The Revenue Insurance Boondoggle: A Taxpayer-Paid Windfall for Industry
As a Congressional “Super Committee” presses to meet its Nov. 23 deadline to come up with a dei cit reduction proposal, powerful farm state legislators and agricultural industry lobbyists have moved to hijack the process of rewriting the federal farm bill and enact a new, multi-billion dollar entitlement for the largest, most proi table farming operations. Their goal is to have the 12-member committee adopt their scheme, drafted entirely behind closed doors, while shutting out everyone else with a stake in the outcome – including taxpayers and advocates for healthy food, rural revitalization, children, conservation, public health and the environment.
The champions of big agriculture are trying to pass off their scheme as budget reform by letting it be known that they are ready, at long last, to part with the long discredited farm subsidy programs known as direct payments, which send out cash even during years of record-high farm income. You don’t even have to be a farmer to get a payment. It has become clear, however, that allies of big agribusiness are pushing to trade direct payments for a system that guarantees income – at taxpayer’s expense – for the richest of corporate agriculture businesses, which are already doing far better than most of the U.S. economy.
At the heart of this scheme is an expansion of the federal “revenue insurance” program, an already heavily subsidized program that insures business income won’t fall below a “revenue guarantee” – something that would be the envy of any other industry – even as it enriches the insurers. This paper by renowned agricultural economist Dr. Bruce Babcock, who developed one of the i rst revenue insurance products, clearly demonstrates that the justii cations for preserving and expanding this taxpayer-subsidized program are hollow.
Big agriculture’s supporters argue that the revenue insurance program should be immune from budget cuts because it has already been trimmed and further cutbacks will leave farmers vulnerable and put America’s food supply at risk. The reality is far, far different. Babcock’s close analysis shows that the supposed cuts did little more than make a trivial dent in the windfall proi ts that insurance companies and agents reap from the program, while the taxpayer-subsidized premiums entice growers to buy expensive and unnecessary policies that can pay out even if they suffer no crop loss at all.