Farm Bill: New Analysis Of Costly Crop Insurance

In a just-released working paper, American Enterprise Institute (AEI) agricultural economists Vincent Smith, Bruce Babcock, and Barry Goodwin find that the Price Loss Coverage (PLC) and Supplementary Coverage Option (SCO) programs in the House version of the farm bill could cost taxpayers over $20 billion.

Key findings:

  • High cost of PLC: If crop prices remain at historically high levels, program costs will be approximately $1.1 billion. However, if crop prices drop to their recent historical average levels, program costs could exceed $18 billion annually – almost four times the current cost of subsidies paid under the Direct Payments program, which the PLC would replace.
  • Crop insurance boondoggle continues: If prices remain at current high levels, the SCO will cost taxpayers $2.6 billion annually. Half a billion of those dollars would flow directly to crop insurance companies – who already receive $3 billion per year in other taxpayer subsidies. If prices drop to recent historical average levels, SCO costs would drop to $1.5 billion.
  • Skewed priorities: If crop prices moderate to recent historical average levels, the House PLC and SCO programs will cost taxpayers over $20 billion per year, more than all current spending on farm-oriented programs. This includes current programs that enhance farm incomes – like subsidized crop insurance, direct payments, disaster aid, and loan rate programs – in addition to publicly funded R&D and education programs that benefit consumers, processing companies, and farmers by improving agricultural productivity.

Read the full report here.

Topics:

Leave a Reply

One comment on “Farm Bill: New Analysis Of Costly Crop Insurance

  1. The Senate Farm Bill should NOT be passed if still includes this section: SEC. 12211. DEFINITION OF RURAL AREA FOR PURPOSES OF THE HOUSING ACT OF 1949 would increase the pool of recipients and also increased rural community population requirement to 35,000. This population level would be a small City not a true rural community. Also, changing the Census date to 2020 insures those who have already received fair share of benefits over past years and now self-sufficient to continue receiving such benefits. This means less money available to true rural area communities, because others would continue receiving more after they are now self-sufficient and no longer rural. It is not suppose to be a Welfare System for self-sufficient communities who have already received past benefits wanting more. Furthermore, why would our SENATORS want to add more communities to a government entity who has had Property Right violations occurring under the USDA Mutual Self Help Program? Until this problem is fixed and no longer happening, then the USDA certainly should not have more communities or area to manage. You can consider this past news article as an example of property right violations: http://thebusinesstimes.com/public-funding-private-housing-homeowner-raise-concerns-over-land-purchases-for-affordable-housing-2/ Per this article the owner put $384,000 into their house and after their Property Rights were violated sold instead of staying for the planned 10 years. Per the County Records "Sales and Conveyance Information” on 12/06/2010 they sold their home for $245,000 dollars (bottom of this page: http://www.imap.mesacounty.us/assessor_lookup/Assessor_Parcel_Report.aspx?Account=R025388). Now while the market may have fallen slightly in 2010 do you really think it affected the value by a difference of $139,000 for a home at that time? That was a huge financial LOSS mostly because of the actions of an entity who violated governing documents and state laws backed by our various federal, state, city, etc. tax dollars! The “marketability” of their home was affected because an entity purchased with the intent to take from consumers who themselves had prior VESTED property rights and also potentially violating their Consumer Protection rights. We have citizens who are suffering due to the decline in home values and those same citizens do not need to have the marketability further harmed by any government backed entity. The USDA should not be in the housing business … that is HUD area of expertise not the USDA.

