It's time to reform crop insurance and help smaller neighbors

At the Center for Rural Affairs, we’ve heard from farmers across the Midwest and Great Plains about negative impacts of federally subsidized crop insurance for over a decade. A farm safety net is important to help family farmers mitigate risks, but there are real concerns with the current crop insurance program. 

The federal government subsidizes crop insurance, paying 62 percent of premiums, on average, in 2012. Insurance policies are sold and completely serviced through 19 approved private insurance companies.

Not only does the federal government pay the majority of producers’ premiums on every single acre, regardless of how large they are or how much money they make, insurance companies’ losses are also reinsured by USDA. In addition, the federal government reimburses the insurance company’s administrative and operating costs. In total, these insurance companies have lobbied and negotiated for guaranteed profits approaching a 14 percent return on their investment. 

However, the current government subsidized crop insurance program is working against the very farmers we all believe deserve a safety net.

The program is not transparent, props up private insurance company profits, and puts our natural resources at risk.

Moreover, unlimited crop insurance subsidies result in mega-farms driving up land costs, driving their smaller neighbors out of business, and barring the next generation of family farmers from even getting a start.

The time has come for crop insurance reforms that emphasize conserving soil and water, put real limits on subsidies to the nation’s largest farms, and ensures these subsidies are transparent to taxpayers.

Tracy Bruckner is the senior associate for agriculture and conservation policy at the Center for Rural Affairs. Established in 1973, the Center for Rural Affairs is a private, non-profit organization working to strengthen small businesses, family farms and ranches, and rural communities through action oriented programs addressing social, economic, and environmental issues.

Disclaimer: The views expressed in this commentary do not necessarily reflect those of the Cheney Free Press.