Farm bill: insurance racket draws Waxman scrutiny
by skeptic06, Mon May 14, 2007 at 10:02:48 AM EDT
I mentioned last week that the House Ag committee was going to start marking up the farm bill this week.
CQhighlights one spot which combines the controversial subjects of biofuels and crop insurance.
I'm absolutely no expert in energy or ag: but it seems to me that, the way the US has gone about this, biofuels are very much a road to hell paved with good intentions.
Corn or soybeans grown for biofuels are covered by the same insurance policies that farmers buy to protect the commodities they grow for food. But the long-term viability of biofuels depends on cost-effective production of "cellulosic" ethanol from plants such as switchgrass, which are not currently eligible for crop insurance protection.
On the face of it, insurance might sound not a totally crazy idea - if USG wants biofuels, surely the different feedstocks ought to be treated equally.
In practice...developing a new crop insurance program can be complicated. Academics, insurance experts and agriculture officials first must write a policy and set a premium based on the crop's historical success. Then, the policy is tested in different regions of the country for as long as four years. If the indemnities paid out exceed the premiums collected, the program is changed or scrapped.
Prime mover in extending the scope of crop insurance is a leading blogfave:
Tester's bill would expedite the creation of a pilot crop insurance program for biofuel crops, including camelina, a type of wheat that is grown in Montana to make biofuel, not food.
You can't grow corn in MT (I think!) so, for MT farmers to get a slice of the biofuels racket, it has to be wheat.
But the House Ag chairman has a broader plan:
Peterson, meanwhile, wants to develop a pilot program under the new farm bill to grow 5 million acres of feedstock for ethanol. The idea, he says, is to see which crops grow best in different regions.
The wrinkle in Peterson's plan is that the farmers won't get crop insurance, but will get conservation handouts.
(Will that be cheaper?)
One guy, however, has the crop insurance racket in his sights, and I have a feeling none of those arguing round the farm bill table will be pleased:
Rep. Henry A. Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, held a hearing this month on abuse in the crop insurance industry.
"The federal crop insurance program has become a textbook example of waste, fraud and abuse in federal spending," Waxman said.
Update [2007-5-14 14:13:2 by skeptic06]:
Basic reading for the farm bill is the CRS reportPreviewing a 2007 Farm Bill dated January 3 2007.