In 2000, taxpayer-funded Federal subsidies paid for (on average) 38% of crop insurance premiums and the “farmers” (typically large industrial commodity operations) paid the rest.  These days those numbers are reversed.  Now taxpayers pay for 68% of the insurance premiums and the farmers pay for only 32%.  The subsidy levels vary between 38% and 80%.  These subsidies cost taxpayers nearly $9 billion per year, making it the most expensive program for farmers in the USDA budget.

As I’ve mentioned before, government-funded insurance coupled with record high prices has led to a dramatic increase in the amount of land being planted in corn and soybeans.  The combination of government insurance and price supports has created incentives to plow up marginal land, with resulting environmental damage.  And since the insurance insures not only against crop loss, but also against a drop in price, then it essentially is an income guarantee (using tax dollars to guarantee 85% of the operation’s income).  Most of the subsidies go to the largest operations at a time when crop prices and farmland values are at all-time highs.  There are a lot of folks hurting in America these days.  Industrial farmers, as a group, aren’t among them.

Some fiscal conservatives and environmentalists joined to try to bring some sanity to this.  Senator Jeff Flake of Arizona, one of the most fiscally sensible members of Congress, introduced a bill (the Crop Insurance Subsidy Reduction Act of 2013) that would roll the crop insurance subsidies back to the 2000 level, but the bill never made it out of committee.  The version of the Farm Bill that passed the Senate actually increases the subsidy program (which also requires taxpayers to pick up 100% of the operating costs of the so-called “insurers”).  The Bill failed in the House, but not because of opposition to subsidized insurance, which will almost certainly be increased in the final version of whatever passes.

No doubt there are hundreds, if not thousands, of equally ridiculous counterproductive corporate welfare programs within the multi-trillion dollar fiasco that is government spending.  Even if folks came to their senses and ended this one, the overall situation would still be an unsustainable mess.  But I see no evidence that this is going to end, regardless of the fact that it’s bad policy, which we can’t afford.  When we look back at 2013 in ten years or so, I’m fairly confident that the government will be using its printing presses and Chinese credit line to spend even more on industrial crop insurance subsidies than it does today.  Assuming of course that the entire house of cards hasn’t collapsed by then.

8 comments on “Ridiculous

  1. Bob Braxton says:

    “The Story of Stuff” makes clear the place of properly-stated pricing. What one pays for a T-shirt, for example, in no way expresses the “real cost” of producing it and the remainder of its cycle. We retired a little less than two years ago and are both willing and able to pay more for all that the federal government does. We contribute – but never could even approach the level of the bounty of the Creator. The “government of the people, by the people and for the people” is much, much too timid about “ask”ing citizens to pay up – for big items and for small. We are citizens first (responsible to pay in order to spend) first, consumers somewhere else down the line.


    • Bill says:

      It seems to me that much of our society has (in the words of the old blues song) “a handful of gimme and a mouth full of much obliged.”

      The Story of Stuff is great.


  2. El Guapo says:

    I don’t think it’s entirely fair to just blame gov’t recklessness.
    Con Agra and other corporate farmers were making a lot of noise for the better deal.


    • Bill says:

      Absolutely. There are corporate interests behind all of this. I don’t remember the exact numbers, but something a very high percentage of the subsidies go to the wealthiest 4% of the industrial farms. And they are no doubt influential contributors to their members of Congress. The hands that give are also the hands that receive.

      My very first post ever was a rant about the farm bill 5 years ago. I probably won’t be able to resist another rant when the 2018 farm bill comes along either.

      I’ll soon be back to posting pictures of chickens.


  3. Dee Ready says:

    Dear Bill, most of the info here is beyond my comprehension as I don’t know the intricacies of farming, insurance, or government. Nor do I know which members of Congress are in debt to industrial farmers. All I do know is that business now runs Congress. That’s probably jaded, but it’s what I think. Peace.


    • El Guapo says:

      I think that’s less jaded than it is true.


    • Bill says:

      I think you’re right Dee. I love what we do, but it’s a struggle to make it work financially. So it especially bugs me to see billions of dollars being doled out to those who don’t need or deserve it, and who are able to flood the marketplace with “food” that seems cheap compared to ours, because we taxpayers have already paid part of the price.


      • Dee Ready says:

        Dear Bill, that old adage “money speaks” is really true. And it speaks mightily to so many in Congress who sell their souls for it. Among them, I’m sure are those who support these large industrial farms. We here in the US are spoiled by how little we pay for groceries. I admire farmers like yourself who keep working to give us food that is not poisoned by pesticides and insecticides and the torture of animals. Peace.


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