The AgriBusiness Examiner #79
While American Farm Bureau Federation leaders have hailed the recent Congressional passage of an $8.2 billion crop insurance package as a major victory for farmers the legislation, as was pointed out in last week's THE AGRIBUSINESS EXAMINER, was another apparent political coup by the AFBF.
While the $8.2 billion is slated to go toward reducing premiums on federally subsidized crop insurance over the next five years while the same time making a series of changes in the insurance program designed to get more farmers to buy the coverage from an insurance industry in which the Farm Bureau has numerous vested financial interests.
Yet, as Scotty Johnson writes in the Defenders of the Wild Life's GREEN UPDATES "progressive farmers say crop insurance does not address the fundamental problems facing agriculture - low prices. Even conservative Senate Agriculture leader Richard Lugar (Rep.-Indiana) says crop insurance could aggravate price depression by prolonging oversupply. So why is Farm Bureau jumping up and down while their family farmer members want real solutions to the price problem?"
No one really knows how much Farm Bureau insurance companies stand to make from increased crop insurance funding. Not even Congress and the USDA says they will not release that data because to do so would reveal "corporate strategies." However, according to RURAL UPDATE research a few basic facts are know about the AFBF insurance holdings.
1) The Farm Bureau's vast insurance network (currently 54 companies) owns and controls about one-fourth of the insurance companies approved by the USDA to provide crop insurance.
2) According to USDA documents obtained by RURAL UPDATE sources, in 1998 Farm Bureau insurance companies wrote $81 million worth of crop insurance premiums. Based on new federal subsidies reaching approximately $3.4 billion annually, and assuming Farm Bureau keeps the same piece of the crop insurance "pie," the Farm Bureau could be writing $161 million dollars worth of crop insurance premiums this year --- or $800 million over the nest five years, i.e., the duration of "emergency" funding.
"That's a good chunk of change," Johnson notes. "Especially, when you figure all the new members they will get. Not to mention the fact that insurance companies are getting about one-third of the crop insurance subsidy paid directly to them in so-called administration and operating expenses. The Farm Bureau's involvement in the federal crop insurance program is highly suspect.
"One thing is certain: If the Farm Bureau leaders want to remove doubts about conflict of interest, they should divest themselves of all affiliation with the Federal Crop Insurance program. Until they eliminate their stake in the crop insurance program, they cannot claim they advance crop insurance in the interests of their non-profit members," he adds.
Currently, Defenders of the Wildlife is spearheading a national effort to get an investigation of AFBF underway and while the campaign has the support of many environmental organizations it still needs the solid backing of many more local and national farm organizations to succeed. Such an investigative effort, family farm leaders emphasize, must not be seen as renewed conflict between farmers and environmentalists, but rather as a concerted attempt to bring long overdue economic and social justice to rural America.
A Defenders report, Amber Waves of Gain, highlights many areas of Farm Bureau operations and demonstrates that the Farm Bureau is an intricate web of interconnecting business interests, including insurance companies,agribusiness giants and banks, linked with the national federation, the 50 state bureaus, more than 2,800 county bureaus and 4.9 million members, although 1997 Census of Agriculture figures show that there are only 1.9 million farms in the U.S.
To obtain a copy of Amber Waves of Gain or a list of the hundreds of groups joining in the call for action, contact Ken Goldman at (202) 682-9400 x237. The report is also available in PDF format at http://www.defenders.org:
