Environenta Working Group
by CrAiG COxViCE prESiDENT FOr AGriCUlTUrE AND NATUrAl rESOUrCES, EWG
hERE WERE TWO REASONS ThATENVIRONmENTAl WORKINGGROUP (EWG) COmmISSIONEDAGRICUlTURAl ECONOmIST BRUCEBABCOCK OF IOWA STATE UNIVERSITY TOANAlYZE hOW ThE hEAVIlY SUBSIDIZEDFEDERAl CROP INSURANCE PROGRAmPERFORmED DURING ThE CORN BElTDROUGhT OF 2012.
First, te 2012 drougt drasticay cut crop yiedsacross severa states – just te kind of event tat
many economists agree justies a role for taxpayers
in providing farers wit a safety net. Second,Congress is about to take up te far bi again underserious pressure to cut spending. Te taxpayer costof crop insurance as grown steadiy since 2000 andnow is te ost expensive governent prograsupporting far incoe. EWG tougt te 2012drougt woud be te perfect case to test weterit’s possibe to save federa tax doars wie sti
providing an eective safety net for farmers facing
potentiay cripping osses.Dr. Babcock’s concusions soud be a wake-up cafor taxpayers and te senators and representatives
in Congress charged with creating a more scallyresponsible safety net. His key ndings:•
Over-generous subsidies ave turned cropinsurance into ore of a far incoe supportprogra tan a risk-anageent progra.
Taxpayers coud provide farers wit a secure
oor under their nances for less than half of
wat te current progra costs.
disaster reief expenses as been one of te ost-often cited
justications for subsidized crop insurance, the
current insurance progra cost taxpayers farore in 2012 tan traditiona disaster reief woud ave.
Taxpayers wi bear te burden of aost 75percent of te 2012 insurance payouts; andsince 2001, insurance copanies ave enjoyed$10.3 biion in underwriting gains – wietaxpayers ave ost $276 iion.Tis atest report fro Bruce Babcock adds to tegrowing evidence tat coon sense refors tocrop insurance woud save biions of doars wie
still providing a solid safety net, cutting the decit and
investing in progras tat iprove uan eatand te environent. So far, owever, te subsidyobby as anaged to pus Congress in te oppositedirection. If eiter te faied Senate or houseAgricuture Coittee far bi proposas fro astyear were to becoe aw, taxpayers woud be askedto pay even ore for crop insurance wie funding forconservation and nutrition progras went under tebudget knife.Congress soud and coud do far better as it takes upte far bi again tis year.