Why crop insurance subsidies are winning out

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Frank Morris/Harvest Public Media

Kansas wheat farmer John Thaemert surveys his parched crop in this file photo from 2006.

There is little doubt that crop insurance will emerge from the current farm bill process with hefty subsidies in place. If anything, the program will become a larger part of the farming safety net.

The real unknowns are the details of those subsidies and who winds up getting them. The Senate recently passed a bill that would expand crop insurance but impose some limits.  In the House, where the farm bill is expected to soon hit the floor, several pending amendments would curb how much the government subsidizes the premiums farmers pay.

But premiums aren’t the only part of the system supported by taxpayers. Crop insurance companies also enjoy lots of government largess. That’s by design.

"Congress wanted this to happen and it is now happening,” said Keith Collins, who had the job of chief economist at the U.S. Department of Agriculture longer than anyone ever has. He served 16 years under four presidents and watched as most farm support programs were rolled into crop insurance.

"You had one member of Congress after another saying that we have to find a better way to manage disasters,” Collins said. “And the sort of the after-the-fact approach that had been taken was having to pass emergency supplemental on budgeted bills."

That’s why last year — when the worst drought in generations struck the Corn Belt — there was no need for an emergency disaster program.  Because unlike in previous droughts or floods, most farmers now carry plenty of crop insurance.

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