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Crop insurance bulls-eye

Crop insurance bulls-eye

LAST week, House Agriculture Committee ranking member Rep. Collin Peterson (D., Minn.) caught my attention when he said crop insurance sees five times the amount of fraud as the food stamp program.

After some further digging and a tweet from the National Crop Insurance Services (NCIS) with more details, I think his claim may be a bit inflated.

NCIS cited Dr. Bert Little, who oversees the government's data mining program for crop insurance at Tarleton State University in Texas. He estimated the crop insurance fraud rate at less than 0.2%, well below other lines of insurance.

Peterson may have made the point to deflect some of the attention away from food stamp fraud; the program has some flaws regarding the way certain benefits are administered.

It's another example of how the crop insurance program continues to come under increasing scrutiny and needs to justify why government spending on crop insurance has soared since 2000.

At the beginning of March, Rep. John Duncan Jr. (R., Tenn.) and Sen. Jeff Flake (R., Ariz.) introduced the Crop Insurance Subsidy Reduction Act (H.R. 943 and S. 446), which would significantly reduce the amount of taxpayer dollars used to subsidize crop insurance.

The proposal returns federal crop insurance premium subsidies to pre-Agriculture Risk Protection Act levels. That law was passed in 2000 and raised the taxpayer portion of crop insurance premiums from 37% to 62%.

The White House issued a budget blueprint that calls for significant cuts to crop insurance subsidies, but much less than proposed by Duncan and Flake.

After spending time last week in the same room as the top Republican and Democrats on the Senate and House agriculture committees, I expect crop insurance to remain unscathed once again.

Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) continued to stand behind the crop insurance program proposed during last year's farm bill debate and reintroduced by Sen. Pat Roberts (R., Kan.) last week to expand crop insurance, especially to specialty crop growers, who have been largely left out of the program.

Stabenow noted that specialty crop growers, who account for half of the nation's agricultural crop receipts, would go from zero coverage to having coverage, which isn't about sweetening the pot for producers but is more of an "equity issue" since many specialty crop producers have not had the opportunity to purchase coverage.

Stabenow also reiterated that "farmers have skin in the game" when it comes to insurance, which doesn't offer a payout regardless of conditions (like the direct payment program does).

"We want to make sure farmers have confidence that crop insurance, as it is today, will remain available to them," Stabenow said.

For the 2012 crop, it now appears that indemnity payments will be close to $17 billion. Crop insurance has all but eliminated the need for ad hoc disaster bills, which is why, despite two bad weather years in a row, there has not been a single large outcry for ad hoc disaster relief for crops. Forty-two such bills have cost taxpayers $70 billion since 1989, according to the Congressional Research Service.

Crop insurance has become a big bull's-eye for critics and a mainstay risk management tool for producers. The debate will remain paramount while a new farm bill is drafted.

Volume:85 Issue:15

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