Are farmers the world’s biggest bludgers?

Quite possibly they maybe…the world over they are rent seekers, always demanding the taxpayer cough for this or for that, and expect everyone to feel sorry for them when some weather event stuffs up their livelihood:

In the US crop insurance is highly subsidised…and is causing major problems:

 The worst drought in 50 years could leave taxpayers with a record bill of nearly $16 billion in crop insurance costs because of poor yields.

The staggering cost of the program has drawn renewed attention, as the Obama administration and Congressional Republicans wrangle over ways to cut the deficit. Last month, Treasury Secretary Timothy F. Geithner said that reducing farm subsidies was one way that the administration could cut government spending. But Congress has resisted.

The Agriculture Department, which runs the program, said that the total losses from crops harvested last year would not be known for weeks, but that costs from the program were estimated to be $15.8 billion, up from $9.4 billion in 2011.

Separately, a record $11.4 billion in indemnities for crop losses has been paid out to farmers, and officials say that number could balloon to as much as $20 billion. In 2011, a then-record $10.8 billion was paid out in indemnities.

The crop insurance program has drawn criticism from a wide range of groups, including the Environmental Working Group and the conservative Heritage Foundation, two Washington research groups, which say that the costs need to be reduced and that the program mainly benefits insurance companies and large farmers. Farmers’ net income for 2012 is expected to be $114 billion, down 3 percent from 2011 but still the second highest in 30 years.

So farmers are making more than ever but expecting taxpayers to subsidise their insurance?

Thomas P. Zacharias, the president of National Crop Insurance Services, an industry trade group, defended the program, saying that the record crop losses last year showed the need for insurance.

“This year, most farmers will be able to rebound from historic drought, thanks to crop insurance,” Mr. Zacharias said.

The federal crop insurance program dates to the Dust Bowl era of the 1930s, when Congress created the taxpayer-subsidized insurance to protect farmers against crop losses. Today, the government pays about 62 percent of the insurance premiums. The policies are sold by 15 private insurance companies that receive about $1.3 billion annually from the government. The government also backs the companies against losses.

Government documents show that taxpayers have paid nearly $7 billion so far to subsidize premiums for 2012. The documents also show that taxpayers could pay another $7 billion to underwrite losses by the insurance companies and other costs.

“Essentially, taxpayers are hit twice by the cost of the program,” said Bruce A. Babcock, an agriculture economist at Iowa State University.

President Obama has proposed cutting crop insurance subsidies and reducing the amount paid to insurance companies, saving $4 billion over 10 years.

What is it with farmers, always expecting the government to bail them out. Why can’t they get insurance from the private sector like the rest of us.

 


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  • Andrei

    On reading this it is not the farmers who are the beneficiaries of Government largess, it is the insurance companies, who get the premiums, partially paid for by the Government but do not carry the risk because that is also borne by the Government.

    Farmers feed us all so there is a real benefit to ensuring that there is a mechanism that allows farmers enough resources to plant and harvest a new crop after the failure of the previous years crop – so that one bad year doesn’t snowball into years of famine

    • Goldie

      That is a socialist argument. The fact is that those US farmers are farming in areas that have severe droughts, and those farmers should factor that into their cost structures like any business – they only farm in those areas because they are massively subsidised and protected by the taxpayers. No-one will ever face famine because government stops subsidising farmers Andrei – in fact, that is what is happening at the moment – US beef production has fallen, so beef exports from NZ are increasing. The free market works – the answer to food security is to let unproductive farmers go to the wall, and let the productive farmers flourish.

  • Jimmie

    I agree WO that US farmers are bludgers – perhaps more subsidy addicts would be a better phrase. They have had federal minimum price guarantees in place for years and cry a river every time world ag prices go down.

    In this case I’m not so sure – if they have been paying insurance premiums year after year that reflect the cost of the crop insurance there is nothing wrong with this – no different to you having income protection insurance several years ago and then getting paid out when you became depressed.

