I find it odd that these ‘Red State” rural voters are the most politically vocal in opposition to government social support programs, yet they are first in line to put their paws on government crop insurance subsidies, and lucrative claim payouts.
The government should get completely out of the farm welfare business. There is sufficient risk diversity to allow private insurers to establish appropriate rates, and the demographics of agriculture would lend itself well for mutual, even assessment mutual risk enterprises thru existing organizations such as the various Farm Bureaus.
On a separate but related note. One of my college professors told us that he was a farmer who was paid to not grow anything. He said that between state (NC) and federal subsidies he was paid more money to not grow his crops (primarily corn and squashes) than he would ever make by selling his crops, so instead he chose to teach and not grow crops. He was the dean of the Economics department.
Hmmm…. What does he not farm? How long ago was that? Was he referring to CRP? Because it has been at least 2 farm bills ago since set aside acres where part of the program.
There is not an ability for private insurance to fund the risks that farmers need funded. Crop Insurance is federally subsidized for the same reasons that flood insurance is federally backed. Both have too large of a risk for private companies to pick up. Crop Insurance as we now have is a good mix or blend of the private and governement sectors working together to provide a risk management tool which the private industry cannot handle. Without crop insurance, farmers will not be able to borrow money to farm adn the whole chain reaction will be felt as the rural economy tanks.
As far as lucrative payouts… I will disagree. A farmer with a good crop and decent prices will pay bills and make profits. Crop insurance helps them hold things together and slow the bleeding but it is no way to make a living long term. Each year of losses cuts the yield on their ten year averages by lowering their average and raising the price of the insurance. It has a way of cutting out the farmers who nurse it continually. For the droughts like we have had and are still experiencing hopefully most of the farmers will be able to hang on until the rains start again.
I am just curious where you get the information you have to form your opinion of crop insurance and the government farm programs? I am a crop insurance agent and have farmed in the past. I would love to continue this conversation if we can keep it on the up beat and positive.
Let’s assume that Don is correct, and there isn’t private capacity to provide the coverage necessary. It’s the under-pricing (a.k.a. subsidy) that’s the actual problem then. The coverage should be priced to cover the long-term cost. If the farmers need the coverage, they can purchase it for what it’s worth, based on the risk, rather than what politicians can provide in the form of pork.
If that means that food prices would ultimately be somewhat higher to consumers, so be it. Subsidies are not sustainable.
The reason I ask this is because flood insurance is run in a very similar fashion for the same reason. There is no private insurance willing to take on these risks. If you cannot provide for insuracne against flooding then home ownership becomes less of a good investment. If you do not have a safety net like crop insurance then you undermine the ability of this nation to feed itself. With this safety net, farmers put their own money into the risk process and they are choosing how much risk to bear themselves. There are some years when losses are low and the industry actually comes away in decent shape but no one will enter into the risk side as a private insurance company because of the huge risk this entails.
Now you probably do not think of the military as being people who we susidize because they are needed for national defense. I am with you. We have to have them to defend this country and provide for national defense. Imagine not having adequate food because there is no one to help agriculture manage the risks that it has. Helping maintain safe and healthy food supply is imperitive to our security as a country. Hungry people are not people you can govern. Crop insurance is not that much different than military spending because it helps provide for national security.
Let me repeat: it’s not the source of the insurance (private vs federal) it’s the pricing. If it covers the long-term cost, fine. If it doesn’t, it’s a subsidy, a handout. That it happens to go to a group that you happen to favor, doesn’t make it less of a handout. If other groups also get subsidies, well, join me in advocating that those should be cut also, and help cut the federal deficit in the process.
As for flood insurance, the pricing there should also fully reflect risk, otherwise you have development in unnecessarily risky spots. I recall this story about someone building his house on sand…
Well you do see the two programs as being the same. I would like to think you could operate it without the government help but this is one of those risks that no company will take. So the question is if it not something that private industry will take on because it is too risky then someone has to step up. We have had lots of farm programs with many ad hoc disaster programs. With an increase in crop insurance participation those have not happened in the last few years despiste this horrible on going drought. You say none of those are acceptable. My question then is how do we provide a secure healthy food supply if no one will handle the risk side?
Why don’t we just cut the Agriculture Dept budget in half? A lot of their budget is to pay farmers for not growing crops. Why do we not export more crops to other countries and relieve our balance of payments problem. Farmers in this country could double their production is a short while and export their harvest. They just want to keep prices high and sell their corn for ethanol, meanwhile corn prices on all products stay very high.
No the program paying farmers not to grow has not been a part of the farm program for ages! The vast majority of the farm program pays for SNAP or the food stamp program.
