Thursday, March 08, 2012

Administering Conservation Compliance

Chris Clayton has a post on the possible linking of a conservation compliance requirement to crop insurance in the next farm bill.  There's this quote from a proponent which I don't understand:
“Despite what you may have heard, attaching compliance to the crop insurance premium support would have a pretty minimal impact back on the farm,” Scholl [head of American Farmland Trust] continued. “Farmers across the United States would still be able to buy crop insurance and get operating loans from their bank. Anyone out of compliance simply wouldn’t receive the crop insurance premium support until they come back into compliance. NRCS and FSA would still do compliance checks using the same system we have in place now, and crop insurance agents would not have an additional enforcement role.”
I've always assumed the government subsidies for crop insurance are behind the scenes, invisible to the policy holder.  If I have a policy for which the nominal premium is $1000 and the government subsidy is  $600, then the crop insurance company would bill me for $400.  Is that right?  (If so, it's another instance of "invisible government", which is the subject of a Christmas present which I've not yet read.  But that's a digression.)

If so, then if NRCS/FSA determine me to be out of compliance and notify the company, what happens? Does the company bill me for the $600, or do I just have my coverage reduced down to whatever $400 would buy me?  Seems to me whatever happens the agents are going to be somewhat involved, unless, of course, there's no consequences to the farmer being out of compliance.


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