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.  ;)

Chimel.

4 comments:

  1. I have been trying for a day to argue about crop insurance and every time I get a comment written something happens with the browser and I lose it. Yet, that maroon from payday loans gets through!
    You pay for your insurance, the insurance company bets you won't use it. Not every one is scamming on the crop insurance. The government bet there would not be a drought. The government hires the clever people that control the water levels on rivers and when they cause a massive flood by running the river level for some environmental theory and not for flood control then someone should pay. It should come from their personal pockets but that is not the way it works.
    Also, if crop insurance is not allocated to who needs it, it doesn't mean that crop insurance is a scam or a bad idea, it means it needs to be administered properly.
    And perhaps farms are too big? Not sure what to do about that one either.

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  2. This comment has been removed by a blog administrator.

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  3. If the yields keep dropping, this thing is going to fold up anyway.

    I think the country may be broke and unable to function before that happens.

    Ed

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