Farmers Shoulder Nearly $17 Billion in Losses in 2012
Before farmers received a single dime in crop insurance indemnity payments, they shouldered $12.7 billion in losses as part of their deductibles to crop insurance policies, according to a guest editorial published today by Tom Zacharias, president of National Crop Insurance Services (NCIS).
“When combined with the $4.1 billion farmers paid out of their own pockets to purchase crop insurance last year, total farmer investment neared $17 billion,” explains Zacharias in today’s edition of Roll Call/CQ.
Zacharias noted that it was important to get those numbers out because of the ongoing assault on the “the men and women who put food on our tables and clothes on our backs” over their purchasing of crop insurance. “Critics called crop insurance a farmer bailout and said things like farmers were ‘laughing all the way to the bank’ and were ‘praying for drought, not praying for rain,’” the article notes. “Farmers even have been compared to cheap drunks at an open bar and told to pay their fair share.”
The article points out that when assessing the value of crop insurance, there are undisputed facts of what transpired after the worst drought our country has seen in decades:
- Indemnities to farmers cost about $17 billion, but “thanks to crop insurance’s design, these indemnities were not completely borne by taxpayers because farmers and insurers picked up a major portion of the costs and sustained significant economic losses.”
- “This was the sixth time since 1983 that crop insurers lost money. Compare that to the property and casualty insurance industry, which has lost money only once as far back as data is available.”
- “It is also important to note that when crop insurance premiums exceed losses, the government sees underwriting gains that help offset payments in bad years. In fact, the government experienced nearly $4 billion in gains from 2001-2010.” And just as importantly, “Congress was not asked to fund an ad hoc disaster bill despite the historic devastation endured by our agricultural producers.”
Zacharias welcomed reasoned debate on farm policies, but added that “lawmakers and the American public deserve an intelligent conversation about the future of agriculture that is kept to just the facts.”
To see the guest opinion in its entirety, click here.