Critics of farm policy are impossible to please and are adept at arguing out of both sides of their mouths.
For example, when crop prices around the world are low, they often blame U.S. farm policy for the falling prices and criticize it for harming farmers in poor developing countries. Then, when crop prices rebound, they often blame farm policy for higher prices and criticize it for harming poor consumers.
In other words, U.S. farmers are in a lose-lose proposition – blamed when prices are up and blamed when prices are down. The same is true when it comes to critics’ views of crop insurance.
When crop prices are up, the cost of crop insurance is usually higher and other components of the Farm Bill are lower. That’s because insurance premiums are pegged to the value of the insured crop, while other Farm Bill policies are specifically designed to kick in if prices fall.
So, critics complain about the cost of crop insurance when crop prices are up and conveniently ignore the fact that other Farm Bill costs are lower and balance out the equation.
Then, when crop prices fall, farm policy critics do an abrupt about-face. They refuse to acknowledge that crop insurance costs are down because of lower premiums and instead focus their criticisms on the rest of the Farm Bill, which kicked in as designed.
This same yo-yo style of debating is seen when we have agricultural disasters in this country, too. When farmers are lucky enough to avoid widespread loss due to drought, floods, or freezing, insurance companies write fewer indemnity checks to cover losses.
That means lower taxpayer costs, which critics overlook. It also means that insurers and the federal government, which helps reinsure the program, see underwriting gains. To agriculture’s opponents, private-sector companies seeing profit is a point of criticism.
When farmers are unlucky and meet Mother Nature’s wrath, there are more insurance indemnity checks written. That means that crop insurers and the federal government see losses. To agriculture’s opponents, the added costs associated with losses is a point of criticism.
Of course, there’s not even a mention of the fact that private companies helped cover part of the losses with private assets so that taxpayer weren’t on the hook for the whole bill.
In this impossible “head I win, tails you lose” set-up, it’s probably best for everyone to just tune out the professional critics. Instead, let’s focus on what really matters: Protecting farmers and the country’s food, feed and fiber supply with a cost effective, common-sense policy.
And that’s exactly what crop insurance is.