The Case for Crop Insurance vs. Ad Hoc Disaster

Via Farm Policy, here's 3 paragraphs from a case for crop insurance, a John Mages op-ed:

Crop insurance is a public-private partnership, designed to ensure that when disaster strikes, the private sector – crop insurance companies – are there to help shoulder the risk and the financial burden of rebuilding.  Crop insurance policies are purchased by the farmer and suited to the farmer’s needs, comfort with risk and financial situation.

In the past, before purchasing crop insurance was the widespread and widely available option, disasters like last year’s would have triggered large, stand-alone disaster bills in Congress, aimed at trying to save as many farms as possible.  Those bills would have cost taxpayers dearly, and unfortunately, would have taken months, or even several years to finally get into the hands of the farmers who need the help.  Not a good situation for either party involved.

In 2011, with 80 percent of eligible lands protected by crop insurance, private sector companies paid out in excess of$10.7 billion in payments to farmers who had purchased plans and suffered losses.  Those checks were often in the hands of the farmers in 30 days or less after they completed the necessary paper work.  It’s because of the effectiveness and efficiency of crop insurance that many of us are in our fields planting today instead of being forced to auction off our farms.

 Since I've been implicitly and explicitly critical of crop insurance, it's only fair to recognize the counter-arguments.  I'm proud of the work my shop did on disaster programs and payments over the years, but it's true enough that an ad hoc program doesn't work as well as having something in place from year to year.