Farmers across the country are in a position to gain financially from the ongoing drought thanks to strengthened crop insurance programs and high crop prices, some financial experts predict.
Federal crop insurance programs, which date back to the 1930s and the agricultural disaster of the Dust Bowl, have long been one of the most important parts of the farm bill. The value placed on crop insurance is reflected in the willingness of many American farmers to trade away direct payment farm subsidies in exchange for strengthened crop insurance subsidies.
Current crop insurance programs, taken out through private insurers and backed by the federal government, increase payments based on the severity of crop loss and financial damage. With crop prices going up because of damage done to food supplies, farmers currently experiencing losses may see their insurance payouts increase, leading to a bizarre situation where some farmers may be better off due to crop losses.
According to one Iowa State University economist, “Farmers are laughing all the way to the bank. If the price goes up, you could end up better off than anticipated if you have a crop loss. I’m not saying this is anything illegal, or immoral, it’s just the way it is.”
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Written by: Justin Ellison / Farm Plus Staff Writer