Craig Hill’s editorial explaining the importance of crop insurance to farmers made a lot of sense. (“This much is certain – For farmers, crop insurance is essential” 10/5/2016) Most business and individuals buy insurance to reduce risk, and, as Mr. Hill explained, farmers have plenty of risk. What he did not explain is why taxpayers need to subsidize about 60% of the premium. Contrary to his opinion, it definitely is a handout. Farmers, on average, have much more wealth than the average person. It doesn’t matter that much of the wealth is tied up in land values. Land can be sold for cash just like any other asset. Crop insurance is a good idea, it just should not be subsidized by taxpayers. In the next farm bill, a couple of years from now, we need to eliminate the taxpayer subsidy for crop insurance.
Link to Register article: http://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2016/10/04/much-certain-farmers-crop-insurance-essential/91551614/
In 1862 California passed the, “Act to protect free white labor against competition with Chinese coolie labor, and to discourage the immigration of Chinese into the State of California.” Some things never change. Even though we are not that many generations away from our own ancestor immigrants, once we get settled, we don’t want others to come in and change things.
Today, 9/16/2014, The Des Moines Register once again reinforced the idea that there is something inherently wrong with increasing income inequality. (See “Ag economy cited in study showing growth in rich-poor gap” – link below.) In a free market, where government does not interfere except to stop fraud and force, people only become wealthy by producing things that others value and purchase voluntarily. Under free market capitalism, voluntary trade only makes every participant richer.
Unfortunately, we don’t have a free market in much of our agricultural sector. So, an important question is how did the wealthy gain their wealth. If they gained their wealth by receiving subsidies from our government, then they gained their wealth by making others poorer. Today, farmers receive various kinds of government subsidies, both directly and indirectly. For example, crop insurance premiums are subsidized 60% by taxpayers, regardless of the income or wealth of the farmer. And, crop insurance not only covers losses from natural disasters, it also covers loss of profits due to lower crop prices. There should be no subsidy at all for crop insurance, but it is particularly distasteful when the subsidy goes to the rich. So, we must blame our own government’s policies for at least some of the unjust and immoral aspects of income and wealth inequality.
If seems as if all businesses now require some type of welfare program. The definition of economic development is grants or loans or special tax breaks given by our government to businesses. Banks get their welfare indirectly – from loan guarantees from many government programs. Of course our farmers must be protected from losses by government – through crop insurance subsidies that not only cover natural disasters, but actually protect against price declines. All types of energy companies receive special tax credits or tax breaks. The biggest manufacturers in Iowa receive large tax credits for research. Now, Mediacom and John Deere want a grant of $800,000 from the federal government to help bring high speed internet to farmers who buy high-tech, internet connected tractors that cost hundreds of thousands of dollars. We should say no! We need to reverse the trend of expecting taxpayers to fund all types of economic development. Just as with with individuals and families, welfare for businesses create dependency. Our economy will continue to grow sluggishly as long as we look to government to manage our economic development.
It appears that those in charge of reconciling the differences between the House and Senate versions of the Farm Bill will not be doing anything to reduce the obscene amount of welfare going to farmers. Money “saved” by eliminating direct payments is being shifted towards more subsidies for crop insurance. Senator Grassley’s effort to place a cap on the total welfare payments received by any one farmer appears to have been watered down at best. Farmers have higher incomes and greater wealth than most citizens. They should pay the full cost of their crop insurance. Now, lets hope that either the full House or Senate will vote this bill down. We don’t need five more years of welfare for rich farmers.
Taxpayers subsidize about 60% of the premiums that farmers pay for crop insurance – regardless of how wealthy the farmer is, regardless of the income of the farmer, and regardless of whether or not the owner actually even works on a farm. Crop insurance covers not only losses due to disasters, but it also covers losses due to low prices. There is no ethical, moral, or food security reason why wealthy farm owners should be receiving any subsidy. Most farms, like most other businesses, need disaster insurance. But, there is no good reason why taxpayers should subsidize the premiums. Farmers say they need a 5-year farm bill so that they can properly plan. That is understandable. Let’s let them plan on not receiving any subsidy on their crop insurance.