Tuesday, August 27, 2013

Crop Insurance--Prairie Potholes, Good Farming, and Seatbelts

As crop insurance takes over being the main "safety net" for crop farmers, it gets more attention:
  • from Congress, particularly those in the prairie pothole region, who want consideration for "prevented planting" coverage and have gotten their Congressional delegation involved, as described in this Farm Policy issue.  The problem, as I may have described before, is, unlike Gertrude Stein's rose, a pothole is sometimes arable land and sometimes not.  Or, more accurately, since the marshiness of a pothole varies directly with the general water table level, in wet years a pothole expands its untillable area; in dry years it contracts.  So farmers want coverage for the wet years under their insurance policy.  (It's sort of the mirror image for areas of the Great Plains, where a period of wet years may enable a couple years of continuous cropping whereas dry years mean you have to fallow or reconvert the land back to grazing.)  
  • from NRDC, with a study described in a Des Moines Register article suggesting lower premiums for farmers who use good conservation methods:
     "The group said the use of cover crops, such as grasses and legumes that improve soil health and reduce runoff,  no-till farming and an improved irrigation schedule are the best management practices that could be used"
Both issues relate to an idea economists have: the more you mitigate risk, the more risk you take, as when you mandate seat belts and improve brakes, people drive faster and tailgate more.

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