Land Stewardship Project Outlines Major Reforms for Making the Nation’s Largest Ag Program an Accountable & Reliable Safety Net for All Producers
LE SUEUR, Minn. — The nation’s largest federal agriculture program is a significant barrier to beginning farmers who are trying to get access to land and capital, according to a new white paper released by the Land Stewardship Project (LSP) today. Crop insurance has in recent years become a major publicly-funded mechanism for inflating land prices, concludes the “How Crop Insurance Hurts the Next Generation of Farmers” white paper, which is based on an analysis of government data and farmer interviews.
“Crop insurance should be an effective safety net for all farmers, not just a select few raising a small number of favored crops,” said Tom Nuessmeier, who raises crops and livestock near Le Sueur and serves on LSP’s Federal Farm Policy Committee. “Unfortunately, it’s become a program that is biased against some of our most innovative farmers.”
As two previous LSP white papers show, crop insurance cost the taxpayers over $58 billion between 2003 and 2012, and is projected to produce a $90 billion tax bill over the next decade. Launched in 1938 to provide a basic safety net for farmers facing severe weather catastrophes, public funding for crop insurance now mostly benefits 19 major insurance corporations and some of the largest crop producers in Minnesota and the U.S.
Because the program subsidizes as much as 60 to 70 percent of the cost of premium subsidies and has no limits on how much an individual producer can qualify for, it provides a publicly-funded source of cash for bidding up rental and purchase prices, according to Mark Schultz, one of the authors of the LSP white papers.
“Our interviews with farmers confirm that it has served to artificially inflate land prices by allowing the largest crop operators to lock in profits and aggressively purchase and rent farmland to expand their operations, driving up land costs beyond the reach of most farmers,” said Schultz, who is also LSP’s Policy Program director.
Crop insurance also makes it difficult for beginning farmers to access capital since it limits coverage for producers who have little or no yield history or who choose to raise a diversity of crops. Emily Hanson, who along with Klaus Zimmermann has been searching the past few years for a farm to raise crops and livestock on, said even marginal acres are out of their price range because of the inflationary market. Read more »