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Bills target crop insurance funding

Last year was one of broken records for crop insurance indemnity payments on account of the nationwide drought. Though crop insurance was a lifesaver for many farms, especially in parts of the Plains, Midwest and mid-South, there's a new effort to slash federal funds devoted to the industry.

Bills were introduced in the U.S. Senate and House of Representatives on Tuesday to effectively pare down federal support for crop insurance to levels similar to those prior to 2001 (that year, the federal government spent $1.8 billion supporting the industry, according to the policy thinktank R Street). The "Crop Insurance Subsidy Reduction Act," say supporters, would trim $40.1 billion from the federal budget over the next 10 years.

“What makes the crop insurance program particularly troublesome is that, unlike other agricultural supports, the subsidies are neither means-tested nor subject to conservation compliance requirements,” says Andrew Moylan, senior fellow with R Street, a free market policy research group. “The end result is that 26 large agricultural producers each banked more than $1 million in crop insurance subsidies in 2011, while 10,000 received more than $100,000. Meanwhile, the program encourages farmers to convert to agricultural use that marginal land that is most subject to flood and erosion.”

But though an R Street report says federal support for the crop insurance industry has swelled to $7.5 billion annually, the idea behind the legislation -- that producers pocket exorbidant insurance payments sometimes illicitly -- is a big bone of contention for those in the crop insurance industry, many of whom are quick to point out the fallacy of the argument.

"You don’t buy insurance on your car with idea of going out and having a wreck,” says Robert Geddes, a farmers from Hoopeston, Illinois, in a report from National Crop Insurance Services. “It’s to take care of [you], when things truly go against you.”

Adds Tulia, Texas-based claims adjuster David Finch: "I’ve never heard of anybody or talked or visited with any farmer who would rather have an insurance check than he would have a good crop that he could bank on his own."

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