Thursday, May 27, 2010

Payment LImitation and Crop Insurance

Some random thoughts triggered by EWG's publication of crop insurance data and the various testimonies before the House Ag committee on the trade-offs between FSA farm programs and insurance.

One thing not yet mentioned: payments under most FSA programs are subject to limitation, crop insurance is not.  So it would be logical for big farmers to push for putting more benefits under the crop insurance umbrella rather than FSA.  (What does that mean--raising benefits, cutting the loss needed to trigger payments.)  Cutting against that logic is the fact that cotton and rice producers seem to be the biggest fans of the traditional FSA programs, and not of crop insurance.

It might be possible to apply a payment limitation, or indemnity limit, to crop insurance--continue to subsidize the administrative costs and indemnities up to a given figure.  After all, FDIC insures savings accounts only up to $200,000 ($100,000 permanent); car insurance limits the liability amounts; homeowners insurance limits liability.

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