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Secret Lobby for Secret Safety Net

Wednesday, June 13, 2012

Few Americans know that taxpayers finance a $90 billion crop insurance program that provides millions in subsidies to highly profitable farm businesses and insurance companies.

And even fewer know that the crop insurance industry spends more on lobbying and political donations than farm organization representing corn, soybean and wheat farmers.

But a new analysis by the Environmental Working Group reveals that crop insurance companies and agents have quietly grown into a powerful lobby on Capitol Hill.

In fact, the amount they spend on lobbying and political contributions to members of the House and Senate agriculture committees now exceeds the amount spent by the stalwarts of the farm subsidy lobby.

It is no coincidence that the “public-private” partnership that delivers heavily subsidized federal crop insurance has proved so profitable for the private partner and so expensive for the public.

The taxpayer cost of the crop insurance program exploded from $2 billion a year in 2002 to $9 billion last year. Meanwhile a 2009 study commissioned by the Risk Management Agency at the U.S. Department of Agriculture concluded that crop insurance companies were enjoying a rate of return far in excess of what could be considered fair. More recently, an analysis by noted Iowa State University economist Dr. Bruce Babcock concluded that for every dollar that goes to a farmer to compensate a loss, another dollar goes to crop insurance companies and agents.

Yet the crop insurance industry and its champions in Congress have so far killed even the most common sense reforms to the federal program. Their unfounded and overheated claims that such reforms will destroy the program and put farmers out of business have mostly gone unchallenged in the halls of Congress.

A look at the growth of the crop insurance lobby sheds light on who is really driving the crop insurance train.

Crop Insurance versus Agriculture Lobbying Expenditures in 2011

 

Source: EWG analysis of data from the Center for Responsive Politics http://www.opensecrets.org/

Five organizations representing crop insurance interests reported spending $730,000 on lobbying expenses in 2011, according the Center for Responsive Politics:

- American Association of Crop Insurers - $380,000

- Crop Insurance and Reinsurance Bureau - $120,000

- Crop Insurance Research Bureau - $40,000

- National Crop Insurance Services - $40,000

- Rain and Hail Insurance Society - $150,000

Insurance interests investment in lobbying now exceeds such stalwarts of the traditional farm subsidy lobby as the National Corn Growers Association and the National Cotton Council. The American Soybean Association, the National Association of Wheat Growers and U.S. Rice Producers Association trail far behind the clout of the crop insurance industry, measured by the amount spent on lobbying.

Crop Insurance versus Agriculture Political Action Committee Contributions

 

Source: EWG analysis of data from the Center for Responsive Politics http://www.opensecrets.org/

Crop insurance interest group growth in lobbying expenditures is matched by the growth in the industry’s political action committee contributions to members of the agriculture committees. Crop insurance interests contributed $167,400 to members of the House Agriculture Committee for the 2010 election cycle, led by the American Association of Crop Insurers and the Rain and Hail Insurance Society that each contributed $75,000. The same insurance interest contributed $127,500 to members of the Senate Committee on Agriculture, Nutrition and Forestry, with the American Association of Crop Insurers and the Rain and Hail Insurance Society leading the way, with contributions of $61,500 and $56,000 respectively.

Members of the traditional farm subsidy lobby trail far behind. The National Cotton Council is the closet rival with contributions of $87,600 and $29,500 to members of the House and Senate committees respectively.

Go here to see contributions to individual members of the 2010 House and Senate committees. Incomplete information for the 2012 election cycle is available on the Center for Responsive Politics website.

There is nothing inherently wrong with lobbying. We at EWG lobby too, although on a much smaller scale. There is also nothing inherently wrong with political contributions either (EWG doesn't make political contributions because it is a 501(c)(3) non-profit).

But policymakers, farmers and taxpayers should ask this question: given the growing lobbying clout of crop insurance interests – whose interests are really being served by the direction the federal crop insurance program is taking? And members of Congress should move ahead quickly with common sense reforms to crop insurance as the farm bill is reauthorized this year.

 

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