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Our View: Farm Bill still flawed

Published: Tuesday, June 18, 2013 5:30 a.m. CDT

The U.S. House is expected to take up debate on the Farm Bill this week.

And while the Farm Bill has many tentacles – everything from food stamps to dairy production – we hope the House does something its counterparts in the Senate failed to do: Address the amount of money government (meaning you, the taxpayer) spends in subsidizing crop insurance for farmers.

Crop insurance is purchased by farmers to protect against the loss of crops due to natural disasters or loss of revenue due to price fluctuations.

The 2008 Farm Bill expired last year, but was extended for nine months when financial concerns took precedence over getting a new bill passed. The 2008 bill, according to the Congressional Research Service, set aside $22 billion for crop insurance.

In 2008, the total premium cost in the U.S. for crops was $9.85 billion, according to the USDA. Of that, the farmer-paid premium share was $4.17 billion, and subsidies were $5.68 billion. In 2012, estimated total premiums were $11.15 billion; of that, the farmer-paid premium was $4.15 billion, while subsidies were $7 billion.

From 1995-2011, the government had expenses of $41.7 million for crop insurance in McHenry County but revenue of just $25.03 million during that time frame, for a cost of $16.67 million to the government, according to the Environmental Working Group. That organization maintains a farm subsidy database with information it received from the USDA under the Freedom of Information Act.

In the latest version of the Farm Bill to pass the Senate, government will continue to pay more than half the cost of the insurance. Bruce Babcock, an economics professor at Iowa State University, told National Public Radio that federal crop insurance was “the Cadillac of insurance products.”

Babcock said that for every dollar of insurance premium, farmers pay an average of 38 cents, meaning taxpayers pay 62 cents.

Crop insurance is important. But lawmakers should ensure farmers are paying more of the premium on crop insurance than taxpayers.

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