Unpopular Big Government Power Grab

February 15, 2012

You have to hand it to the National Association of FSA County Office Employees (NASCOE).  While nearly everyone else is calling on the private sector to do more and the government to do less, NASCOE is proposing to expand the role of government by urging Congress to end the highly successful private sector delivery of crop insurance and retry the 42-year failed experiment of government-run delivery.

Crop insurance has been widely hailed by producers, lenders, and lawmakers as the most important risk management tool available to farmers and ranchers today.  Without it, producers who borrow more money each year than most people will borrow in a lifetime would have to do so without insurance on their crops and, in turn, could very well be denied credit.

Under a system created by Congress to minimize taxpayer risk exposure and enhance delivery efficiency, producers purchase insurance policies that are tailored for their specific operation to help cover at least a portion of their weather and market risks.

Private companies make these policies widely available; more than 12,000 private insurance agents sell and service the policies; and when disaster strikes, private companies speed private insurance money to growers within 30 days.

Now, NASCOE wants to hand over much of the job back to the government, which was fired from the job of insurance delivery in the ‘80s after failed performance and cost overruns.

Naturally, farm and government leaders quickly squashed NASCOE’s idea.

Speaking to crop insurance leaders during an annual conference in Scottsdale, AZ, Senator Pat Roberts, the top Republican on the Senate Agriculture Committee called the idea “loony” and said it was “dead on arrival.” Sen. Roberts wasn’t alone in his criticism.

Jerry Hagstrom reported in The Hagstrom Report from Scottsdale that Bill Murphy, the USDA official who oversees the crop insurance system, saw many good reasons to continue private-sector crop insurance delivery.

“The Farm Service Agency does a great job, but crop insurance is a unique tool,” Administrator Murphy said.  “It is a financial tool. There is a good reason [crop insurance] agents are required to be licensed in every state.”

Meanwhile, American Farm Bureau Federation policy expert Mary Kay Thatcher told Hagstrom that crop insurance was too vital to make changes to the delivery mechanism.  “It is complex, and the agents have been at it for years,” she said. “That is where it ought to stay.”

Shawn Holladay, a cotton producer from Lamesa, Texas, representing the National Cotton Council; Blake Gerard, a rice producer from Cape Girardeau, Missouri, representing the USA Rice Federation; and Anthony Bush, a corn producer from Mt. Gilead, Ohio, representing the National Corn Growers Association, all stated during the annual meeting that their organizations would oppose this proposed government take-over of crop insurance.

Mark Lange, president and CEO of the National Cotton Council, also spoke out against the idea.

“I think it’s clear that the delivery of insurance or revenue programs from government has a very chilling effect for agricultural producers,” Lange said during a radio interview from the crop insurance conference.

He said growers wouldn’t be interested in government crop insurance delivery and pointed to recent delays under SURE as proof. “It’s just now providing benefits to growers on losses they incurred in 2009,” he said of SURE.  “That’s just too long.”

Lange said cotton growers in West Texas, facing conditions worse than the infamous Dust Bowl, weathered the storm and planted a 2012 crop because of insurance and speedy private-sector indemnity payments.  All told, payments from private crop insurers to farmers across the country have totaled nearly $10 billion—a new record—on the 2011 crop.

No wonder crop insurance is so popular and NASCOE is getting such a chilly reception.

As the managing editor of a major agricultural publication, DTN, summarized: “In the light of the country’s current abhorrence of big government, and the pressure on the administration to create private jobs vs. expanding the government payroll, it is harder to believe that this plan that would decimate some private businesses while possibly enlarging Big Brother will fly.”