Legislation Stories

Crop InputsBayer: 5 Reasons We Disagree With Maryland Neonic Ban
April 12, 2016
We’re disappointed that the Maryland legislature chose not to stand up for sound science and the rights of Maryland’s homeowners Read More
Michael Hazzan, Technical Manager at AcuTech, PSM Training
LegislationPreparing For Process Safety Management: What Ag Retailers Need To Do
April 3, 2016
By and large, ag retailers like to use three letter acronyms in their day-to-day operations. Most talk about getting a Read More
LegislationFarm Groups Applaud USDA Effort To Embrace Cuban Agriculture
March 23, 2016
Leaders from across the U.S. agriculture and food sectors are expressing support and optimism in new opportunities for collaboration with Read More
MyPSM MYRMP Compliance Assistance Tool screenshot
LegislationProcess Safety Management Compliance Toolkit Now Available From ResponsibleAg
March 10, 2016
ResponsibleAg has announced the availability of MyPSM+RMP Compliance Assistance Tool and PSM Training Modules. These online materials will greatly assist Read More
Trending Articles
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
HerbicidesHerbicide Resistance In Waterhemp Continues To Grow
April 22, 2016
Twenty-five years ago, waterhemp was virtually unknown to Illinois farmers. Today, the broadleaf weed blankets corn and soybean fields across Read More
Eric SfiligojBiotech Corn Drop More Economics Vs. Consumer Rejection
April 18, 2016
Since their introduction into the agricultural marketplace, biotech crops has steadily grown in acreage in the countries of the world Read More
Crop InputsBayer: 5 Reasons We Disagree With Maryland Neonic Ban
April 12, 2016
We’re disappointed that the Maryland legislature chose not to stand up for sound science and the rights of Maryland’s homeowners Read More
Corn
OpinionChallenging Global Economic Conditions Putting More Heat On U.S. Ag Retailers
April 7, 2016
There it is. That vague, slightly sickening feeling in the pit of my stomach. Things are getting weird out there. Read More
ScoutPro iPad
Precision AgWhat’s Trending In Soil Testing And Scouting
April 6, 2016
Keeping up on soil testing and scouting, especially following unusual weather conditions, can play a role in maximizing yields. Soil Read More
Latest News
BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Soybean field
Industry NewsVerdesian Life Sciences Adds Vice President Of Business…
April 28, 2016
Verdesian Life Sciences has announced the addition of Marc Treurniet to the plant health and nutrition company’s management team. Treurniet Read More
ManagementBiotech Crops Developments and Millennials
April 28, 2016
Editors Eric Sfiligoj and Paul Schrimpf talk about the latest activities in biotech crops and a major shift in the Read More
Industry NewsNachurs-Alpine, Pathway Biologic Extend Marketing Agree…
April 28, 2016
Nachurs-Alpine Solutions (Marion, OH) and Pathway Biologic (Plant City, FL) announce an extension to their exclusive marketing agreement specific to Read More
MicronutrientsCharah Add Three Warehouses For SUL4R-PLUS Fertilizer
April 28, 2016
Charah, Inc., a total solutions company providing unparalleled service and innovation for the coal-fired power generation industry, announced today that Read More
Spenser Forgey, Yahama Fortix
FungicidesIndiana Farmer Wins Arysta LifeScience FORTIX Fungicide…
April 28, 2016
Arysta LifeScience North America recently presented Spenser Forgey, a grower from Young America, IN, with a new 2016 Yamaha Grizzly Read More
Corn Field
HerbicidesNew Wilbur‐Ellis Herbicide Targets Volunteer Corn
April 28, 2016
Wilbur‐Ellis Co., a recognized leader in marketing and distribution of crop protection products, as well as precision agriculture technology, has Read More
StewardshipNRCS To Help Farmers Measure Conservation Impacts On Wa…
April 27, 2016
The USDA has announced the availability of $2 million to help farmers install edge-of-field stations that monitor water quality as Read More
Planter in Iowa
EquipmentTop 10 Twitter Pics For #Plant16
April 27, 2016
Despite some wet weather in parts of the Midwest, growers and ag retailers are working feverishly to plant this year’s Read More
HerbicidesHELM AGRO Launches New HELM Sulfentrazone 4F Herbicide
April 26, 2016
HELM AGRO US, Inc. has announced the federal Section 3 registration of its new HELM Sulfentrazone 4F herbicide. Classified as a Read More
Valley Irrigation Valley 8000 series on corn
EquipmentValley Irrigation Receives Environmental Stewardship Ho…
April 26, 2016
Valley Irrigation has been recognized as a Groundwater Guardian Green Site by the Groundwater Foundation. The Groundwater Guardian Green Site Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
HerbicidesHerbicide Resistance In Waterhemp Continues To Grow
April 22, 2016
Twenty-five years ago, waterhemp was virtually unknown to Illinois farmers. Today, the broadleaf weed blankets corn and soybean fields across Read More
ManagementIllinois Leads The Nation In 4R Certified Nutrient Mana…
April 22, 2016
As Illinois agriculture works to educate farmers about minimizing environmental impact and optimizing the use of ag nutrients, Illinois now leads Read More
Social media
Matt Hopkins7 Social Media Trends Shaping Ag Retail In 2016
April 22, 2016
After writing my last column on why social media is a must for ag retailers, I heard from several readers Read More
Industry NewsArysta LifeScience Adds Corey Abels To Midwest Sales Te…
April 22, 2016
Arysta LifeScience North America recently announced the addition of Corey Abels as Territory Sales Manager for the Midwest region. In Read More
Soybean Field
HerbicidesHELM AGRO US Unveils New Sheridan 25 WG Herbicide
April 22, 2016
HELM AGRO US, Inc. has announced the federal Section 3 registration of its new Sheridan 25 WG herbicide for selective Read More
ManagementCentennial’s Jim Fargo Talks Ag Retail
April 21, 2016
Special guest Jim Fargo discusses challenges facing this CropLife 100 retailer. Read More