A new Land Stewardship Project study says crop insurance needs to change to help preserve what's left of the nation's family farm tradition.
The U.S. agriculture department's own numbers support the notion that large farms are a growing and dominate sector of U.S. food production. A report from last year said while only 3 percent of the nation's farms gross over a million dollars a year, they account for more than 40 percent of U.S. agricultural production.
• Co-op chaos: Provision from tax bill has farmers, companies scrambling • Falling milk prices: Farmers find little help from safety net
Southern Minnesota farmer Randy Krzmarzick with Land Stewardship Project said the crop insurance program plays a role in helping big farms get bigger.
"Crop insurance is a useful and valuable tool," said Krzmarzick. "There's a place for government to be involved with that. But the money could be just better spent."
According to the Land Stewardship study, federal costs for the program average about $9 billion a year.
Krzmarzick's main complaint is that there's no limit on federal crop insurance subsidies, which can pay as much as 60 percent of a farmer's insurance costs. Krzmarzick said that gives big farmers an easy way to grow. Depending on which policy a farmer chooses, crop insurance can protect against either low yields and low profits. Krzmarzick said that means a big farmer can buy or rent more land and use the insurance to almost guarantee a profit on the acres.
"If you are going to continue to expand and take more acres on, it made it less risk, if not completely risk-free, to do that," said Krzmarzick.
• Discussion: Will 2018 be a good year for farmers?
But many farm organizations disagree with that take on the crop insurance program. The nation's largest agricultural group, the American Farm Bureau Federation, strongly supports the current crop insurance system. The Farm Bureau said it's needed more than ever, with most crop prices at break even or lower levels. The group said crop insurance provides a necessary financial safety net for farmers.
But funding for the program could be in question if President Trump has his way. The administration would like to reduce crop insurance subsidies. Iowa State University assistant economics professor Alejandro Plastina said farm groups don't like the administration's plan, and many members of the House and Senate agriculture committees oppose any cuts to the crop insurance program.
"There has been a strong reaction, opposing that proposal," said Plastina. "So we'll have to see what Congress does about it."