The Enid News and Eagle, Enid, OK

March 27, 2013

Letter: Crop insurance is not a safety net, but a hammock


Enid News and Eagle

ENID, Okla. — A March 26 Enid News & Eagle editorial, “Crop insurance simply is the cost of doing business,” claims that federal crop insurance subsidies are necessary “to keep food prices manageable.”

However, it fails to recognize that more than 40 percent of the most highly subsidized crop — corn — doesn’t fuel people, but cars, through ethanol. And last time we checked, no one was eating cotton, the third most highly subsidized crop.

The editorial also fails to acknowledge that agricultural producers can receive generous taxpayer-subsidized crop insurance payouts even if they have a bountiful harvest. The primary reason crop insurance claims were estimated to hit a record $21 billion last year (not the $16 billion figure reported in the editorial) was due to the drought, but most producers enroll in revenue-based policies that can pay out even if no crop loss was reported.

If crop insurance is indeed a “cost of doing business,” then the government should treat it accordingly and allow agribusinesses to cover costs of managing their operations. Instead, taxpayers shelled out a record $14 billion on the crop insurance program in 2012, according to the U.S. Department of Agriculture’s Risk Management Agency.

And we did this by paying 62 cents out of every dollar of insurance coverage a producer purchased, subsidizing companies to write and deliver crop insurance policies, and by paying for most of the losses.

Helping farmers out during times of catastrophic floods and drought may be in the federal government’s interest. But crop insurance is not a safety net, but a hammock, writing checks when revenue goals fall short as little as 10 percent. Producers may be on track to experience record farm income this year, but taxpayers are still covering their costs of doing business. If any industry can shoulder budget cuts right now, it is agriculture.

Sheila Karpf, Omaha, Neb.

(Karpf is a policy analyst for Taxpayers for Common Sense, a nonprofit watchdog group in Washington, D.C.)