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

LegislationUSDA: Quick Implementation Of Disaster Assistance Programs A ‘Top Priority’
July 9, 2014
USDA has processed 106,000 payments to farmers in 40 states across the country who suffered livestock and grazing losses between Oct. 2011 and passage of the 2014 Farm Bill. Read More
LegislationTFI Praises White House For Signing WRRDA Into Law
June 11, 2014
The bill streamlines U.S. Army Corps of Engineers projects, prioritizes authorized waterway improvements and provides needed adjustments to the Inland Waterways Trust Fund. Read More
LegislationAg Policy: Plenty Of Fertilizer Issues Ahead
January 2, 2014
From West Fertilizer to the Chesapeake Bay, fertilizer producers and dealers are keeping an eye on several Beltway developments in 2014. Read More
LegislationLack Of Farm Bill Leaves Farmers Facing Uncertainty In 2014
December 13, 2013
With just a few legislative working days remaining in 2013, the likelihood of a new farm bill is waning, leaving farmers in limbo once again. Read More

Trending Articles

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More

Latest News

Crop InputsSyngenta Appoints New Chief Operating Officer
September 29, 2014
Jon Parr will succeed retiring COO John Atkin at the end of the year. Read More
CropLife 100South Dakota Wheat Growers To Add Grain-Agronomy Facili…
September 26, 2014
Planned to be constructed in Kennebec, the facility will be located along the soon-to-be rehabilitated line of heavy-rail service from Chamberlain to Presho. Read More
CropLife 100GROWMARK Announces Vice President Appointments
September 25, 2014
Two individuals have been appointed Vice President positions on the GROWMARK executive team. Read More
FertilizerFertilizer Industry Organizations Join Global Alliance …
September 25, 2014
The Fertilizer Institute, the International Plant Nutrition Institute and the International Fertilizer Industry Association are encouraging the industry to promote the proper use of fertilizer products to minimize their environmental impact. Read More
Precision AgARA Organized Precision Forum Hits Capitol Hill
September 24, 2014
The Coalition for the Advancement of Precision Agriculture (CAPA) hosted its inaugural Precision Ag Forum, Sept. 18, in Washington, D.C. Read More
FertilizerFactors To Consider When Placing Fertilizer With Seed
September 24, 2014
The type of crop, fertilizer source, row spacing and soil environment all affect how much fertilizer can be safely applied with seed. Read More
FertilizerSidedressing Manure Into Corn Has Promising Results
September 24, 2014
Applying manure to growing crops can boost yields, reduce nutrient losses and give livestock producers another window of time to apply manure to farm fields. Read More
FertilizerWhen To Sample Manure For Analysis
September 24, 2014
Because the goal is to collect a sample that represents the manure actually being applied, the best time to sample is during loading or field application. Here's why. Read More
Syngenta
Seed/BiotechSyngenta Faces Second Lawsuit Over Agrisure Viptera Cor…
September 23, 2014
A second company has sued Syngenta AG over sales of genetically modified corn seed not approved by China. Read More
StewardshipCover Crops Field Guide For Farmers Expanded
September 23, 2014
Farmers interested in planting cover crops to improve soil health now have an updated and expanded resource in the second edition of the Midwest Cover Crops Field Guide. Read More
HerbicidesArysta LifeScience Launches Contest For Wheat Growers
September 23, 2014
The Flush after Flush Photo Finish contest encourages farmers across the U.S. to participate through Instagram or Twitter using the hashtag #FlushAfterFlush. Read More
FertilizerCF Industries Confirms Merger Of Equals Discussions Wit…
September 23, 2014
CF Industries Holdings, Inc. has confirmed that it is in preliminary discussions with Yara International regarding a potential merger of equals transaction. Read More
StewardshipProgram To Examine Ag-Related Practices, Policies To Pr…
September 22, 2014
A panel discussion on October 14 will include a significant discussion on key issues and solutions related to all aspects of harmful algal blooms. Read More
Eric SfiligojIt’s Product Of The Year Voting Season
September 22, 2014
Readers of CropLife IRON will choose 2014’s best new product over the next month. Read More
Palmer pigweed in soybean stubble
HerbicidesValent To Discontinue Gangster Herbicide
September 22, 2014
Valent will discontinue Gangster Herbicide after the 2015 growing season as growers can now deploy Fierce XLT herbicide in soybeans. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
Equipment2014 Farm Science Review Crowd Tops 2013 Show
September 19, 2014
The 52nd annual Ohio State University Farm Science Review welcomed more than 130,000 farmers, industry professionals, FFA students and agricultural enthusiasts during the three-day event. Read More
Seed/BiotechUSDA Approves Enlist Following Rigorous Review
September 18, 2014
Dow AgroSciences now awaits EPA registration of Enlist Duo herbicide, the companion herbicide to the Enlist traits, which is expected in the near future. Read More