The American Farm Bureau Federation (AFBF) is pushing “the option of stacking area-wide insurance policies on top of individual policies as something that could provide value to growers,” pointed out Kansas Sen. Pat Roberts, ranking member of the committee, while addressing AFBF president Bob Stallman. “Can you tell me a little more about how Farm Bureau sees this program in terms of benefiting growers across the country?”

AFBF concerns are “on several levels,” said Stallman. “One is at the level which the top layer is set. The devil is always in the details. We’re concerned that if you set the level of coverage too high – and there have been some proposals of 90 and 95 percent coverage levels – that you’re taking too much risk from the producer.”

For more on AFBF’s “deep loss” proposal, see here.

Going that route would mean “the law of unintended consequences kicks in,” claimed Stallman. “You have farmers that are willing to leverage their equity a whole lot more than they would otherwise. You have the bidding up of cash rents and land prices and the normal things that occur purely from an agricultural economics perspective. We believe that would make it more difficult for young farmers and ranchers.

“We also want to be sure we do this on an area basis … as opposed to a farm-level trigger. We’re very concerned that with farm-level triggers at that high a level of coverage there’s a risk of moral hazard. And, obviously, the costs go up when you use a farm trigger as opposed to an area-wide trigger.”

The AFBF is “willing to look at some of these proposals,” continued Stallman. “If the parameters are right, maybe we can come to a consensus. We still fundamentally believe that flipping it around and letting the government take the deep loss and giving the producers the responsibility of crafting their own risk management with existing crop insurance tools at a lower premium presents a better option. (That would mean) producers have more skin in the game as opposed to the government taking the top layer of losses and producers taking lower levels.”

The day after so many endorsements of ramping up federal crop insurance, the Environmental Working Group (EWG) jumped into the fray with claims that U.S. taxpayers unwittingly funded overseas insurance companies between 2007 and 2011. The group, long derided by many commodity and farmer groups, released a study showing that twenty insurance companies – including those based in Bermuda, Japan, Switzerland, Australia, and Canada – received over $7.1 billion through the USDA to sell American farmers crop insurance.

“More and more tax dollars are flowing to foreign insurance companies and away from farmers, working families and the environment,” Scott Faber, EWG vice president for Government Affairs, said during a Friday morning press conference. “These insurance subsidies are being provided with no strings attached to the largest and most profitable farm operators and foreign insurance companies.”

For more on the EWG report, see here.