    However if the crop premiums are nominal and don’t reflect the cost of the insurance then it is jsut another subsidy and is a form of bludging.

  • maninblack

    I just dont get the need for subsidys.. anywhere. If it doesnt pay its own way.. why bother?

    • Jimmie

      In the US it would cause large fluctuations in food stuff prices which would make all the voters moan to their Crongressmen to do something about it.

  • Gazzaw

    No US administration would ever be game enough to tackle farming subsidies. They would be facing a lobby group that makes the NRA pale into insignificance!

  • ConwayCaptain

    The FARMERS in the US, EU, Japan are all highly subsidised. If these subsidies were removed it would make it economical for 3rd world farmers to grow crops and export them to the above countries.
    There are also the unseen subsidies like the councils cleaning up the waterways from farm pollution

    • cows4me

      After the 2nd world war CC many governments realised that their farmers had to be subsidised. Europe was on the verge of starvation as many farmers had to walk off the land, their farms simply didn’t pay. It was soon realised that it was cheaper for governments to support the local farmers rather then pay and wait for imported food. Many subsidised farmers are more the result of food security issues in the countries you name, whether this is still relevant now is another argument. I know Japan for example only has food security for about 2.5 days. The imported food chain is so highly tuned that if a ship is running late their could be problems in obtaining some foods. I believe our food security is about two months before we would have problems obtaining special foods but you would probably know more about that.

    • So in actual fact the people being subsidised are food consumers. The continuity of supply and the price are both subsidised to increase the well being of food consumers. If the subsidies were removed the price would rise. Yes, then others countries could compete. The only group to lose out then would be food consumers in all countries, already subject to increased prices due to idiotic ethanol crop planting, including people in poor countries only just making ends meet now. But they don’t matter do they….

  • TayheiNotts

    I recall a few years ago reviewing a farmer’s feed and grazing budget in early spring. I commented that he had not allowed any space for a summer drought. No need to budget for a drought he said. If there is a drought the Federated Farmers will access government help, so that sort of possibility is never budgeted for. Just go for the “max”. The willingness of governments to help out “poor” farmers make prudent planning worthless.

    • cows4me

      Must have been quite a few years ago. I remember the old man getting worried about the extra costs he would incur. Best thing that ever happened if you ask me.

  • redeye

    I’ve been growing food for just over 5 years now. The price of everything diesel, rates, fertilisers, electricity etc. has increased almost exponentially in that time. But dare to raise the price of the food you grow and you are suddenly the devil incarnate and God will strike down upon thee with great vengeance and furious anger (thanks Jules).

    That’s why there are subsidies.

    Nek minute you’ll be calling for a capital gains tax to really fuck our worth.

    • Ford

      if ppl like you stopped producing the world would be fucked..the masses would starve to death because most of the useless fucks wouldnt know how to grow potatoes

  • Whafe

    If you look outside the dairy, sheep and beef industry, you would all be blown away just how unprofitable growing food to feed the population is.
    Yes dairying has been going well, as as stock farming, but when it comes to growing commercial vegetable crops, the profitability is absolutely shocking. Joe Public has no “real” understanding of that…
    On a global basis, if Sunsidies were removed, best you be prepared to pay far more for your food, serious amounts more….

    • cows4me

      It’s only going to get worst Whafe if councils like Horizon have their way. Every time a farmer changes crops they will have to apply and pay resource consents. It’s a great shame some of these parasites continue to suckle on full bellies.

      • Whafe

        Horizon have totally forgotten what the vast majority of the Manawatu economy is made up of!
        Cam, I think you may found that there is not the vast amounts of money being made in Primary Production in NZ as you may well think… Sure if you have family in primary production, you have an in road… Perhaps look at it from another angle of you wised to become a farmer etc, near impossible without copious amonts of capital… Yes you need capital for any business venture, however the business case in Primary Production is no golden goose… I am more coming from the commercial vegetable production side….
        Thank you to Progressive & Foodstuffs

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