With the farm bill in what could be the final stages before vote, there’s still some talk of cutting crop insurance subsidies. This led Tom Zacharias, president of National Crop Insurance Services to point out that before farmers received a dime in crop insurance indemnity payments, they had shouldered $12.7 billion in losses as part of their deductibles to crop insurance policies. In addition, the premiums paid by farmers totaled $4.1 billion – bringing their share of the disaster to $16.8 billion. This ignores the substantial investment they made in planting their crops to begin with.
He urges legislators and the public alike to focus on the facts:
- Indemnities to farmers cost about $17 billion, but unlike the ad hoc disaster bills of the past, farmers know their risk up front and share the loss.
- This was the sixth time since 1983 that crop insurers lost money. The property/casualty insurance industry has lost money only once as far back as data are available.
- Between 2001 and 2010, the government experienced nearly $4 billion in gains that contribute to loss years.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.