Crop Insurance Badly In Need of Reform
The 2013 Farm Subsidy Database demonstrates that unlimited crop insurance subsidies are badly in need of reform.
Taxpayers pay two thirds of premiums and most of insurance claims when disaster strikes. As a result, crop insurance is now the most costly - and least equitable - component of the farm safety net, costing taxpayers twice as much as direct payments and other subsidies.
Some policyholders annually receive more than $1 million in premium support and more than 10,000 policyholders receive more than $100,000 in subsidies. Because there are no limits on crop insurance subsidies, the largest 1 percent of policyholders annually receives about $227,000 while the bottom 80 percent receives about $5,000.
A handful of states also receive the lion's share of crop insurance support. While some Midwestern and Southern states have received more than $5 billion in subsidies since 1995, most states have received less than $1 billion in crop insurance support.
Crop insurance is also the least transparent part of the safety net. While EWG can report who receives most farm payments, EWG is prohibited from sharing which farm businesses receive premium support. So, taxpayers and policymakers are kept in the dark. In addition to failing to provide the names of farmers, USDA's Risk Management Agency this year refused to provide information about specific policies after providing detailed information in 2012.
Common sense reforms would strengthen the crop insurance program, including payment limits, means testing, and greater disclosure requirements. Farmers who receive premium support should be required to adopt basic environmental protections. There has never been a better time to ask the largest farm businesses to share more of the cost of risk management - net farm income, farm equity, and farm household income are all at or near record highs.
These reforms will strengthen, not weaken, the crop insurance program by making these costly subsidies more fiscally responsible and transparent.Read less
The Case for Crop Insurance Reform
Unlimited crop insurance subsidies now cost the taxpayer $9 billion a year and overwhelmingly flow to the largest and most successful farm businesses. Unlike other farm subsidies, crop insurance subsidies are not subject to means testing or payment limits and farmers are not required to adopt basic environmental protections in exchange for premium support from the taxpayer. While some farms annually collect more than $1 million in crop insurance premium support, the bottom 80% of policyholders annually collect about $5,000.Read more
Note: The information on conservation spending for 2011and 2012 are incomplete due to missing data from USDA's Natural Resource Conservation Service. In addition some payments made in 2010 were not assigned to recipients in the data received from NRCS. Those payments are also not included.
The information provided for the Wetland Reserve Program (WRP) provides an inaccurate picture of how WRP payments are distributed. USDA's Natural Resource Conservation Service uses title companies as intermediaries to finalize wetlands easements under the Wetlands Reserve Program. As a result, the data provided to us shows large sums of money going to these title companies. In reality, the payments are ultimately distributed to landowners participating in the WRP.
Unfortunately, NRCS has not provided the data to show where these farms and wetlands are located or which farmers or landowners are enrolling in the program, so EWG is unable to allocate these large sums of money to individuals beyond the title companies. Therefore, these companies skew the conservation rankings and payment concentration, which EWG cannot avoid unless and until NRCS makes available the additional farm attribution data. Therefore, we have not included WRP payments in the 2011 or 2012 data update.
We have separated data on farm commodity, disaster and conservation payments in order to provide a more accurate picture of top recipients and concentration of payments among the three main categories of USDA programs.
Finally, EWG works hard to ensure the accuracy of the information it provides through its products and services, but obtains data for the Farm Subsidy Database from the U.S. Department of Agriculture pursuant to the Freedom of Information Act. Therefore, EWG cannot guarantee the accuracy of the information USDA provides or any analysis based thereon. If you find an error or discrepancy on the site, please contact your local USDA Farm Service Agency office to check its records before contacting EWG.