Deep in the heart of the arcane laws that give farmers a helping hand, there’s something called “crop insurance.” It’s a huge program, costing taxpayers anywhere from $5 billion to $10 billion each year.
It’s called an insurance program, and it looks like insurance. Farmers buy policies from private companies and pay premiums (which are cheap because of government subsidies) to insure themselves against crop failures and falling prices. It’s mainly used by corn, soybean, cotton and wheat farmers. Defenders of the program call it a safety net.
But according to Bruce Babcock, an economist at Iowa State University who’s also a long-time critic of this program, it’s far more generous than a safety net — and really, it’s not insurance at all. Normal insurance is something that you buy while hoping that you’ll never use it. Crop “insurance,” Babcock says, is really a lottery: You play because you hope to win.
Farmers do win. A lot, in fact. And in this casino game, the house — meaning you, the taxpayer — loses every year.
Here are the numbers, which Babcock just released in a new report for the Environmental Working Group. For every $1 that farmers spent on crop insurance premiums over the past 15 years, they got more than twice that much back in payouts.
Even more startling is the disparity across different regions of the country. In the Corn Belt states of Indiana and Illinois, the program was not nearly as profitable f…