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Taxpayers on the Hook for Huge Payouts
An article by Marcia Zarley Taylor in DTN/The Progressive Farmer reveals how far the crop insurance program has strayed from its origins as a fiscally responsible safety net for farmers. Most farmers in the corn belt, covered by new so-called revenue protection insurance polices, stand to make more money this year – thanks to taxpayers – than they would have if they hadn’t lost crops because of the drought.
Taylor highlights Auburn, Ill., farmer Tim Seifert, who expects his yields to drop from 217 bushels per acre to as little as 130 bushels. “Ironically, he’s feeling ‘very confident’ his revenues won’t suffer a similar wipeout,” Taylor writes. “Not only did he purchase an 80% Revenue Protection policy that will shield him from losses, but he expects to collect much of the 47% price increase that’s buoyed markets since late June on the unsold portion of his crop.”
Seifert’s heavily subsidized revenue protection policy would pay out at those same 47 percent higher crop prices.
Kansas State University economist Art Barnaby is quoted as saying, “I won't say growers are making a profit when government's writing the check. But they will receive much bigger checks than in 1988, easily 30% to 40% or more above what the old yield-only formulas would have provided. From a grower's point of view, it couldn't be any better.”
Taxpayers, not crop insurance companies, will be responsible for picking up the vast majority of the payments made to farmers this year. The payments look to be very large because more than three-fourths of the acres in hard-hit Corn Belt states are covered by these revenue protection policies.
Iowa Farm Bureau President Craig Hill tells the magazine, "The zeroed out acres in Indiana, Illinois and southern Missouri will be collecting $700/acre, not the normal $40/acre payments. This will be big money and serious dollars."
In Taylor’s follow-up story today, Hill is quoted as saying, “This just isn't business as usual when you zero out corn fields insured for $700 or $800 an acre. I will be shocked if the payouts are only $40 billion."
Dr. Bruce Babcock of Iowa State University explained the cost breakdown in more detail during a media briefing last week at Environmental Working Group’s DC office.
DTN/The Progressive Farmer’s Chris Clayton wrote a story titled “Ag Needs to Stop Ignoring the Elephant in the Cornfield.” Meaning, climate change. Click here to read more.
And in a new AgMag post, EWG’s government affairs intern Andrew Menaquale shines a light on the devastating effects of federal nutrition assistance cuts on low-income kids who rely on the government for free or reduced school lunch meals.
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