The federally subsidized crop insurance system, which cost $58.7 billion from 2003-12, “lacks accountability and transparency,” says the Land Stewardship Project in a white paper. “These public dollars are going to already wealthy corporations – top-ranked insurer Wells Fargo had $1.4 trillion in assets in 2013 while second-ranked Ace reported $2.7 billion net income in 2012,” said LSP.
The nonprofit group, dedicated to sustainable agriculture and communities, says the government paid an average 71 cents of each $1 in crop insurance premiums during the decade ending in 2012. “This subsidy benefits the insurance companies by artificially creating a large market for their products,” says LSP. Besides premium subsidies, the government pays a part of the administrative costs of the program and shares in losses in bad years. LSP says insurers see a return in equity that is higher than necessary.
“It’s time we returned crop insurance to its original intent – as a fiscally sound safety net that supports family farmers and is accountable to the public,” says Paul Sobocinski, a farmer.
The Minnesota-based group plans additional white papers dealing with the program on Dec 2 and Dec 8.