Kenney, whose $150,000 premium represents roughly 10 percent of his total costs, says he doesn’t have much faith in alternative tools for managing risk, including financial contracts such as futures and options.
Premiums last year accounted for no more than 10 percent of corn growers’ average production costs of $349 per acre, said Bruce Babcock, an agricultural economist at Iowa State University. Farmers spent far more on seed, fertilizer, fuel and electricity.
Dropping Coverage?
If premium subsidies were reduced, many farmers would consider canceling their policies.
“If we had to pay what they say they subsidize, most of us wouldn’t have crop insurance because we couldn’t afford it,” says Mike Brown, 63, who along with his son Tanner farms 7,300 acres in Colby, Kansas. “Crop insurance is costing you $15 to $20 an acre. If they took all the subsidies out, it would be $50 to $60 an acre.”
Crop insurance funding will be determined when lawmakers reconcile competing House and Senate versions of the farm law. Congress faces a deadline of Sept. 30 to make a deal or extend a current stopgap funding measure.
Off the table: whether federally backed crop insurance should exist at all.
“We shouldn’t look at crop insurance as the least evil policy,” says Josh Sewell, senior policy analyst with Washington-based research group Taxpayers for Common Sense. “It’s not like our choice is to send checks one way or send checks another way. We could just not send checks.”