Ag Policy Blog

Crop Insurance Critics on the Hill Today

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
Connect with Chris:
@ChrisClaytonDTN

Just days ago major farm groups at Commodity Classic reaffirmed their interests to protect crop insurance from budget cuts. On Tuesday, critics will again be on Capitol Hill calling on Congress to overhaul the entire crop-insurance program.

Sen. Jeff Flake, R-Ariz., and Rep. John Duncan, R-Tenn., will join staff from Environmental Working Group and an organization called the R Street Institute, as well as Bruce Babcock, an agricultural economic professor at Iowa State University.

It's unclear what critics of the program will be raising today. Last year, EWG suggested major savings by shifting the program responsibilities over to the Farm Service Agency and out of the hands of companies. It would be a little hard to imagine Flake and Duncan advocating that position.

Also today, Agriculture Secretary Tom Vilsack will appear before the House Agriculture Committee to talk about the state of the agricultural economy and likely take questions from congressmen about implementing sequester cuts as well.

I can be found on Twitter @ChrisClaytonDTN

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Comments

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Bonnie Dukowitz
3/6/2013 | 6:11 AM CST
Like auto insurance, the first claim is insignificant. Repeated claims,your premium goes up and the coverage goes down.
Tim Haugen
3/5/2013 | 7:09 PM CST
Ha. It was entertaining for a while.
KEITH PEARSON
3/5/2013 | 6:27 PM CST
Hey guys Lon probably didnt have crop ins this last year & got burned because he didnt have it. Now he is blaming everybody else but himself for not having it.
Tim Haugen
3/5/2013 | 6:26 PM CST
http://www.justice.gov/usao/mn/ansarisentenced.html - should we scrap the entire SNAP program, which consumes 80% of the USDA budget - 10 times the amount of crop insurance. Btw, this guy needed no help from any business in scamming millions.
KEITH PEARSON
3/5/2013 | 6:23 PM CST
Hey guys Lon probably didnt have crop ins this last year & got burned because he didnt have it. Now he is blaming everybody else but himself for not having it.
Tim Haugen
3/5/2013 | 5:07 PM CST
Stable, big farms take time, work, and bushels hauled to town - not frequent claim payments. The beautiful part of MPCI is personal yield databases. Those that continually file claims receive lower numbers and frequent audits. Stamp and Grabanski are simply two indicators of how gullible investors can be taken for a ride. Babcock and EWG would do away with personal yields (in order to deliver insurance cheaply), leaving the system even more wide open to fraud and abuse.
Tim Haugen
3/5/2013 | 4:52 PM CST
Unlike EWG, I respect privacy laws, and cannot parade a list of names of indemnified clients. If you believe Babcock and EWG's proposal of 100% FREE crop insurance would be less susceptible to insurance fraud, that can be your opinion. Notice how the Colorado operation purchased GRIP (Babcock's highly subsidized group risk insurance policy) and then manipulated the county yields (which determine GRIP claims) by controlling a majority of the crop acres. I am an agent in MN and advised all my clients to avoid GRIP. Quote from your source: "Seven of eight farmers interviewed by the OIG claimed that their insurance agents did not promote the policies in 2008 �because it cannot be used as collateral for an operating loan�" Babcock's own policy caused this massive sod busting insurance farming. This is not a case of MPCI failure. It's a bad person doing bad things and eventually getting caught. Stamp Farms is another good example. Once again, your source only supports the current system and shows how Babcock and his like do not have the answers.
Lon Truly
3/5/2013 | 4:33 PM CST
Tim - You feel that MPCI just helps the farmers get the loans. Here is an example of lots of loans a juggernaut farmer would not have gotten without MPCI. The way most farmers get huge is by outbidding smaller farmers with the help of the multimillion dollar investment/profit guarantees and subsidies congress provides. See http://www.agweek.com/event/article/id/17593/
KEITH PEARSON
3/5/2013 | 3:55 PM CST
Lon; I did some research on the web site you are using, its only telling you half the truth. Crop ins has saved many small family farms me included over the past year. the farmers who buy ins depending on the amount of coverage afects what his premium is going to be. You can buy a small policy that doesnt cover your cost of production or you can buy one that covers your cost of production. Either way we farmers pay more than a third of the premium for ins. Plus there is no disaster payment for corn & beans this year. Did you buy crop ins this year or did you think you didnt need it?