We do export a lot and it does help with our trade deficits because ag products is one of the few things with which we have a trade surplus. Of course with the drought we have been having the excess of grain we have had to export is not a large as we once had… No one can make it rain but if the infrastructure in the arm country can hold on until it does turn around we should see those production numbers increase again. With 9.1 billion mouths to feed by 2050 feeding everyone will be an interesting challenge.
March 26, 2013 at 4:15 pm
George says:
Like or Dislike:
0
0
$13 billion is nothing in the scheme of the federal budget. It could double and they wouldn’t notice. It’s a lot to insurance carriers (you can debate fiscal responsibility of the government vs insurance carriers now, internet, that’ll be fun). I don’t think it’s feasible to put the risk in the hands of private insurers for the reason Don points out. Premiums would skyrocket and all but the largest farmers would be unable to buy the insurance. I don’t want to buy $10 tomatoes.
Don, this country has the ability to grow three or four times more than we have been doing. Millions of acres lay fallow in the great midwest. We could literally be the bread basket of the world, but government and large farm corporations and their lobbyists know how to work the system and receive tremendous subsidies for limiting crop size. We should be cutting way back on the Food Stamp program which has grown to 50 million receiving them. We have been advertising in Mexico on how to apply for them when the illegals come in. Hello! They shouldn’t be getting them at all. The Agriculture Dept is really good at spending our tax dollars and all we get are the increases at the supermarket every time we shop.
Agent
Where do you get the figure that millions of acres lay fallow in the great midwest and could be put into culitivation? I know that there are acres in CRP but those are acres which should have never been broken out for farming because they are enviromentally fragile land in most cases. I would like to have a documented source before I put much weight into that statement.
Could you define large farm corporations as well? I know that many farmers farm as a corporation but they do so in order to be able to have a tool through which they can transfer ownership of the farm from them to someone else in the family who has come home to farm. These family corporations make up the bulk of the farming corporations that I see in my business.
Food Stamps… I have a love hate with this too. But my wife teaches school. Kids that are hungry do not learn. Kids that do not learn become burdens on the tax rolls because they wind up in low paying jobs, unemployed or in jail. I would like some documentation again on the statement you make about advertising in Mexico for people to apply for food stamps when they come over illegally. As with any program where you have money, rules and people there are always going to be the scammers. I do know people who have been on food stamps until they got into a better place in life and have gotten off of them as soon as possbile because their pride moved them to do so. That is a group I see needing food stamps. I also see that we as a nation have to help those who are mentally or physically challenged as well.
I find it odd that these ‘Red State” rural voters are the most politically vocal in opposition to government social support programs, yet they are first in line to put their paws on government crop insurance subsidies, and lucrative claim payouts.
The government should get completely out of the farm welfare business. There is sufficient risk diversity to allow private insurers to establish appropriate rates, and the demographics of agriculture would lend itself well for mutual, even assessment mutual risk enterprises thru existing organizations such as the various Farm Bureaus.
On a separate but related note. One of my college professors told us that he was a farmer who was paid to not grow anything. He said that between state (NC) and federal subsidies he was paid more money to not grow his crops (primarily corn and squashes) than he would ever make by selling his crops, so instead he chose to teach and not grow crops. He was the dean of the Economics department.
Hmmm…. What does he not farm? How long ago was that? Was he referring to CRP? Because it has been at least 2 farm bills ago since set aside acres where part of the program.
There is not an ability for private insurance to fund the risks that farmers need funded. Crop Insurance is federally subsidized for the same reasons that flood insurance is federally backed. Both have too large of a risk for private companies to pick up. Crop Insurance as we now have is a good mix or blend of the private and governement sectors working together to provide a risk management tool which the private industry cannot handle. Without crop insurance, farmers will not be able to borrow money to farm adn the whole chain reaction will be felt as the rural economy tanks.
As far as lucrative payouts… I will disagree. A farmer with a good crop and decent prices will pay bills and make profits. Crop insurance helps them hold things together and slow the bleeding but it is no way to make a living long term. Each year of losses cuts the yield on their ten year averages by lowering their average and raising the price of the insurance. It has a way of cutting out the farmers who nurse it continually. For the droughts like we have had and are still experiencing hopefully most of the farmers will be able to hang on until the rains start again.
I am just curious where you get the information you have to form your opinion of crop insurance and the government farm programs? I am a crop insurance agent and have farmed in the past. I would love to continue this conversation if we can keep it on the up beat and positive.
Let’s assume that Don is correct, and there isn’t private capacity to provide the coverage necessary. It’s the under-pricing (a.k.a. subsidy) that’s the actual problem then. The coverage should be priced to cover the long-term cost. If the farmers need the coverage, they can purchase it for what it’s worth, based on the risk, rather than what politicians can provide in the form of pork.
If that means that food prices would ultimately be somewhat higher to consumers, so be it. Subsidies are not sustainable.
