What is in this article?:
• High cost to the U.S. government resulted in a chorus from opponents to crop insurance.
• Look at difference in why people oppose farm programs and crop insurance.
• In many cases crop insurance is more targeted than the traditional ad hoc disaster programs.
And there are those who are okay with the current subsidized crop insurance program, but want to make sure that there are no payment limitations, no conservation compliance requirements, and no planting or acreage restrictions.
Most of the players are agribusiness firms and those allied with those firms. Their goal is to have all-out production all the time and then backfill farm income with insurance payments, both when yield is low and prices are high and when yields are average to high and prices are in the tank.
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They want to make sure that farm programs do not interfere with their opportunity to maximize their sales all the time.
In addition to opposing planting and acreage, most also oppose government embargoes on exports to protect domestic markets when supplies of one or more crops become severely limited. This is called de jure opposition because it involves a matter of law.
But by opposing any storage programs they lay the markets open to de facto (concerning facts) embargoes. And that is exactly what happened this crop year with corn. We have had a de facto embargo on exports because the high price has driven most of the purchasers of U.S. corn to other sellers.
In coming years, it will be telling to see if this de facto embargo turns out to drive investments in agriculture for our international competitors in the corn market as the de jure embargoes did for our soybean competitors.
Because most of this rhetoric is targeted to one or more elements of the farm program, it would be easy for the general public to come to the conclusion that the farm program has no purpose other than to enrich large farmers at the expense of the rest of society.
At its most basic level, there are solid reasons why we have seen farm programs as a necessary part of our national life. In economic-speak, agriculture faces a low price elasticity of demand, a low price elasticity of price, a fixity of resources, and the inability to finely control production as other industries do.
Translated into English, that means when prices are very “high” most people do not eat significantly less food — though it does affect the poorest of the poor — and when prices are “low” they do not go from three meals a day to four — in the U.S. a large number of us already eat too much.
At the same time, whether prices are high or low, farmers plant all of their acreage to something; what farmer is going to rent ground and then tell the landlord that they are not going to grow a crop?