Crop insurance faces opposition from conservative groups

The R Street Institute is a center-right think tank, describing itself as “engaged in policy research in support of free markets and limited, effective government.”

While the R Street Institute does not oppose the federal crop insurance program, it has called for reforms of the program.

“Because the subsidies predominantly go to Americans who would engage in the economic activity even without the subsidy (farming is profitable even without the FCIP), the program functions as a wealth transfer from taxed Americans to subsidized corporations and farmers. And as the subsidies grow, their negative economic impact worsens,” wrote Phillip Rossetti, senior fellow for energy and the environment at R Street Institute, in his Nov. 23 analysis “Federally Subsidized Crop Insurance Lacks Economic or Environmental Justification.”

In the analysis, Rossetti suggests several ways to reform crop insurance.

“Simple reforms could be adopted to eliminate the wasteful aspects of the FCIP. The subsidy component of the premiums could be reduced or eliminated to make the program function more like a conventional insurer that would need enough premiums to cover losses,” Rossetti said.

“Means testing could be incorporated into the FCIP to ensure that the subsidies protect only those farmers for whom the insurance makes or breaks their farm viability.

“And small reforms to the program could be implemented, such as eliminating the ‘harvest price option,’ which causes the program to pay out much larger subsidies than what is needed to cover expected losses to a farmer if the price of a failed crop increases after planting.”