On Crop Insurance

The UC Berkeley economist Brian Wright provocatively begins an article in Choices Magazine as follows

Consider a deal where, for about 200,000 farmers, every dollar they can pay to the government in crop insurance premiums will give them an expected return of $1.90 as J.W. Glauber reported was the case for 1990 to 2011. Imagine that it costs the taxpayers at least $1.10 to get farmers paid that expected a 90-cent profit (Glauber, 2013). Imagine that this deal has just been sweetened further with a new set of giveaways in the legislation that is widely called the 2014 Farm Bill, at the end of a half-decade called the “great recession” when farm families’ wealth has soared to over eight times that of the average American family (Bricker et al., 2012; and U.S. Department of Agriculture (USDA), 2014). In an ingenious and successful political marketing campaign, farmers continue to promote public support for this deal as crop “insurance.”