Environmental Working Group targets crop insurance

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, May 31, 2012- The Environmental Working Group (EWG) today revealed its data analysis on crop insurance payments for individual policyholders in each U.S. state and county. EWG obtained the data through the Freedom of Information Act from USDA's Risk Management Agency (RMA) on the system of government-backed premium discounts to crop insurance policyholders.

According to the data, in 2011 more than 10,000 individual farming operations “received federal crop insurance premium subsidies ranging from $100,000 to more than $1 million apiece. Some 26 farming operations received subsidies of $1 million or more last year.”

EWG President Ken Cook said his organization will be asking senators to take the steps necessary for RMA to reveal the names of the crop insurance subsidiaries, as well as the profits of the crop insurance companies. 

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However, a statement today from the National Crop Insurance Services, Crop Insurance and Reinsurance Bureau and American Association of Crop Insurers stated that the environmental group “fails to account for the fact that these ‘subsidies' are premium discounts that are accounting transactions that take place within the USDA.”

“There are no government subsidy checks to farmers,” states the crop insurance industry release. “Unless indemnities are paid to a farmer, there is no outlay on that famer's policy. Even when there is a loss, taxpayer cost is minimized by government underwriting gains on other policies, which is why CBO estimates for crop insurance have historically been so much higher than actual costs.”

The EWG principals indicated that several amendments to the Senate Agriculture Committee's 2012 Farm Bill should be expected regarding the crop insurance system. The Senate is expected to consider the Committee's bill within the next week. 

Some of the crop insurance amendments might include premium limits, means testing for crop insurance subsidiaries and conservation compliance requirements, said Scott Faber, EWG's vice president of government affairs.

“We expect the Senate to be having a historic debate about who receives crop insurance subsidies, how much they receive, what we know about these recipients and their environmental responsibilities,” Faber said. 

“All of those issues should have properly been debated in the agriculture committees and weren't,” Cook said. He added he expects “a lot of members of the Senate and Senate staff will be stunned” about the data EWG revealed today.

The release from the crop insurance representatives calls the EWG data release an “attack on farmers' most important 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,” stated the crop insurance agencies' joint release. “That is because crop insurance gives producers a fighting chance after disaster strikes or markets collapse.”

The crop insurers also noted that several fruit and vegetable growers are among some of the largest crop insurance benefit recipients on EWG's data list. The analysis breaks down insurance payments by crop, listing corn as the top beneficiary, but also lists potatoes and fresh market tomatoes in the top five crops receiving the most benefit.    

“I was surprised to see the extent to which some of the specialty crop businesses were benefitting from crop insurance,” said Craig Cox, EWG senior vice president of agriculture and natural resources.

The crop insurers also noted that after reductions in farm policies, such as the elimination of direct payments, crop insurance “is the single most important risk management tool remaining for U.S. farmers and ranchers.”

EWG notably opposed the direct payment system, which is excluded from 2012 Farm Bill legislation. 

“We didn't wish for the direct payment program to morph into a revenue guarantee,” Cook said. “The vast majority of policy holders have very modest scale policies. No payment limit would touch them.”

“Premium subsidies are modest for the overwhelming majority of crop insurance policyholders,” stated the EWG analysis. “Those farm operations would be unaffected by premium subsidy limits now being debated in Congress, such as the $40,000 limit analyzed by the Government Accountability Office earlier this year.”

According to the EWG analysis, the bottom 80 percent of policyholders (389,494 operations) received subsidies worth just over $5,000 in 2011.

EWG used the data release to also spotlight the profits the crop insurance companies make. Cook said the agency will be requesting the Senate to seek this information in the coming days. 

The crop insurance industry seems to find this particularly notable, since, according to their joint press release, “EWG fails to mention that it is promoting a plan on Capitol Hill to provide farmers with 100 percent subsidized crop insurance coverage administered by the government instead of efficient private insurers.”

However, Cook claims questioning receivers of taxpayer money is the most prominent issue being ignored. “Why hasn't Congress done its job and released the names for everyone to see, instead of serving the interests of the crop insurance lobby?” he said. 

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