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Aid Is a Bumper Crop for Farmers
Those farmers have come to depend on both crop insurance and disaster payments, which together allow for covering up to 95 percent of the value of their crops. "Taxpayers are funding something good, the rural life," said Terry Aronson, a farmer in the flood-prone Devil's Lake area of North Dakota, who has received nearly $300,000 in disaster aid the past decade.
"No one wants to appear they are being chintzy with farmers," said Bruce L. Gardner, an agricultural economist at the University of Maryland and a former top USDA official. "In spite of all of these increases in subsidies, crop insurance really hasn't made a dent in the disaster payments."
A Continuous Cycle
In the past 25 years, Congress has passed three major "reforms" of the federal crop insurance program in an effort to sign up more farmers and reduce their dependence on disaster aid. Instead, the result has been a continuous cycle in which Congress expands crop insurance only to turn around and hand out more disaster payments.
In 2000, then-House Agriculture Committee Chairman Larry Combest, a Republican representing West Texas, was instrumental in getting the most recent reform bill passed, which included the $8 billion in new premium subsidies. He cited the "countless billions" in disaster payments that were undermining crop insurance. In the Senate, Pat Roberts (R-Kan. ) argued that expanded insurance would result in "less need" for disaster aid.
The government would now pick up an average of 60 percent of the cost of farmers' premiums. Farmers jumped at the cheaper insurance. Today, about 80 percent of all eligible cropland -- 240 million acres -- is insured at some level.
Yet only four months after the bill was passed, Congress authorized $1.8 billion in disaster aid. That was followed by $3.1 billion for 2001 and 2002 crop losses, and $3.5 billion covering 2003 and 2004. Still another $250 million was set aside after the 2005 hurricanes.
"In farm states, legislators have to appear they are doing something," said Art Barnaby, an agricultural economist at Kansas State University and an expert on crop insurance. "It can hurt them politically if they don't."
Combest, now a lobbyist representing agricultural interests, including crop insurance agents, declined to be interviewed. "I think I'll take a pass," he said. Roberts did not respond to requests for comment.
Disaster payments to farmers are a public record but, by law, the USDA keeps the names of recipients of crop insurance confidential. Thus there is no way to count how many farmers have collected both and in what amount. However, interviews with farmers and government officials indicate that farmers who get insurance payments also get most of the disaster money.
The USDA calculates how much to pay farmers in disaster money by first looking at how much they have received in crop insurance for losses. Farmers must show that they have lost at least 35 percent of their crop to qualify for a disaster payment. The maximum is $80,000. The total of their insurance payments, disaster aid and sales revenue from remaining crops is capped at 95 percent of what they would have earned if they had harvested and sold a full crop.
Bountiful Harvests and Aid, Too
Tulare County in California is an example of a farming region where the use of crop insurance is extensive but farmers still draw millions in disaster relief. The county is part of the lush San Joaquin Valley, one of the largest and most productive agricultural regions in the world. The largely irrigated fields produce a bountiful harvest of oranges, lemons, olives, cotton and 150 other crops.
For 12 years, Charles Fisher, 73, helped to police the distribution of disaster payments to Tulare's farmers.