Agricultural News
EWG Claims Federal Crop Insurance is an Ongoing Disaster for Taxpayers and the Environment
Thu, 05 Nov 2015 10:45:40
One of the most vocal groups in its criticism of the Federal Crop Insurance program is the Environmental Working Group. The EWG was a major force in demanding farm policy reform that led to the eventual elimination of the direct farm program payment. Now that the five billion dollars that funded the Direct Payments is off the table- the EWG has turned all of its farm policy attentions to what they call "an Annual Disaster." The group has just published a report that emphasizes how they believe that the subsidies that are tied to crop insurance are a free ride given to approximately one million farmers each year. EWG claims that the Crop Insurance subsidies are even worse than the price support programs they have now mostly replaced- especially when you measure the environmental impact.
EWG analyzed crop insurance and ad hoc disaster payment data and reviewed scientific and economic studies of the two approaches to farm assistance, and they conclude:
"In the six years between 1999 and 2008 in which Congress authorized large ad hoc disaster relief programs, the total cost to taxpayers of crop insurance (which does not include the share of premiums paid by farmers) was almost $20 billion nearly a third larger than disaster payments.
"Over those six years, crop insurance payouts (which include farmer-paid premiums) were $11 billion more than ad hoc disaster payments. Insurance payouts topped disaster payments every year except 2005.
"Taxpayer-funded premium subsidies mean many farmers actually make money by buying crop insurance since payouts regularly exceed the share of premiums paid by farmers. The Government Accountability Office says some farmers gain almost $2 in profit for every dollar they pay in premiums."
In the report just released by the organization- EWG says "swapping crop insurance for disaster programs has created "a different kind of disaster for taxpayers and the environment."
"Whenever crop insurance is criticized, the agricultural industry and its political patrons argue that it's at least better than disaster payments but the facts show this is simply untrue," said Anne Weir, EWG senior economics analyst and author of the report. "Crop insurance is not what most people would recognize as an insurance policy, but is essentially an income support program."
What's more, crop insurance is worse for the environment than disaster programs were. Insurance payouts are so generous and so frequent they encourage farmers to plant crops on sensitive land, exacerbating environmental consequences of high risk farming practices.
"Crop insurance needs to return to its roots as a safety net instead of what it has become: a burden on taxpayers and the environment," said Weir. "Congress should make sure the program shields farmers from potentially crippling losses because of bad weather, but in a way that saves taxpayer money and does not encourage environmental harm."
To read the complete report, click here.
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