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Tuesday, December 6, 2011

Why Is All the Talk Around the 2012 Farm Bill About Insurance?

Posted By on Tue, Dec 6, 2011 at 8:50 AM

click to enlarge KENT SORENSON / SHUTTERSTOCK

The Farm Bill is coming! The Farm Bill is coming! It's up for renewal by September 30, 2012, which means that lobbying organizations and activists are already milling about the training fields, choosing their weapons, and preparing to ride out to battle. And according to the Atlantic, one of the major skirmishes will be over replacing direct subsidies with revenue insurance for farmers.

This, in itself, is a big shift. Despite the efforts of sustainable-ag activists and Michael Pollan, the last time the Farm Bill came up in 2008, no one could get Congress to talk seriously about eliminating direct payments to farms growing commodity crops. As the SF Chronicle has been reporting, one of the cost-cutting measures the Congressional Supercommittee was plotting to make before it failed was to cut out direct subsidies.

But the Atlantic says that the plan on the table is to shift money toward expanding revenue insurance for farmers. What's farm revenue insurance?

According to author Gabriel Silverman, for the past three decades, farmers who grow specific

subsidy crops have been purchasing insurance to guarantee they'll

receive 85 percent of their expected revenue if their crops fail or if

the crop prices go down so far because of overproduction. Have a bad year, you win. Have too good of a year, you win, too.

The fight won't be over the validity of revenue insurance, it's over the validity of the government giving so many billions of dollars toward providing revenue insurance. Not

only does the government subsidize private insurance companies who provide

revenue insurance, it subsidizes farmers' premium payments.

Right

now, with crop prices high, advocates of funding insurance, reports Silverman, say they're saving billions of dollars. But if you look at the switch

another way, it's a cash money giveaway to the for-profit insurance industry. And

thanks to the "complexity" of writing policies for multiple crops, farmers who

grow much of the food we buy  -- carrots, kale, tomatoes -- aren't able to

buy revenue insurance.

So instead of giving money away to corn and soybean farmers, we'd be giving money to insurance companies to make sure corn and soybean farmers keep making money.

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Follow me at @JonKauffman.

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Jonathan Kauffman

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