This is a response to part 1 of a 3 part series on Crop (revenue) Insurance in the Farm bill. It was originally written as an email to someone asking me questions about the paper. It’s a fairly hurried response, and therefore has the virtue of brevity. The original is:
Land Stewardship Project, Crop Insurance — How a Safety Net Became a Farm Policy Disaster, A Land Stewardship Project Special Report:
“White Paper 1: Crop Insurance–The Corporate Connection,” (http://landstewardshipproject.org/repository/1/1390/white_paper_1.pdf?cms34sid=a7cd9a05232a242de55f6badbcbd63c1). Link to Series: http://landstewardshipproject.org/organizingforchange/cropinsurance.
See part 2 of this series: Brad Wilson, “Biggest Secretly Bigger in ‘Reform’: Rebutting LSP’s White Paper 2,” ZSpace, 1/3/15, https://zcomm.org/zblogs/biggest-secretly-bigger-in-reform-rebutting-lsps-white-paper-2/ .
LSP is one of the great groups working within the paradigm of the Sustainable Agriculture Movement, which is now led by the National Sustainable Agriculture Coalition. As such, LSP generally does great work on sustainable production and related farm bill spending issues, plus a range of state issues, such as fighting CAFOs.
My review here comes from a larger, more encompassing paradigm that I call “farm justice,” in which farm bill spending as a whole is a smaller subcategory, but where the biggest issues are those of nonspending market management. It is because I’m writing out of this bigger paradigm that my views differ with those of LSP.
LSP has written on this topic previously in a series of papers, and I’ve written quite a bit about those papers as well.
POSITIVES WITH NEGATIVES
There’s some useful information, and yes, the corporations are hogging a bunch of the farmer benefits. They should have mentioned that some of us see the insurance emphasis as something like a 50 year effort by Farm Bureau to finally achieve the goal of a “Farm Bureau Insurance Farm Bill.”
My main concern is that LSP misses the part where there can never be an ongoing “revenue insurance” program. That’s because such a program would insure against the economic problem of chronic low farm prices and against the political program of Congress keeping a farm bill with no Market Management(with no Price Floors and Supply Management). Economically, in the ‘free’ market, prices are usually low. The private sector can’t insure against that. You’d have to be crazy or want to lose money to do that. So it can only exist if government massively reduces the risks to the corporations and farmers by paying subsidies to both. In both cases it’s done instead of making corporate commodity buyers pay fair price to farmers.
Second, why not just pay the subsidies to farmers, as that’s the central purpose of concocting it in the first place? (Translation, if you’re going to maintain cheap prices where the US loses money on farm commodity exports for decades, why not pay farmers their fractional (i.e. not nearly as large as the prior reductions,) compensations transparently, and based upon actual need? The answer is clear, but not addressed by LSP: it’s all to make it possible to spin farm subsidies as “risk management,” as a tough-minded business tool for “agribusiness” minded farmers. Plus, it’s a clever way of making it look like farmers are paying for their own subsidies, which has long been a goal. (How about making a food stamp savings program, where recipients save up to pay themselves their own food subsidies! Ditto for food aid, for the Least Developed Countries of Africa!) That too is an absurd idea.
Third, we see then, that the spin about crop (revenue) insurance as a kind of “risk management” guards against asking why we need subsidies in the first place. It’s because (economically) the ‘free’ market fails, significantly, most of the time for 150 years, on into the 21st century. And we must never let that truth come out into the light of day. Politically, the problem was fixed by the New Deal Farm Programs, and without subsidies. They paid for themselves, even made a profit for the government, through 1948. So no subsidies were or are, (i.e. would be if the farm bill were fixed,) needed. Congress then reduced (1953-1995) and eliminated (1996-2018) the New Deal programs, creating the “need” for subsidies.
Fourth, So crop (revenue) insurance guards against the restoration of Price Floors and Supply Management. That is, it protects the MEGA beneficiaries, (the totally hidden beneficiaries, who’s benefits are off books, not a part of farm bill spending at all). So, while there are no subsidies and no crop (revenue) insurance paid to commodity buyers (Cargill, Tyson, Shuanghui, Bunge, Dean Foods, Kraft,) and while subsidies do not cause cheap prices, these are the biggest beneficiaries to the programs. They benefit from the absence of Price Floor programs, (which is what these insurance programs are about hiding). They benefit more than the Crop Insurance Companies and the farmers.
These then are the main issues of “corporate connection” that are missed in LSP’s first white paper.
FOR FURTHER READING
The highly regarded farm commentator Alan Guebert has written positively about the LSP series, as has, (Guebert shows,) a Farm Bureau lobbyist. I’ve written a response to Guebert along these same lines which includes further analysis of the LSP series. The Guebert rebuttal contains a list LINKS TO of OTHER WRITING that supports my views. See:
Brad Wilson, “The Room is Underwater: Rebutting Alan Guebert’s ‘Insuring Elephants’,” ZSpace, 1/3/15, https://zcomm.org/zblogs/the-room-is-underwater-rebutting-alan-gueberts-insuring-elephants/.