We should question proposals to provide billions of taxpayer dollars to support an industry that is enjoying record profits

More Subsidies for Prosperous Farmers

By Barry Goodwin

The U.S. Department of Agriculture estimates that farm income in 2013 will be more than double what it was in 2009. The nation’s farmers are enjoying the benefits of high crop prices, massive crop insurance subsidies, and technological advances that have made crops more resistant to drought. As a result, farming’s record level of income far surpasses that of comparable non-farm sectors.

Yet much of the debate over new farm legislation seems oblivious to these facts. The latest farm bill would give farmers even greater subsidies. In 2012, the Senate and the House failed to reach a consensus on a farm bill and instead passed a compromise extension of expiring law. The hope was that the agricultural committees would then develop a traditional omnibus farm bill package of legislation. The extension is set to expire on September 30; House and Senate leaders have pledged to complete a bill this year and the House will hold a markup this month.

Today, as has increasingly been the case since the early 1980s, U.S. farmers are protected from significant yield and price losses by a massive and heavily subsidized crop insurance program. The program offers most producers the option to guarantee up to 85 percent of their projected yield or revenue. The most popular form of crop insurance guarantees revenue and promises to replace yield losses at the greater of the expected price at planting time or the actual price at harvest. As crop prices and farm incomes have increased to record levels, so too have the revenues guaranteed to farmers under these insurance contracts and the subsidies paid by taxpayers.

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