Crop Insurance in the WSJ

Somehow I missed this editorial by two agricultural economists, Bruce Babcock and Vincent Smith, that appeared in the Wall Street Journal on Christmas Eve.  They write:

Farmers have a sweet deal with crop insurance: Taxpayers currently cover all the administrative costs associated with marketing and managing the program and fund more than 60% of the premiums to cover anticipated crop-insurance payouts, according to annual data from the Agriculture Department’s Risk Management Agency. Farmers pay only about one-third of the real costs of their crop-insurance coverage. From 2003 to 2012, crop-insurance subsidies cost U.S. taxpayers $55.4 billion—66% of the cost of the program.


Bipartisan congressional support should go to programs that spend federal dollars to serve the public’s interest and cannot be provided by the private sector. Subsidies that induce farmers to buy gold-plated harvest-price-option crop insurance fail on both counts. Eliminating these costly subsidies would save taxpayers $40 billion over 10 years while posing no threat to the nation’s food supply. Come January, the new Congress should do just that.

Not surprisingly, various commodity groups and the insurance industry didn't care for the editorial (and had a number of responses unpublished by the WSJ).