurance withholdings tidily subtracted. It’s a one-line net income world out there. Farming is lost in that translation. Not just with $400,000 combines (and headers that cost as much as a house), but through no familiarity with the price of land, rent, inputs and interest. We’d like to see the pay scale of CEOs or business owners who put capital at risk each year in amounts similar to a sizable farm.
But we digress, like so many bags of wind in this silly political season.
Thomas P. Zacharias, president of National Crop Insurance Services, responded to the Heritage Foundation’s piece in the Washington Times with a letter to the editor :
"Prior to development of the modern [insuarance] program, response and reaction to agriculture disasters came in the form of 42 supplemental ad-hoc disaster bills, measures that have cost taxpayers $70 billion since 1989 and took up to 18 months to reach growers.
Contrast that to today’s modern crop-insurance program, in which last year 84 percent of eligible acres were protected by private crop-insurance policies purchased by farmers. When a string of natural disasters struck last year, there was not a single call from farmers for disaster aid.
Again this year, most farmers will be able to rebound from historic drought, thanks to crop insurance. Unlike in the past, taxpayers will not stand alone to shoulder the costs. Farmers will pay more than $4 billion in premiums, and insurance companies will incur billions in underwriting losses."
Stay tuned to the farm bill debates, which will be on hold until after November. And, if you’re a livestock producer, why not write your legislator to ask why in a year of true hardship, there hasn’t been much word from Washington about your plight and lack of insurance in market where federal regulations divert a considerable amount of feedstuffs away from feed markets. It’s a zinger, that one.