The debate over crop insurance has become a debate between big business interests and family-scale farmers. As you will read here and at cfra.org, we are putting a stake in the ground. We are preparing to push back against the large corporate and financial interests protecting the status quo.
While crop insurance is a complex program, the problem at hand is fairly simple. Under current law, taxpayers subsidize crop insurance at an average rate of 62 percent on every acre without limit.
To be certain, crop insurance is a valuable risk management tool for farmers. Fundamentally, we believe in the government helping family-scale farmers manage risk.
But the problem is that the federal government pays the majority of producer premiums on every single acre, regardless of how large they are or how much money they make.
That’s the issue. Our tax dollars – the public trust – subsidize the largest operators no matter how big they get. If one entity farmed the entire state of Minnesota, under current law, taxpayers would share in the cost of their crop insurance on every acre.
We think there ought to be a limit to that.
Furthermore, insurance policies are sold and serviced through 18 approved private insurance companies. These select insurance companies are guaranteed a 12 percent rate of return, and USDA reinsures them against losses. Between 2006-2010 they earned an average 20 percent return.
Senators Jeanne Shaheen (D-NH) and Pat Toomey (R-PA) have introduced a bill to cap federal crop insurance premium subsidies at $50,000 per farmer. The Congressional Budget Office estimates the cap would save roughly $2.2 billion over 10 years and only affect the largest 2.5 percent of farms.
The same study pointed to one farm that insured crops across eight counties and raked in $1.3 million in taxpayer subsidies. These are the largest and wealthiest farms. They use their premium subsidies to bid land away from beginning and small and mid-sized farms.
We are working to develop additional policy reforms that cap subsidies, open opportunity for beginners and diversified farmers, and link meaningful stewardship practices to enrollment in the program.
Our opponents argue that our proposed reforms will cause crop insurance to collapse. We disagree. The largest operators will simply have to carry their fair share of doing business, like any other industry.
Make no mistake, this will be a tough fight. We don’t expect to win easily. We’ll need you to stick with us for several years, possibly longer. But we take energy and inspiration in knowing it is a right and just position.
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