Mike Adams, radio host of Agri-Talk, recently interviewed National Crop Insurance Services President Tom Zacharias regarding a recent Bloomberg News series that contained numerous factual errors and obvious bias, claiming for instance, that the government “pays farmers to buy [crop insurance] coverage.”
“Farmers are not paid to buy crop insurance,” noted Zacharias. “Farmers pay for crop insurance.” Zacharias explained that crop insurance was a new kind of risk management tool which required farmers to purchase policies with their own money in order to enjoy the relative protection that crop insurance provides.
Zacharias noted that farmers “spent about $4 billion of their own money in 2012 for premium, and last year when we had the catastrophic drought through the Midwest, before those deductibles kicked in, farmers absorbed just under $13 billion in uninsured losses.”
He explained that contrary to farm safety net programs of the past, there is no subsidy in the traditional sense of the word to farmers who purchase crop insurance. “Farmer premiums are discounted which makes crop insurance affordable,” he said, adding that farmers only receive an indemnity payment if they receive a verifiable loss.
Zacharias also pointed out that Bloomberg News led its readers to believe that the costs from last year’s historic drought had become the norm, “not putting it into perspective of what we were going through – the drought of 2012,” he said.
Zacharias told Adams that contrary to the claims in the Bloomberg News series, crop insurance companies are never guaranteed a profit; in fact they have suffered losses in a number of years. “Companies lost money last year, so I don’t think that they view this as a guaranteed profit.”
Zacharias explained that the lengthy series also failed to mention that crop insurance has taken $12 billion in funding reductions since the 2008 Farm Bill. “So there’s a laundry list of issues here” that Bloomberg failed to report correctly or completely omitted, he said.
“Unfounded, sensationalist headlines are uncalled for, it does not serve the public interest, nor the Bloomberg readership.”