Who’s Really Funding Crop Insurance?
Crop farmers are going to be OK coming out of the current drought – but not taxpayers, economist Bruce Babcock of Iowa State University says in a National Public Radio interview.
“They’re going to be paying large losses,” Babcock said. “The drought really shows how important the [federal crop insurance] program is, and who's really funding it.”
Taxpayers pay, on average, 62 percent of the farmers’ insurance premiums and send $1.3 billion a year to crop insurance companies to sell and service the policies. And taxpayers, not insurance companies, pick up most of the cost when insurance policies pay out – especially during bad years.
In fact, Babcock noted last week, many farmers stand to make more money than they would if there were no drought, because of the way crop insurance works. Popular “revenue protection” policies will allow farmers to collect a payment tied to the October “harvest price” of their crop, rather than the price they insured their crop at when they bought their policies. As yields fall because of the drought and crop prices rise, so too will the harvest price farmers will collect on their failed crops.
Politico reports that Rep. Kevin McCarthy of California, a top House Republican leader, said, “Congress could move legislation to help farmers stricken by the drought” even if it can’t agree on a farm bill.
The Heritage Foundation published a brief on its website on the secrecy surrounding crop insurance premium subsidies. A 2000 law bars the government from disclosing which farmers get these subsidies, and for how much.
Environmental Working Group's Alex Formuzis responds to an agribusiness group that doesn’t want people to have more information about pesticide residues on conventionally grown fruits and veggies.
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