Congress Poised To Make Crop Insurance Subsidies More Generous : The Salt Farmers have been getting these government checks for years. Essentially, insurance allows farmers to lock in price guarantees — while taxpayers foot 60 percent of the premiums. Critics say such subsidies help the rich get richer and minimize risk so much, they incentivize farming on marginal lands.
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Congress Poised To Make Crop Insurance Subsidies More Generous

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Congress Poised To Make Crop Insurance Subsidies More Generous

Congress Poised To Make Crop Insurance Subsidies More Generous

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This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.


And I'm Robert Siegel.

We turn now to Farm and Food Politics and what it has to do with you, your pocketbook and the food on your table. It's a hot topic on Capitol Hill right now; Congress is debating a bill that will decide how much government support farmers will get in coming years. Farmers have been getting checks from the government for decades. And critics say it's time for the taxpayers' generosity to be scaled back, especially since farmers have been doing quite well in recent years.

NPR's Allison Aubrey, who covers food and nutrition, and Dan Charles, who covers food production and farming, are here to discuss this. Good to see you both.


DAN CHARLES, BYLINE: Nice to be here.

SIEGEL: And, Dan, let's start with you. How does this all work? How are farmers subsidized these days?

CHARLES: OK, there have been lots of different programs over the year. The overall level of subsidies bounces around a lot but, generally, in recent years, it's been declining. Over the past 15 years, it's come down by, say, about a third. What's left is something called crop insurance. And this part has grown. It's now the biggest farm subsidy by far. In a normal year, it costs taxpayers about $6 billion, say. Last year, because of the Midwestern drought, the cost was $13 billion.

Most of this particular subsidy goes to the big grain crops - corn, soybeans, wheat, cotton. But now, lots of other farmers are taking advantage of it, too; fruit and vegetable farmers, organic farmers, tobacco farmers.

Pat Roberts, Republican from Kansas, gave a passionate defense of this program on the Senate floor recently.

SENATOR PAT ROBERTS: Simply, crop insurance allows producers a way to manage risk so they can continue to provide a stable and secure food supply, and pass their operations on to their children. And if that isn't a success story of the partnership between government, private industry and America's farmers, I really don't know what is.

SIEGEL: Sounds reasonable. It's a floor - we don't want to see farmers go out of business because of one disastrous when there's a drought or a flood.

AUBREY: Well, yes and no, but not everybody is convinced that this is the perfect partnership between government and farmers because these insurance policies don't work the way traditional insurance works. It's not like your car insurance or your home insurance. With crop insurance, a farmer buys a policy but doesn't have to pay the premium. It turns out we do. Taxpayers pick up about 60 percent of the cost.

In essence, we're subsidizing the cost of buying insurance. And we, the taxpayer, also pick up a lot of the administrative and operating fees. On top of this, farmers don't just get a pay-out if they lose their crop due bad weather, they also can make claims when prices of their crops dip. So essentially, by insuring against significant price drops, farmers can lock in a guaranteed price.

And critics say, this in essence takes away much of the risk of farming.

SIEGEL: Well, has this actually happened, though? Have farmers actually gotten payouts for losses of the kind that Allison just described, Dan?

CHARLES: Yeah. Actually, last year was a really good example of this. You'll remember there was a big drought across the Midwest. The corn and soybean harvest went way down. As a result, prices went way up. And here's the thing. Corn and soybean farmers got to pocket the extra income by selling their crop at those high prices. And they also got big insurance payouts because of the low yield.

Many of them made more money in that drought year than they would have made in a year with normal rainfall. And a good chunk of that extra income came from the federal government, through crop insurance.

A lot of people say that is not what the program should be doing, it's a waste of taxpayer money.

SIEGEL: Allison, other ramifications of this?

AUBREY: Well, one criticism is that with so much of a price guarantee, farmers take risks they normally wouldn't take if it were purely a market-driven economy.

I spoke to Scott Faber of the Environmental Working Group, an organization that is pushing for reform of crop insurance.

SCOTT FABER: When the government is guaranteeing you 85 percent of your income, it suddenly makes a whole lot more sense to farm in places that might flood or might have low soil moisture, might not have been practical to farm if you simply had your own skin in the game.

AUBREY: So basically he's saying farming in wetland area or other environmentally sensitive lands, that crop insurance as structured now, encourages this.

SIEGEL: So what's happening now? Are members of Congress listening to critics or listening to the farmers? Who seems to be gaining?

CHARLES: Well, there are critics who say if the government is in this business - and probably there's a good reason for there to be crop insurance - it should just be a bare bones kind of insurance that would keep farmers from going under in a bad year. Maybe make up, say, 70 percent of their income.

AUBREY: But actually, what's happening now is that crop insurance is about to get bigger. Both the House and the Senate Agriculture Committees are adding a sort of whole new program on top of crop insurance to make these insurance programs even more generous. And at the same time, Food Stamps and other nutrition assistance programs are being cut significantly.

So the question critics such as Taxpayers for Common Sense are asking is this, at a time that the farm economy is quite strong, land prices are near record high, crop prices are strong: Does it make sense to subsidize farmers to this extent, especially the biggest, wealthiest players in agribusiness?

SIEGEL: That's NPR's Allison Aubrey and Dan Charles. Thanks to both of you.

AUBREY: Thank you.

CHARLES: Thank you.

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