Crop insurance “lacks accountability and transparency”

A new analysis is highly critical of the federally subsidized crop insurance program, citing a lack of accountability.

Insurance News

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A new analysis from Minnesota-based Land Stewardship Project comes out highly critical of the federally subsidized crop insurance program.

“Crop Insurance: The Corporate Connection” argues that the program “lacks accountability and transparency,” while providing large profits to a relatively small number of corporations. The information in the report is based on government data and interviews with farmers in Minnesota.

According to the analysis, the federal government paid crop insurance corporations roughly $42.1 billion in premium subsidies and $12.5 billion in administrative reimbursements in the period between 2003 and 2012. It also paid out just $4.1 billion in underwriting losses and other costs—meaning the total taxpayer burden for the program was $58.7 billion for 10 years.

In a second white paper from the group, Land Stewardship Project asserts the top 10% of crop insurance premium subsidy recipients took in more than half of all premium subsidies paid out by the public treasury, despite representing just 2.3% of American farmers.

There are just 19 corporations designated as “approved insurers” with the federal government, including Wells Fargo, American Farm Bureau Services, John Deere Insurance Co. and Archer Daniels Crop Risk Services.
The numbers reflect a lack of accountability in the way crop insurance dollars are spent, Land Stewardship Project asserts.

“We need a crop insurance program that provides a basic, reliable safety net for farmers like me,” said Darwyn Bach, a corn and soybean farmer in Yellow Medicine County, Minn. “But what we’ve ended up with is a tool that guarantees income in times of high grain prices, which has created a land rush by the largest crop operators.”

Bach also asserted that with this kind of payoff for large agricultural producers, there is incentive to branch out into unprofitable territory.

“Land was being put into production that should have never been put into production—that was a big factor with crop insurance,” he said. “As one guy told me, ‘The problem is there’s a lot of guys not farming the land anymore, they’re farming the crop insurance program.’”

The group says it seeks to “foster an ethic of stewardship for farmland, to promote sustainable agriculture and to develop sustainable communities.”
 

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