No Competition
“I have a lot of problems with the federal crop program,” Handsaker said as he sat in the kitchen of his one-story home, a Cadillac sedan parked outside. “It doesn’t matter who you purchase it from, it’s the same.”
Subsidized insurance also gives farmers an incentive to plant on land where crops may or may not flourish, he said, adding that he knew individuals in South Dakota who are “farming the program” with the intent of making an insurance claim rather than harvesting a crop.
The program’s formula for determining insurance premiums also “has created brittle farming operations that lack resilience and a spiral of ever-increasing taxpayer-subsidized” losses, according to an August report from the Natural Resources Defense Council, a New York-based environmental group.
Democratic Representative Ron Kind of Wisconsin expects that trend to worsen.
“You’re going to see a lot of unproductive land brought into production because the taxpayer will cover the losses from all these riskless decisions,” said Kind, whose proposal to limit program subsidies fell 10 votes short of passage in June. “My concern is that this is eliminating all risk.”
Big Subsidies
In 2011, the latest year for which data is available, 26 farmers each got annual subsidies of more than $1 million; more than 10,000 received $100,000 or more. One grower of tomatoes and peppers in Florida enjoyed a subsidy of $1.9 million, according to the Environmental Working Group. Congress has barred the USDA from revealing the identities of payout recipients.
In April, Obama’s fiscal year 2014 budget recommended slicing $11.7 billion from the program over the next decade by raising out-of-pocket costs for farmers and cutting administrative subsidies for insurers. Ryan, too, has called for trimming program spending.
Instead, the House-approved farm measure would expand crop insurance to guarantee as much as 90 percent of a farm’s income and extend coverage to peanut farms while the Senate bill covers farmers against even the modest losses they currently pay out of pocket.