Example 2 is the reliance on crop insurance, because every farmer is rational and is going to buy it. Chris Clayton at DTN reports getting calls from farmers like this:
"Is the government going to do anything? I don't have crop insurance.
How could you not have crop insurance? We've been saying since before the 2008 farm bill that you have to have crop insurance.
One farmer only has 160 acres. Crop insurance every year just didn't pencil out.You didn't look into catastrophic coverage, or CAT?
I don't know what that is.
I wasn't sure what to think of this conversation, but I have to believe there are more people like this farmer out there. He's a small farmer in the scheme of things. He's never needed to rely on government payments and didn't want to. But now he doesn't have a corn crop and concerned the beans won't make anything either.
The advantage of disaster programs, perhaps their only advantage, is they apply across-the-board. If that farmer and others like him make enough of a stink, Congress will do something ad hoc, which partially undermines the whole idea of crop insurance. The situation is rather like that of a 30-year old who passes on health insurance because it didn't pencil out, then gets into a car crash which leaves her paralyzed.
Is there some type of help available for him at the Farm Service Agency office. He said they couldn't think of anything that would specifically help him out."
[Updated to add the link.]