Just to get an understanding… are you saying that flood insurance should be thrown out and given to only private insurers without government backing?
The reason I ask this is because flood insurance is run in a very similar fashion for the same reason. There is no private insurance willing to take on these risks. If you cannot provide for insuracne against flooding then home ownership becomes less of a good investment. If you do not have a safety net like crop insurance then you undermine the ability of this nation to feed itself. With this safety net, farmers put their own money into the risk process and they are choosing how much risk to bear themselves. There are some years when losses are low and the industry actually comes away in decent shape but no one will enter into the risk side as a private insurance company because of the huge risk this entails.
Now you probably do not think of the military as being people who we susidize because they are needed for national defense. I am with you. We have to have them to defend this country and provide for national defense. Imagine not having adequate food because there is no one to help agriculture manage the risks that it has. Helping maintain safe and healthy food supply is imperitive to our security as a country. Hungry people are not people you can govern. Crop insurance is not that much different than military spending because it helps provide for national security.
Let me repeat: it’s not the source of the insurance (private vs federal) it’s the pricing. If it covers the long-term cost, fine. If it doesn’t, it’s a subsidy, a handout. That it happens to go to a group that you happen to favor, doesn’t make it less of a handout. If other groups also get subsidies, well, join me in advocating that those should be cut also, and help cut the federal deficit in the process.
As for flood insurance, the pricing there should also fully reflect risk, otherwise you have development in unnecessarily risky spots. I recall this story about someone building his house on sand…
Well you do see the two programs as being the same. I would like to think you could operate it without the government help but this is one of those risks that no company will take. So the question is if it not something that private industry will take on because it is too risky then someone has to step up. We have had lots of farm programs with many ad hoc disaster programs. With an increase in crop insurance participation those have not happened in the last few years despiste this horrible on going drought. You say none of those are acceptable. My question then is how do we provide a secure healthy food supply if no one will handle the risk side?
Why don’t we just cut the Agriculture Dept budget in half? A lot of their budget is to pay farmers for not growing crops. Why do we not export more crops to other countries and relieve our balance of payments problem. Farmers in this country could double their production is a short while and export their harvest. They just want to keep prices high and sell their corn for ethanol, meanwhile corn prices on all products stay very high.
No the program paying farmers not to grow has not been a part of the farm program for ages! The vast majority of the farm program pays for SNAP or the food stamp program.
We do export a lot and it does help with our trade deficits because ag products is one of the few things with which we have a trade surplus. Of course with the drought we have been having the excess of grain we have had to export is not a large as we once had… No one can make it rain but if the infrastructure in the arm country can hold on until it does turn around we should see those production numbers increase again. With 9.1 billion mouths to feed by 2050 feeding everyone will be an interesting challenge.
$13 billion is nothing in the scheme of the federal budget. It could double and they wouldn’t notice. It’s a lot to insurance carriers (you can debate fiscal responsibility of the government vs insurance carriers now, internet, that’ll be fun). I don’t think it’s feasible to put the risk in the hands of private insurers for the reason Don points out. Premiums would skyrocket and all but the largest farmers would be unable to buy the insurance. I don’t want to buy $10 tomatoes.
Don, this country has the ability to grow three or four times more than we have been doing. Millions of acres lay fallow in the great midwest. We could literally be the bread basket of the world, but government and large farm corporations and their lobbyists know how to work the system and receive tremendous subsidies for limiting crop size. We should be cutting way back on the Food Stamp program which has grown to 50 million receiving them. We have been advertising in Mexico on how to apply for them when the illegals come in. Hello! They shouldn’t be getting them at all. The Agriculture Dept is really good at spending our tax dollars and all we get are the increases at the supermarket every time we shop.
Agent
Where do you get the figure that millions of acres lay fallow in the great midwest and could be put into culitivation? I know that there are acres in CRP but those are acres which should have never been broken out for farming because they are enviromentally fragile land in most cases. I would like to have a documented source before I put much weight into that statement.
Could you define large farm corporations as well? I know that many farmers farm as a corporation but they do so in order to be able to have a tool through which they can transfer ownership of the farm from them to someone else in the family who has come home to farm. These family corporations make up the bulk of the farming corporations that I see in my business.
Food Stamps… I have a love hate with this too. But my wife teaches school. Kids that are hungry do not learn. Kids that do not learn become burdens on the tax rolls because they wind up in low paying jobs, unemployed or in jail. I would like some documentation again on the statement you make about advertising in Mexico for people to apply for food stamps when they come over illegally. As with any program where you have money, rules and people there are always going to be the scammers. I do know people who have been on food stamps until they got into a better place in life and have gotten off of them as soon as possbile because their pride moved them to do so. That is a group I see needing food stamps. I also see that we as a nation have to help those who are mentally or physically challenged as well.