Thursday, May 05, 2011

Government Help for Flooded Farms

In the wake of the decision to blow the levee on the Mississippi, farmers are concerned about compensation for their flooded fields/prevent planting.  Back in the old days, when we had a disaster program in ASCS that was unrelated to crop insurance, for a while we had a rule saying: if the cause of the crop damage was something someone did, the farmer had recourse against the someone and the losses weren't eligible for disaster payments.  I remember early in my career a case of drifting herbicide which damaged a cotton crop.

And there were limitations on whether land between the river and the levee, or under Corps of Engineer easement, could be designated as set-aside

Later, the redoubtable Jamie Whitten, after whom the USDA administration building is named because he was the long-time head of House Ag (or maybe it was the Ag appropriations subcommittee) some of whose constituents were hurt by our rules, pushed through a special provision saying Uncle Sugar would pay regardless.

One of the good things about periodic redos of programs is you can clean out the special provisions which clutter up programs, like cow flops on a clean stable floor.

(Seems apparent to me that the Corps of Engineers should pay the compensation, not FCIC or FSA.  But that's not going to happen according to the Times article.

[Updated--see this farmgate post by Stu Ellis.] Politically and administratively it may be better to handle the situation as if the farmers had crop insurance, etc.  Of course, that once again creates moral hazard and lessens the incentive for farmers to comply with the rules in advance, because their representatives will get them off the hook afterwards.  It's called, not "too big to fail" but "too many votes to fail".]

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