Monday, January 21, 2013
15 Billions 2012 Crop Insurance
Step 3: Take refuge in the bush where Ed can't see or react to what's happening on his blog! ;)
Crop insurance claims hit a record high 15 billion dollars last year according to the USDA, about half of which comes from our taxes. Crop insurance has effectively become a form of disguised subsidy from tax payers to farmers. Claims of over $3.50 for each dollar of premium will benefit mostly large farms from the North and other dryland areas, as opposed to the (mostly) irrigated South.
Crop insurance is now mandatory in almost all loans for land or equipment, it is an additional warranty that makes sense from the loaner's point of view, so farmers don't have much of a choice in the matter, but I can't help wondering if there is not a better way than the current model that basically encourages bad and risky farming practices to the detriment of good farmers. In a way, this is similar to the free rein given to the banking and trading industry, where a different form of bad and risky practices were not only allowed, but encouraged.
You can't really force a savings program to replace crop insurance onto farmers either, given that many are already slaving away for low if any profit, and you can't immobilize $15B into savings, that would be bad for the economy, but if extreme weather events are becoming the new normal, we'd better prepare for it and improve the current system in a way that is sustainable and does not rely on tax payers' money.
Song of the day: Hello Cruel World, by Bad Religion, from their album True North, a superb rock album altogether, every song is 5-star material. They are from Los Angeles and have unique vocals. And I am a total ignoramus because they have released 15 studio albums since their formation in 1979 and I never ever heard the name. No Ed, I didn't pick this song up because of the name of the band. ;)