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LSP: Crop Insurance Less Helpful to Beginners

Tuesday Minnesota’s Land Stewardship Project released the last of three white papers that criticize the nation’s crop insurance program. It’s third main point is that crop insurance offers revenue guarantees so high that they have allowed large farms to expand and bid up the price and rental costs of land so much that it’s almost unavailable for beginning farmers looking for a start.

“Our interviews with farmers confirm that it has served to artificially inflate land prices by allowing the largest crop operators to lock in profits and aggressively purchase and rent farmland to expand their operations, driving up land costs beyond the reach of most farmers," said Mark Schultz, one of the white paper authors and LSP's policy program director.

Ryan Batalden, a farmer in Cottonwood County in southwest Minnesota, agrees.

In the 12 years since he and his wife started farming, they’ve been able to buy just 32 acres of land and they rent enough to farm a total of 380 acres.

Batalden can’t afford to outbid larger farm operators, but because his family’s farm is organic,”I was able to find landlords that value their land being farmed organically or in a long-term rotation,” he said.

Batalden’s view of crop insurance isn’t theoretical. He normally buys between 75% and 80% revenue coverage on his corn and soybeans.

“On a profitable year, I still get crop insurance payments,” he told Tuesday. The federal government typically subsidizes between 60% and 70% of the premium costs, and what helps Batalden a little bit helps his larger competitors even more.

“I don’t think any industry should use the government to take all risk out of it,” he said.

Batalden’s own approach to risk is to diversify enterprises. He and his wife raise certified organic grains. They have a small cattle herd. They raise popcorn and small grains and specialty crops.

“Having a more diversified operation in general is just recognized as a less risky way to farm,” he said.

Crop insurance doesn’t seem to support that system as well as just a few favored crops like corn and soybeans, he believes.

“I can’t even get crop insurance on buckwheat,” he said.

Batalden supports having crop insurance available on more crops and would like to see USDA work harder and finding a way to rate such crops in areas with less planting history.

He’s not opposed to crop insurance but wants to see it reformed.

“It is really important as a safety net but the way money is boing spent on it now, it’s just too much,” he said.

On Tuesday, LSP also released its “Principle of Reform,” which call for making the crop insurance program serve a broader public purpose and a way that’s less costly.

“Expenditures from the public treasury for federal crop insurance exceeded $40 billion from 2008 to 2012 alone,” the list of principles says. “Prudence and integrity require that such huge sums be spent in ways that strengthen and support all American farmers, the communities that surround and support them, and the land itself — not just the interests of a narrow band of insurance corporations, agribusiness corporations and the largest crop operations.”

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