I know I’m a day late on this one, but here’s hoping it comes up far more than a dollar short:
Sen. John Thune and an assembly of agriculture advocates at a roundtable discussion Tuesday in Sioux Falls were in agreement that the next federal farm bill will be focused on crop insurance.
Farmers told Thune access to reasonably priced crop insurance is their safety net and is necessary to safeguard their futures.
Thune said it is the federal farm support most easy to defend when Congress and the president are looking for trillions of dollars of spending cuts.
Insurance is risk sharing–where there is generally immediate reward for future risk. That’s why we pay a premium now against the possibility of something bad happening in the future. To make things very simple, insurers make money when they guess better than the insured and are able to cover losses and have money left over from the premiums and/or investment returns on the premiums.
If crop damage is a quantifiable, insurable sort of risk–then insurers will be glad to take a part of the risk for a price. If the federal or state governments provide crop insurance, then it very quickly is not insurance (see flood insurance, FEMA).
In brief, federally provided crop insurance which is “reasonably priced” is as much a subsidy as writing checks for producing/not producing a particular crop.
While this type of subsidy may be easier to defend, that statement is true only if one refuses to understand that it is a subsidy by another name. Otherwise, why would we need money in the farm bill to support it? If it were truly crop insurance, then the premiums and investments would entirely offset the price of providing the insurance–and we wouldn’t need any additional taxpayer funding.
We can argue about whether this or that subsidy is worthwhile–but let’s not call stuff something it isn’t.