EWG: What? Me worry?
With charts supplied by Iowa State University economist Bruce Babcock, the Environmental Working Group explained to urban reporters Thursday that, thanks to crop insurance, there's no rush to push a farm bill through Congress this year.
Babcock told reporters that about 80% to 85% of insured acres in the Corn Belt acre covered by Revenue Protection insurance this year.
Babcock said that livestock farmers and those who didn't buy insurance may suffer more financial losses from the drought than corn farmers who bought Revenue Protection.
He used an example of a farm with a historical yield of 180 bushels an acre. Babcock also used the current corn price of about $8 a bushel for the fall price that's guaranteed under revenue insurance (which is based on new crop futures this October). If the farm had a 100-bushel yield, Babcock estimated that crop insurance would pay $352 an acre. Adding that to the $8 a bushel that the remaining corn could be sold for, another $800, then the farm has potential income of $1,152 an acre.
Whether that's a real world example or not (since many farmers have already priced part of their crop for much less than $8), EWG made the point Thursday that farmers will still collect indemnity payments on this year's crop, no matter what happens to the farm bill.
"There is absolutely no reason to jam through a flawed farm bill in response to this drought," said Craig Cox, senior vice president of agriculture and natural resources for EWG.
Cox and others at EWG say the farm bill will increase already generous premium subsidies if it passes the bills under consideration in the House and Senate.
A new revenue program in the Senate bill "essentially means asking taxpayers to pick u most of the deductible on the underlying crop insurance policy," Cox said.
When asked what kind of reforms EWG favors in USDA tax insurance programs, Cox said the group favors "a step by step move" back to lower levels of subsidies for farmer premiums under earlier crop insurance laws. And the group also supports linking conservation compliance to eligibility for insurance.
If the federal government is going to pay a significant share of crop insurance costs for farmers, "they definitely should have some conservation strings attached," Cox said.
Babcock said that in a year like this one, taxpayers will pick up most of the cost of crop insurance payments to farmers, not the insurance companies.
He said it's too early to tell how big the taxpayer and insurance company tab will be for this year's losses because yields aren't known yet.
"I've heard estimates of $15-to-$25 billion of indemnities being paid out," he told reporters.