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Published June 04, 2012, 08:32 AM

EWG study criticizes crop insurance

WASHINGTON — As the Senate makes plans to take up the farm bill, the Environmental Working Group last week released a study of crop insurance that shows some farms get big premium subsidies including those in North Dakota and Minnesota and urged Congress to consider releasing the names of crop insurance beneficiaries and putting limits on the subsidies.

By: Jerry Hagstrom, Agweek

WASHINGTON — As the Senate makes plans to take up the farm bill, the Environmental Working Group last week released a study of crop insurance that shows some farms get big premium subsidies including those in North Dakota and Minnesota and urged Congress to consider releasing the names of crop insurance beneficiaries and putting limits on the subsidies.

The study released June 1 was based on data obtained under a Freedom of Information Act request.

The study said that a Minnesota farm business insuring corn and soybeans in eight counties received $1.7 million in federal crop insurance subsidies. It also said that the 10 percent of North Dakota farm businesses that received the greatest amount of insurance subsidies took in 45 percent of the subsidies going to all farms in the state.

EWG president Ken Cook and other EWG officials noted that the 2000 crop insurance law does not permit the U.S. Department of Agriculture’s Risk Management Agency to disclose the names of the insured, and said that the lack of knowledge about the “secret” farm program should be disturbing to Congress as the farm bill is debated.

“Senate Agriculture committee leaders ought to lift the veil of secrecy before the 2012 farm bill hits the floor next month,” Cook said in a news release. “We must stop giving big payouts that guarantee income to big agribusiness and pass a fair and equitable farm bill that makes meaningful reforms to crop insurance, feeds the hungry, and improves the environment and public health.”

EWG officials said they expect several senators to introduce amendments that would restrict crop insurance, but declined to name them.

Scott Faber, an EWG lobbyist, said during the call that he expects the amendments to include proposals to means-test crop insurance subsidies, challenge the amount of subsidies that go to crop insurance companies and agents and require farmers to protect wetlands, grasslands and soil if they are to receive the subsidies.

“We expect a historic debate,” Faber said.

EWG tracked subsidies across 686,273 insurance policies issued to 486,867 policyholders last year.

Study findings

The study says:

• 26 farming operations including several specialty crop growers received crop insurance premium subsidies of more than $1 million last year.

• 10,000 individual farming operations have received federal crop insurance premium subsidies ranging from $100,000 to more than $1 million apiece.

• 80 percent of policyholders (389,494 operations) received crop insurance subsidies worth more than $5,000 each.

The federal government pays about 62 percent of crop insurance premium costs and also makes payments to crop insurance companies for selling the policies. As commodity prices have risen worldwide, the cost of insuring the crops has risen, and the Congressional Budget Office has estimated that crop insurance, which is largely unchanged in farm bill proposals, will cost about $9 billion per year from 2013 to 2022.

The study showed that most of crop insurance premium subsidies flowed to the producers of corn, cotton and other commodities, but that some of the larger payments also went specialty crop producers who have usually noted that they do not get direct subsidies.

Of the top 10 crops receiving premium subsidy payments in excess of $1 million, corn ranked first and soybeans third, but potatoes ranked second, tomatoes fourth, apples seventh, onions eighth and grapes ninth.

Farms growing fresh-market tomatoes and peppers, insured in five Florida counties, received $1.9 million in premiums paid by taxpayers, while other farms growing apples, blueberries, corn, grapes, mint, potatoes and sweet corn, insured in three Washington counties, got $1.7 million in premiums paid by taxpayers, EWG said.

The revelation of the size of insurance premiums for specialty crop producers is a significant one for EWG, because that organization has repeatedly said that the farm program disproportionately supports commodity producers.

It is well known that the specialty crop industry is highly concentrated compared with commodity production, but Craig Cox, an Iowa-based EWG official, said, “I was surprised to the extent to which the specialty crop industries were benefiting. It’s another reason we should have more information.”

Cox and Faber said that the knowledge that some specialty crop producers are getting large subsidies would not change EWG’s position that the government should spend more money on providing fruits and vegetables to school children.

Cook said that the “big payouts to tomato and potato” growers signal that these payments should be “open to review,” but that in general crop insurance is not so important to that industry because so much of it is irrigated.

Defending crop insurance

Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., has stressed that she is proud the bill would expand crop insurance for specialty crops.

Responding to a question about whether farmers have made crop insurance a priority because EWG has fought so hard against the direct payments program and for payment limitations and the public disclosure of farm subsidies, Cook acknowledged that “Some people have suggested we may be to blame by being too thoroughly critical of direct payments.”

He added that EWG is not opposed to a farm safety net, but wants to make sure subsidies “make sense for the country.” Faber also said that EWG is not opposed to crop insurance, but is questioning subsidizing premiums at a rate of 62 percent and whether the biggest farmers should get them.

Three crop insurance industry groups — National Crop Insurance Services, Crop Insurance and Reinsurance Bureau and American Association of Crop Insurers — issued a statement today calling the EWG study “a reckless attack on farmers’ best risk management tool.”

“Crop insurance is extremely popular with lawmakers from both sides of the aisle, as well as with farmers, their lenders, and nearly everyone with a stake in rural America,” the crop insurance groups said. “That is because crop insurance gives producers a fighting chance after disaster strikes or markets collapse. After recent reductions in farm policies, it is the single most important risk management tool remaining for U.S. farmers and ranchers.

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