Crop Insurance Not A Piggy Bank
May 9th, 2007 by David Graves
The increased cost of operating a successful, nationwide crop insurance program should not be viewed as a large “piggy bank” from which to take money to fund other programs. Crop insurance cost is driven largely by the level of success of the program in meeting Congress’ public policy objectives for the program to be an efficient and effective risk management tool that is fairly and equitably available to all farmers regardless of size, location or enterprise. Keith Collins, Chief Economist at USDA, testified in March, 2006, before a House Agriculture Subcommittee, that program liability or coverage is up about one-third and program acres is up about one-fifth since the passage of ARPA in 2000. In that testimony, Collins also stated, “Recent increases in the administrative and operating expense reimbursement and underwriting gains have strengthened the financial performance of the companies and encouraged new entrants and we believe that will help increase service to producers.”
Any raids on the crop insurance funds will result in higher premium costs and less service for farmers. They would signal a retreat from all the gains in building the best crop insurance program in the world. It would be a retreat from ARPA and all the efforts made in previous legislation and program changes to provide essential risk management for America’s farmers, ranchers and growers that would also be readily accepted by lending institutions and commodity markets.