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Farm aid is wasteful, unfair

By Washington Post
Published October 24, 2006

If we asked Congress to spend billions making the newspaper business a risk-free enterprise, our editorial would be laughed out of the Capitol. Yet that is essentially the deal American farmers get from the federal government every year. The result, according to a Washington Post investigation, is billions of federal dollars wasted in unfair and uncompetitive handouts, many of which go to farmers working land that would be left fallow in a freer market.

The study found that many farmers benefit not only from government-backed, cut-rate farm insurance but also from federal disaster relief funds. This double-dipping means that farmers who lose 35 percent or more of a crop can recoup up to 95 percent of the money they would have gotten from selling their harvest. Ironically, Congress approved a complex public-private scheme that offers cheap farm insurance to all comers in order to wean farmers off disaster aid. Yet even now that the federal government pays, on average, 60 percent of farmers' premiums, lawmakers continue to pass redundant emergency aid for afflicted farmers.

The insurance companies that work with the government to provide farm disaster coverage have seen their profits balloon in recent years. The federal government sets the price for coverage, helps farmers pay it and reimburses insurers for administrative costs. The insurance companies then shift the liability for their most risky accounts onto taxpayers. Last year, these farm insurers posted profits of $927-million and took $829-million in administrative fees from the government.

Nevertheless, North Dakota farmer Terry Aronson unpretentiously defended the system to Post reporters. "Taxpayers are funding something good, the rural life." America has a sentimental attachment to its farmlands. But preserving the rural life of a few, unproductive farmers is not worth the price it pays to do it.

[Last modified October 24, 2006, 02:13:48]