The Farm Bureau, at both state and national levels, vigorously promoted the farm and trade policies -- the 1996 Farm Bill and the General Agreement on Trade and Tariffs (GATT) and the North American Free Trade Agreement (NAFTA) -- which are devastating the family farm system of agriculture today.
Total crop usage is at an all time high for corn, wheat and soybeans, but the prices of all three commodities have collapsed. While farmers and ranchers (who cannot set their price in today's concentrated markets) are forced to sell all major commodities and livestock at below the cost of production, Farm Bureau continues to support the public policies which are putting America's ag producers out of business.
Question: Why does the Farm Bureau favor policies which work against the interests of farmers?
For starters, Farm Bureau claims to be the largest farm organization in the country. Are they really a farm organization? Farm Bureau is a giant network of affiliated mutual insurance companies. The Bureau claims more than 4.5 million "members" -- to be insured by Farm Bureau you must become a member -- in a country that has less than 2 million farmers. Even if every farmer in the U.S. were a "member," that means a majority of Farm Bureau's membership is not in farming at all.
While Farm Bureau urges Congress to stay the course on the 1996 Farm Bill, it is also pushing for $4 billion annually to subsidize enhanced crop insurance. Last year, farmers lost $11 billion in market income and received about $6 billion in emergency appropriations. This year, we are looking at another $11 billion hole, at least, into which Congress will drop about $8 billion.
If current bills pass, the crop insurance industry will be big winners. Four billion dollars which ought to be going into farmers' pockets will go instead to the insurance industry, which will take almost $1 billion off the top (24.9 percent annually) for operating and administrative costs, while they are free to use much of the remaining capital for highly-profitable short term investments.
At best, crop insurance protects farmers against catastrophic crop disasters, but it does nothing to protect farmers against low price disasters and nothing to address failed farm policy. At worst, crop insurance is an inferior safety net which cannot substitute for a fair price in the market for what farmers and ranchers produce.
The plan to rescue this failed farm policy through enhanced crop insurance has been called a "strychnine-laced carrot" for farmers. Expanded crop insurance will subsidize production in millions of marginal and ecologically vulnerable acres (wetlands and drylands, for example) not historically used for cropping. Additional crop insurance will increase production costs, decreasing per-unit profit, and further encourage the planting of maximum acres by farmers trying to benefit from even tiny potential profit margins. Obviously, the end result can only be continuing over-production, driving down price.
Farm Bureau argued that this farm program would get government out of agriculture. By replacing price supports (and other traditional farm programs which helped level the playing field) with unrestrained production and enhanced crop insurance, we trade Big Government (accountable to farmers and other citizens) for Big Insurance (accountable almost exclusively to investors).
Will this tradeoff benefit the Farm Bureau insurances? You bet it will. If legislation Farm Bureau is pushing on Capitol Hill passes, taxpayer subsidies to the insurance industry could exceed $4 billion annually. Watchdog groups estimate that federally subsidized crop insurance expansion could generate a $7 billion cash flow annually for insurance companies. Of all companies approved by the USDA to provide crop insurance, Farm Bureau owns and controls about a third. You do the math.
One farmer estimated that his crop insurance subsidy could total between $500 and $1,000. "Sure, that'd be nice," he said. "But I'd rather get a decent price in the market for my corn, so I could afford to pay for my own crop insurance, thank you very much."
Why does the Farm Bureau favor policies which work against the interests of farmers? Follow the crop insurance money trail, and the answer emerges, like a photograph in a tray of chemicals.
And the picture isn't pretty.
Sally Herrin is education and communications director of the Nebraska Farmers Union. Email NeFUSal@aol.com or phone 402-476-8815.