Environmental Activists Attack Crop Insurance Industry
by David Rogers (Politico) …At issue are government-backed premium discounts designed to make the insurance more affordable to farmers. While not truly cash subsidies, the costs have soared in recent years and fit neatly into the environmental narrative that Washington is too quick to help large-scale farm production at the expense of investments in conservation and the land itself.
The Environmental Working Group, which successfully waged a similar campaign to end direct cash payments to farmers, is again taking the lead. On Thursday, the group released a wealth of new cost data gleaned from Freedom of Information requests filed with the Risk Management Agency, which oversees the multibillion-dollar program.
The names of the individual policyholders remain shielded by law, but the numbers offer the most complete picture yet of the distribution of benefits under the current system.
In 26 cases, policyholders received an annual discount — carried on the government’s books — of $1 million or more in 2011. In 10,152 cases, it was $100,000 or more, while the vast majority of farmers received far smaller discounts averaging closer to $5,000.
“The eye-opening analysis shows crop insurance is not only very expensive,” said Craig Cox, EWG’s senior vice president of agriculture and natural resources, “but also very, very generous to large and highly profitable farm businesses.”
…Potatoes, tomatoes, apples, onions and grapes accounted for 36 percent of the high-end subsidies over $1 million, which carried some irony since environmentalists have long favored such specialty crops.
…That said, crop insurance is very different from traditional cash subsidies and won’t be as easy for EWG to undercut. The premium discount is really an inside-the-government book transaction, involving no cash payment to the farmer, who must still make a hefty contribution as well.
For example, any grower who received a $1 million discount would have had to pay $670,000 in premiums out of his wallet, assuming an average rate of the government covering 60 percent of the costs. And none of that money would come back unless the farmer experiences a loss — and even then he is subject to a deductible that could run 20 percent to 30 percent. READ MORE