Jason Rano: The crop insurance system lacks transparency while the SNAP program has one of the lowest fraud rates of any government program.
JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore.
The House and Senate reached an agreement on the farm bill to cut food stamps by $8 billion over the next decade. Conservation programs were also cut, by $4 billion. And while direct subsidies to farmers was cut by $14 billion, taxpayer-subsidized crop insurance for farmers was increased by $7 billion. We should also note that both the Senate and the House’s original bills cut food stamps and expanded the crop insurance program. This is the first time in history that Democrats supported cutting food stamps.
Now joining us to discuss all this is Jason Rano. Jason is the director of government affairs at the Environmental Working Group.
Thanks for joining us, Jason.
JASON RANO, DIR. GOVERNMENT AFFAIRS, ENVIRONMENTAL WORKING GROUP: Thank you for having me.
DESVARIEUX: So, Jason, we know that direct subsidies will be cut by $14 billion, but crop insurance will increase by $7 billion. First off, what is crop insurance? And how does that differ from direct subsidies?
RANO: Crop insurance is—I like to think of it as similar to car insurance, and the difference being that taxpayers subsidize a lot of farmers’ premiums for the crop insurance program. On average, taxpayers subsidize 62 percent of a farmer’s premiums. We also subsidize the crop insurance industry to the tune of up to $1.3 billion annually.
The difference is that direct subsidies, you didn’t have to actually be farming; you just had to own a stake in land that was being used. For crop insurance, you actually have to be farming and have to suffer a loss.
DESVARIEUX: Alright. And according to your organization—I want to get a sense of who is actually receiving these subsidies. You say farmers, but we can get a little bit more specific. Let’s take a look at your website here, and let’s focus on one of the biggest agricultural producers, California. We can see here that if you take a look, that 91 percent of farms in California did not collect subsidy payment. And that’s according to the USDA.
So does the majority of subsidies go to the largest farms?
RANO: They do. In California, 10 percent of the farms collected 73 percent of the subsidies. When it comes to crop insurance, in 2011 the top 20 percent of policyholders collected 73 percent of the payments.
The difference between the programs is, because there is no transparency in the crop insurance program, we don’t know who the individuals are that collect crop insurance subsidies. At least in the direct payment program we had a clear understanding of who the farmers and agribusinesses were that were collecting these taxpayer subsidies. The same cannot be said of the crop insurance program.
DESVARIEUX: Alright. So there seems to be a lack of transparency here.
But I need to clarify one point, because many of the insurance premiums end up in Wall Street financial firms. Is that right?
RANO: One of the issues we face is we’re not really sure where premiums subsidies go. What we do know is in 2011, 26 people in agribusinesses received at least $1 million in premium subsidies from the taxpayer, and 10,000 received at least $100,000 or more. We also know that we subsidize the crop insurance industry upwards of $1.3 billion annually to sell these crop insurance policies and to administer them. But because there is a lack of transparency, we don’t know much about the individuals and agribusinesses receiving these subsidies.
DESVARIEUX: Alright. Fair enough.
Let’s switch gears a little bit and talk about the other portion of the farm bill, and that’s food stamps. Critics of the food stamp program claim there is massive fraud. And House Republicans’ original bill, they mandated drug testing. How does fraud in the food stamps program compare with fraud in the crop insurance program?
RANO: Well, government reports repeatedly show that the SNAP program has one of the lowest fraud rates in the government. One of the issues with crop insurance fraud is we don’t really know. There hasn’t been an in-depth examination by Congress to look at fraud rates in the crop insurance program.
We do know that there have been several outlandish cases of crop insurance fraud recently, including one last year in North Carolina with 41 defendants pleading guilty or being found guilty of conspiring to defraud the taxpayers and the government of $100 million through the crop insurance program. But there hasn’t been as in-depth an investigation or focus on crop insurance fraud as there has been on perceived or real SNAP fraud.
DESVARIEUX: What would your organization suggest as an ideal farm bill?
RANO: Sure. One is a full funding of nutrition assistance to make sure that those in need receive the food that they need. Focus on healthy and local foods. A reformed and strengthened crop insurance that makes sure that those farmers that needed the assistance and the program the most received it, not just the wealthiest farmers and agribusinesses. And strong conservation funding and practices to protect the land for the next generation of farmers.
DESVARIEUX: Alright. Jason Rano, thank you so much for joining us.
RANO: Thank you for having me.
DESVARIEUX: And thank you for joining us on The Real News Network.