Critics Target Crop Insurance

Chicago Tribune (h/t Big Picture Agriculture):

Unlike practically every other sector of the economy, farming is awash in profits. The embarrassment of riches has made it difficult to justify any of the usual farm subsidies, especially in light of runaway budget deficits. Big agriculture and its supporters have settled on crop insurance as the means to keep federal dollars flowing.

It's not too late to stop it.

You might assume that crop insurance is designed to insure farmers against a poor crop. Not so.

More than 80 percent of crop insurance protects farm revenues, regardless of crop yields. No drought or flood or plague of locusts is required for the policies to pay off. A farm might have a bumper crop, but if commodity prices fall short of its projections, it still could be eligible to collect on its crop insurance. The coverage can be used to guarantee that these private businesses lock in a profit.

Any business would love insurance like that, but it would be unaffordable. It would be too expensive for farmers too, were it not for Uncle Sam. The federal government heavily subsidizes crop insurance. So farmers sign up for top-of-the-line policies that cost much more than they would spend if they had to pay for it themselves.

Over the past decade, taxpayers have committed $60 billion to crop insurance, according to an Iowa State University analysis. Of that money, about $30 billion was paid back to farmers who collected on their policies. The rest went to private insurance companies and their richly compensated agents. So $1 is being siphoned off for every $1 in net benefits delivered. That amounts to a $30 billion windfall for the crop-insurance middleman.

As the budget fights rage, ag programs will catch a lot of flak.  I'll wager though, that Big Ag will generally get its way.