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Details On Proposed Bill To Reduce Crop Insurance SubsidiesDetails On Proposed Bill To Reduce Crop Insurance Subsidies

Kevin Van Trump

March 7, 2013

2 Min Read

Sen. Jeff Flake, Arizona Republican, said yesterday, "The crop insurance program has turned into a huge taxpayer-funded boon for some of the biggest, multi-national insurance companies and multi-millionaire farmers. In a time of record deficits and an incomprehensible $16.5 trillion in debt, this program can no longer be justified in its current form."

In response, Sen. Flake is introducing legislation that will save taxpayers $40.1 billion by "reducing" federal crop insurance premium subsidies. It was introduced in Washington yesterday as the Crop Insurance Subsidy Reduction Act (S. 446) in order to significantly reduce the amount of taxpayer dollars used to subsidize crop insurance. S. 446 returns federal crop insurance premium subsidies to their pre-Agriculture Risk Protection Act (ARPA) levels. Basically the new proposal being presented in Congress want to increase the farmer’s share of the premium from 38% to 62% of the premium.

I should also note Republican Rep. John Duncan of Tennessee, has introduced a similar consumer tax savings bill. To say they are gunning for this program is an"understatement. My argument is, sure the government paid out billions to pay for crop insurance claims, but with 80% of the nations farmers participating and paying big premiums, how much would we have had to pay out as a nation if there was no insurance? You can't tell me billions in disaster aid would not have been paid out following one of hottest, driest summers ever on record! It was a national disaster or huge proportions. Hurricane Katrina cost the county billions and billions, and there was no "hurricane insurance" being paid into the government by the people of New Orleans who ran around in the streets looting businesses following the disaster... Still the government paid out billions!

My guess is as the politicians in Washington attempt to "fix" another problem, they will only create one that is much more dangerous, i.e."gun control, distribution of wealth, social security, medicare, medicaid, etc... Before long we they will be trying to discourage U.S. farming, like we did with U.S. energy production years back. Then we will be held captive to foreign crop production, like we have been held captive to foreign oil. Hope this isn't how it goes down, but as you know they generally take aim at those standing atop the financial hill. As those in the ag industry make more money, I suspect the powers that be in Washington will continue to look for ways to pull back their reins.

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Van Trump Report

About the Author(s)

Kevin Van Trump

Founder, Farmdirection.com

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead. 

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