Tim Haugen
3/5/2013 | 3:49 PM CST
Clarify my zero profit guarantee: it still takes a producer to grow the bushels and select a price to put a farm "in the black"...MPCI simply helps them get the loans and forward contract at desirable prices with some measure of security. Also, another small farm anecdote from Mr. Johnson - thank you as well.
Tim Haugen
3/5/2013 | 3:46 PM CST
Zero profit is guaranteed by MPCI. It does not guarantee that a farmer will haul X bushels to town for Y price. Once again, you have been brainwashed by Babcock-ian powerpoints and disconnected urban oriented think tanks. MPCI treats all farms equally, regardless of size. For every anecdote you can provide about some million dollar operation getting a huge subsidy, I can show thousands of small farms saved (oh look, one sourced anecdote already for me - thanks Kyle). FYI, the term subsidy should be replaced by discount. Every farmer getting a big "subsidy" is writing a premium check to the feds for a similar amount. Take away the subsidy: Big Ag Corps. and their ability to absorb loss and operate at smaller margins is all that's left. Furthermore, I have done my research. According to the EWG's freedom of information (closer to privacy act violation), a majority of the top 10 subsidy recipients are cotton and perennial producers - not the typical row crop Corn/Soybean/Wheat you immediately conclude. If you think the great 'crop insurance conspiracy' is taking down farms faster than production efficiencies, biotechnology, and bigger equipment, I can see that you are as equally disconnected as Babcock and his employers. By the way, have you read their proposals? They're easily available at EWG online. They don't want to return money to taxpayers. They want to reinvest it in other entitlement programs - ones that mainly benefit large urban voters. When Lon's "research" includes something credible other than some polarized 3rd party organization that uses New Zealand (a pastoral ag sector protected by government tariffs) as a shining example of government-free ag, by all means, I'll look into it.
Farmer Johnson
3/5/2013 | 3:40 PM CST
Ditto here too Kyle, without crop insurance my farm operation would have been finished a couple times already. I'm 30 years old and a small operation less than 1,000 acres, the same criteria that some on here have said that crop insurance is snuffing those like me out.
kyle noyes
3/5/2013 | 1:25 PM CST
Crop insurance has saved this small family farm twice now.
Lon Truly
3/5/2013 | 12:47 PM CST
A primary weapon being used by clueless politicians to destroy the family farm is the government crop insurance scheme. This weapon accurately targets the largest and wealthiest farmers with a perpetual and overwhelming prosperity. This government granted multimillion dollar investment and profit guaranteeing scheme total overwhelms the ability of the havenots and haveless's ability to compete in the agriculture business. Obviously we are doing a fantastic job of saving larger family farms. If you think government farm programs have anything to do with saving smaller family farms, please do a little research.
Tim Haugen
3/5/2013 | 11:54 AM CST
Quite possibly one of the most jaded links from an obviously biased source that predetermined their conclusions and then scoured the internet for sources. Agriculture and your food depended heavily on subsidies for decades. Sure, absolutely free economics could control the system, but where would that leave us after a year of bad yields? Funny thing about economics is that there is always a lag time for a correction. Would you be willing to risk your family supper because less than 1/2 of 1% of the federal budget went to our greatest natural resource? It's a security blanket policy. Apparently it has worked so well that people have forgotten what it means. 5 years of succesful yields and nice prices and suddenly farmers are to blame for the defecit. Had it not been in place the last 40 years, family farms would already be history and the national supply would be in control of a highly organized group of big farms and corporations that could easily influence markets and withold stocks. Go ahead and blindly follow the EWG and Babcock lemmings. How quickly we forget that Babcock was the one who designed GRIP insurance - the most highly subsidized revenue product ever (and a major failure - less than 2% of policies sold). Babcock is nothing more than a lapdog for the farm policy du jour (and, interestingly, works at a highly subsidized government college).
Lon Truly
3/5/2013 | 7:08 AM CST
See http://www.downsizinggovernment.org/agriculture/subsidies