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One of the great battles of the 2012 Farm Bill might concern … (drumroll) … crop insurance! Don’t roll your eyes: At $8 billion, it’s the largest part of the current farm bill budget that actually has to do with farms (as opposed to what is literally the largest part, which deals with food stamps). According to a leaked document containing a set of recommendations by the House and Senate Agriculture Committees to the now-defunct supercommittee, the Ag committee’s key priority this time around was to increase federally subsidized crop insurance, even if it meant cutting the direct payments that were so entrenched in earlier bills.
Direct payments are admittedly a lot harder to defend than they were even four years ago. Introduced back when commodity crop prices were rock-bottom enough to crash the economies of several non-subsidized agricultural markets, these payments continued at the same rate, even as grain prices climbed to a record high, cotton became more expensive than it has been at any time since the Civil War, and farmers began actually buying back land that they’d sold to real estate developers.
Just how crop insurance will expand is a critical question. Here’s how federally subsidized crop insurance works now: The feds contract out to a small group of corporations (the same corporations that insure crops across the world), the feds also help farmers pay some or most of the insurance premiums, and they pay out reimbursements when things go south. Meanwhile, the insurance corporation gets money for administering the program, as well as commissions for the policies it sells, and reimbursements for losses.