Govt has felt that the crop insurance subsidies are cheaper for the govt than the old system of special bail-out programs to react to crop disasters as they came up. The insurance program as it's set up really saved the taxpayers a lot of money the past 2 years as we've had a lot of disaster the past 2 years!
However, I'm not a big fan of the current insurance setup.
1. It appears there is room in it for a lot of fraud.
2. There are costlier options that ensure a profit. Most insurance protects against disaster losses, keeps you in business another year. I'm not sure we should be able to insure an outright profit per acre? Get your costs back = good, but insure a profit, I'm not sure that is a good thing?
3. In poor crop years, we need to try to grow every bushel we can. Food supplies around the globe are kinda tight. Instead, with the current set of insurance you plant once, and if the crop is wiped out, that's it, you sit back and wait for fall insurance check. It only hurts you to try to replant and make some sort of harvestable crop. Same with Prevented Planting, it makes more sense to not plant the fields late than to try planting a real late bean or alternative crop and harvest 1/2 of a normal crop....
We have shifted from trying to grow as much crop as we can for the conditions, to just trying once and then give up on producing anything on that land. Not good for the consumers of the world. The old ad hoc disaster payments encouraged farmers to grow or harvest something from the ground, so livestock producers got something out of the old way - some sort of feed or forage at least. Now it's best to harvest nothing at all from disaster acres...
4. With solid insurance behind them, the large farm operations can quantify their risk to their bankers, and become even larger. In short, with less risk it is easier for the big to get even bigger. It's natural for farms to get larger, but this insurance program speeds this up a lot.
So I'm not really a fan of the current crop insurance programs. I think they went too far in some ways, and encourage less production of feed and food, not more, while favoring the larger farms to be able to barrow more with little risk.
Sort of a bad snowball out of control.
The concept of subsidised crop insurance isn't bad, but how they are currently doing it seems to have a lot of negatives that should be fixrd.
Unfortunately what city folk har me say is, 'save tax dollars cut farm programs because thwy are bad!!!!' Not what I amsaying at all. I'm saying the current program took off in a bad direction, and needs some fixing, some changes, to keep things fair, to keep livestock producers in business, to cover production costs not insure profits.
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