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The Questions That Won’t Be Asked

Wednesday, February 13, 2013

Tomorrow, the Senate Committee on Agriculture will hold a hearing titled “Drought, Fire and Freeze: The Economic Disasters for America’s Agricultural Producers.”

The ultimate purpose of the hearing remains unclear, but the committee’s website notes that:

This hearing will examine the toll weather disasters have taken on American agriculture – which employs 16 million Americans – and what steps can be taken to safeguard the economy from future catastrophes.

We can certainly expect that there will be plenty of testimony in support of unlimited crop insurance subsidies with no strings attached – from both senators and witnesses. As usual, no critics of the federal crop insurance program have been invited to testify.

Here are some of the questions senators should ask (but almost certainly will not).

How will climate change increase the cost of crop insurance subsidies? Taxpayers already pay most of the premiums for growers and pick up most of the claims. As extreme weather becomes more common, how much more will taxpayers be expected to shell out?

Why are the taxpayers paying 62 percent of the cost of crop insurance premiums? Since 2000, taxpayers have been paying, on average, 62 percent of the growers’ premiums. Before 2000, the public paid only 30 percent. Congress doubled premium subsidies in 2000 to encourage most farmers to buy the insurance. That goal has been met. So why are we still paying most of farmers’ premiums?

Would farmers still buy crop insurance if Congress lowered the premium subsidy? And how much money would that save? One study estimates that it could save $40 billion over the next ten years. Couldn’t we use those savings to help more farmers battle climate change and adjust to extreme weather?

Why did 26 policyholders collect more than $1 million each in premium subsidies in 2011? Why did more than 10,000 policyholders collect more than $100,000 each? Why are there no limits on who can get insurance subsidies, and why is there no limit on the amount? Why can’t we impose the same limits on insurance premiums that we impose on other farm subsidies?

Do unlimited subsidies hurt family farmers? While the largest and most successful farms can collect more than $1 million each in insurance subsidies, the bottom 80 percent of policyholders collect about $5,000 each. To what extent are these subsidies allowing the biggest farmers to buy up their smaller neighbors?

Why did farmers plow up more than 23 million acres of wetlands and grasslands in the last four years? Farmers have plowed up and planted an area the size of Indiana since President Obama took office. Are unlimited insurance subsidies encouraging farmers to plow up marginal lands? Two of the nation’s leading agricultural economists think so. Does it make sense to encourage farmers to plant lands that are more vulnerable to flood and drought?

What questions do you think senators should ask?