Rep. Frank Lucas, Chairman of the House Agriculture Committee, today issued a statement in response to the Commodity Futures Trading Commission's (CFTC) surprise "advisory notice" to further regulate cross-border swaps.
In Case You Missed It: Farmers Belong on a Tractor, Not Under the Bus
Ames Tribune - June 7, 2013
Editorial by Mark Gerdes
One of the beauties of life in our great democracy is that spirited debate about important public policies is not only expected, it’s encouraged. One of the intrinsic rules of these discussions, if they are to be productive and fair, is that the policy itself should be scrutinized from every angle without demonizing or castigating the various groups affected by these policies.
In other words, we should be able to discuss education policy without demonizing teachers or impugning the integrity of students. Likewise, we should be able to debate defense policy without bashing soldiers or peace activists. Unfortunately, when it comes to discussions about farm policy — in particular the decision by many farmers to purchase crop insurance — critics have chosen to throw farmers under the bus time and time again instead of debating the policies on their merits.
Last year, we had one of the worst droughts our nation has seen in decades. And while America’s farm families watched their crops shrivel in the fields, some critics said “farmers are praying for drought, not praying for rain.” Another critic said that farmers who purchased crop insurance last summer “were laughing all the way to the bank.” In short, they argued that farmers make more money from collecting a crop insurance check than harvesting a crop, and would prefer to watch their crops wither or livestock die to collect a crop insurance check rather than take the fruits of their labors to market.
As a farmer, I must point out that statements about the integrity and motivation of farmers and their decision to purchase crop insurance demonstrates both incredibly poor math skills as well as a complete lack of understanding about the core values and beliefs of America’s farmers.
Take, for example, the charge that farmers hope their crops will fail so that they can collect a crop insurance check. Critics are quick to point out that more than $17 billion will be paid out to farmers and ranchers who purchased crop insurance for their losses in 2012. The implication here is that the $17 billion is some sort of windfall being bestowed upon farmers by the federal government.
But the math tells a very different story. Insurance policies must first be purchased, and then policy holders must absorb the policy’s deductible after suffering a verifiable loss, before they can collect a single dime. In 2012, farmers paid $4.1 billion out of their own pockets to purchase crop insurance policies. Then, farmers shouldered $12.7 billion in losses as part of their crop insurance policy deductibles. Together, these total about $17 billion.
Thus, if farmers had approximately $17 billion in uninsured losses and premium expenditures out of their own pockets to collect $17 billion in crop insurance indemnities, would they really be “laughing all the way to the bank”?
Of course not. Farmers who purchased crop insurance got enough back from their policies to recover some of their losses, allowing them to, in essence, live to plant yet again next year. Had their crops not withered in the fields, however, they would have had a large crop to sell in a year when commodity prices were at or near record highs. So were they really “praying for drought, not praying for rain”? Of course not.
Finally, let’s look at the notion that after planting a crop or helping a cow have a calf, a farmer would rather watch that crop wither or that calf die than to take it to market and sell it at the end of the season. Besides the fact that this is probably one of the most mean-spirited and slanderous arguments I have ever heard, it shows a complete lack of knowledge of why farmers love their vocation and why most of them hope their children follow in their footsteps.
Farmers like me see ourselves as one of the backbone industries of the nation, living an honest and hard-working life close to the earth, respecting the bounty of nature and working to ensure the continuation of a plentiful and affordable food supply. There is a nurturing sense in the heart of every farmer that seeks to enrich the soil in the pursuit of more and better crops every year. Planting something in hopes of watching it die is simply not in our nature.
All the name-calling in the world will not change the fact that over the last decade, there has been a growing consensus among farmers, the financial community and members of Congress from both sides of the aisle that crop insurance is the risk management tool of choice — one that helps farmers manage risk while ensuring taxpayers that if the bottom falls out, they won’t get stuck picking up the tab by themselves.
Mark Gerdes, a fourth-generation farmer, raises corn, soybeans and cattle on 2,800 acres in Aredale, Iowa.