Crop Insurance Caps Would Have Unintended Consequences for All Farmers07/14/2017
Means testing measures like adjusted gross income (AGI) limits would have unintended consequences for all farmers and be detrimental to the long–term viability of crop insurance, warns Rodney Weinzierl, executive director of the Illinois Corn Growers Association, in a recent Agri-Pulse audio interview.
Weinzierl stressed that arbitrary limits to the crop insurance program—whether in the form of a Farm Bill amendment or as part of the President’s budget—would not just strike the biggest farms, but instead hit at all family farmers.
“Having an amendment that is going to affect everybody that is over 600 … acres — that’s not hitting the large farmers, that’s hitting 90 percent of the farmers,” Weinzierl explained.
In addition, capping the discounts farmers receive on premiums they pay for coverage could affect the crop insurance program’s participation levels, which currently include all 50 states and 90 percent of America’s farmland.
“A lot of farmers will probably just walk away from the program or get a very low coverage level,” Weinzierl said.
That would be particularly disastrous now that crop insurance has evolved to become the cornerstone of the farm safety net. If coverage shrinks, Congress could again find itself doling out ad hoc disaster dollars after floods and droughts. And unlike crop insurance, those disaster programs would be 100 percent funded by taxpayers.
In conclusion, Weinzierl pointed out that these kinds of restrictions would harm more than just Midwest farmers. He referenced the vegetable and fruit crop arena as an example, noting that because these farms are usually very large and take more capital, many would be hit by AGI limits.
“You could take [farmers out] of the risk pool…and that policy wouldn’t even be viable potentially to be offered to the rest of the farmers who need it,” Weinzierl said.
He was describing an insurance concept known as the “risk pool,” whereas premiums become cheaper as more people are insured. Remove participants, and there are fewer people to spread risk among, which increases premiums for everyone who remains.
Farm policy supporters often note that excluding the largest, most-established farms from crop insurance would be like removing the safest drivers from the auto insurance pool.
To listen Weinzierl’s Agri-Pulse interview in its entirety, click here.
Source: National Crop Insurance Services