November 25, 2014
On November 24, the Land Stewardship Project released a new white paper, Crop Insurance – The Corporate Connection, part of a three-part series entitled How a Safety Net Became a Farm Policy Disaster. The first white paper outlines the profits being obtained by a few corporations from the multiple subsidies provided them by the federal government through the federal crop insurance program. Two other reports in the series will be released on December 2 and December 8.
White Paper Findings
The first LSP paper includes a number of key findings:
According to Paul Sobocinski, an LSP member and crop and livestock farmer, “Through crop insurance, they’ve privatized the profits and passed the costs onto the public….It’s time we returned crop insurance to its original intent – as a fiscally sound safety net that supports family farmers and is accountable to the public.”
Federal Crop Insurance Program
Farming is inherently a risky business. Weather, pests, variable costs for inputs, and wild fluctuations in market prices for farm products create a volatile business environment and can cause farm income to vary significantly from year to year.
Traditionally, farmers managed risk by growing multiple crops and raising a variety of livestock. If one crop failed or prices for cattle or hogs were low, then sales of other products would make up the difference.
Additionally, a healthy farm and food system depends on public policies that help farmers manage risk effectively. A federal crop insurance program that is accessible to all types of farmers and provides a basic safety net can part of good farm and food system.
However, the current federal crop insurance program is skewed in favor of less diverse crop production systems that are not only more vulnerable to markets, weather, and pests, but that also have serious environmental impacts. The GAO recently published a report outlining the federal crop insurance programs vulnerabilities to climate change.
NSAC will continue to advocate for an accessible, environmentally sound, and fair crop insurance system.
Categories: Commodity, Crop Insurance & Credit Programs
Three years ago when the Senate was working in the 2012 Farm Bill,which got postponed to 2014, delivered a written statement to Senator Stabenow’s office urging her as chair of the Senate Ag Committee to propose making crop insurance a single payer system administered by an insurance/risk management office within USDA. Farmers would pay into the risk sharing pool at lower rate than ins. corps charge now and USDA would respond to any claims. Premium prices would vary by the risks the insured’s crops and location might incur, but administration costs would be lower than ins corps. incur and risk estimates would probably be more realistic than Ins. Corporations make now. Some subsidy to cover losses might be needed, but certainly less than the 60-80% that the companies are getting now to cover risks of factory farms now.
I didn’t go into the risk management part in my letter to the Senator. At the time I could not either see or Chris Adamo, her Ag Committee staff person so I left with the receptionist. I assume both the Senator and Chris saw it. I don’t recall seeing
a response. I would think that a producer could opt for either ARG or Price Loss coverage under such a system.