The following statement should be attributed to Tom Zacharias, president, National Crop Insurance Services and is in response to the Bloomberg News story “Taxpayers turn U.S. farmers into fat cats with subsidies”:
“The primary reason behind the growth and success of crop insurance over the last decade is that farmers, farm groups, banks and other lenders, elected officials and those who live and work in rural America understand that it is the best, most cost-effective risk management tool farmers have. That is why the lack of balance and clear agenda behind the first in this series of articles is so troubling.
“For example, the article claims that the government “pays farmers to buy coverage,” which is absolutely false. Farmers purchase crop insurance policies with money out of their own pockets. If a loss does not occur, which is the case for most farmers in most years, then purchasing crop insurance is a net loss, not a gain, for farmers.
“In truth, crop insurance is a win-win scenario for all stakeholders in agriculture and the public in general. For farmers and the rural economies they support, it is a critical risk management tool that helps farmers who purchase policies recover from natural disasters. For financial institutions, a crop insurance policy serves as collateral for a farmer’s production loan that might otherwise not be feasible. For taxpayers, crop insurance has all but eliminated large-scale emergency disaster bills, which fell fully on their laps every time and cost more than $70 billion since 1989.
“It should be noted that overall farm safety net spending has fallen dramatically since the rise of crop insurance. Unfortunately, this series is providing a platform to the critics of crop insurance, who for various reasons want to implode any farm safety net and return America to the past days of costly, cumbersome agriculture disaster bills and financial disruption for America’s farmers.
“Crop insurance is a modern-day farm policy for today’s unique weather and market challenges and it, and the farmers who raise our feed, food and fuel, deserve praise, not condemnation.”
Tom Zacharias, President of National Crop Insurance Services