With severe drought conditions threatening to drive up crop prices, many farmers want to expand operations onto questionable lands in the hope of making more money. To help farmers take on this risk, Congress is considering a new crop insurance program that could cost the government billions of dollars.

 

The new crop insurance program would cost $3 billion; that’s in addition to a current program that runs about $7 billion yearly. Supporters argue that the new plan would replace an existing direct payments package to farmers that now costs $5 billion.

 

But some farmers disagree with the idea of subsidizing crop insurance, especially with Washington running such large budget deficits.

 

“If we as farmers expect taxpayers to support premium subsidies, it’s only fair that we grow on land that is capable of supporting it,” Jim Faulstich, a farmer and rancher in Highmore, South Dakota, told The New York Times. “Could some of this land be profitable without the crop insurance subsidy? I think not.”

 

While the Senate debated the merits of the new program, the Obama administration announced this week that high temperatures and low rainfall in key parts of the country are taking a toll on crops. Nearly 90% of the corn crop is being impacted by the current drought, which could drive up food prices next year.

 

In addition to corn, the price of beef could rise 4% to 5% in 2013, with slightly lower increases for pork, eggs, and dairy products.

-Noel Brinkerhoff

To Learn More:

Crop Insurance Proposal Could Cost U.S. Billions (by Ron Nixon, New York Times)