Smith, also a visiting scholar at the American Enterprise Institute, a free-market think tank, recently concluded that the expanded crop insurance program could potentially be even more expensive for taxpayers than the lump-sum payments.
“If the government takes on much of the risk in farming, paradoxically, farmers adopt riskier production practices and stop using cheaper tools to manage business,” he said.
Those riskier practices, he added, include using fewer chemicals against pests, failing to rotate the kinds of crops planted, and expanding into marginal, less fertile lands which EWG members say could be conserved or used as grazing land.
But defenders of the crop insurance program say it is a vital part of the government safety net for farmers. “I know the program has critics, but in farm country, it’s the most valuable tool we have to survive,” said Anthony Bush, an Ohio corn farmer. “That’s why 80 percent of us buy it.”
And David Redman, an adviser in Lawrence County, Ind., who helps both farmers and ranchers respond to natural disaster, says that while big farm corporations might see profits this year because of high crop prices and insurance claims, the 100 to 200 acre family-sized farms won’t.
“Most of the farmers I know buy bare minimum coverage to cover out-of-pocket expenses — just enough to keep going next year,” he said, adding that a quarter of the 700 farmers he assists in his area do not buy any insurance at all. Those farmers say they still cannot afford the premiums, even with the government subsidy, Redman said.
Bush has paid into the program for over a decade and has never qualified to collect a claim on his losses, though he expects to this year. He says his share of the annual premium is roughly $30,000. He has lost over $140,000 to drought on his corn harvest.
A member of the National Corn Growers Association, Bush says that while some highly insured crop farmers might be inclined to expand their operations, the trend can be discouraged by expanding conservation programs rather than reducing subsidies.
Debate is also swirling around USDA regulations that keep secret the identities of participating farmers — including 26 of the nation’s largest farming operations, which received more than $1 million each in federal subsidies last year, according to a report by the Environmental Working Group.
Rep. Jackie Speier (D-Calif.) is pushing to include a provision in the House farm bill that would repeal the USDA regulations. A similar provision failed to be included in the Senate-passed farm bill.
Even some farmers favor more transparency. Bush said he believes it would be appropriate to disclose the names of farmers who get the subsidies and how much they receive.
Hurt, the agricultural economist, said the outdated nature of crop insurance legislation contributes to the drought’s burden on ranchers, who have no insurance at all.
In the 1930s, farmers raised livestock and grew crops side by side — and he says federal policy still reflects that business model.
“Up until the 1990s, most farmers both tended livestock and grew crops,” Hurt said. “Now we have a model dominated by specialized, industrial-scale corporations, but our policy is stuck in the ‘Old MacDonald had a farm’ model. It’s time to rethink.”
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