One of the arguments that ACCI makes is that NASCOE is just trying to protect FSA jobs. That being said, it is no less true that ACCI is trying to protect a stable revenue stream for crop insurance companies, insurance agents, and their employees. It is a given that both sides are trying to protect their jobs so that argument seems to be a wash, favoring neither party.

ACCI also argues that since they have already taken a $12 billion cut in federal funds over a ten year period, they should be left alone. Certainly this argument can be made if Congress pushes for additional cuts but is less relevant as a defense against switching the operation of the crop insurance program to the FSA.

While ACCI makes the case that shifting the program to the private sector has increased farmer participation in the program, it is clear that other factors are at work as well. Certainly one of the relevant factors is the inadequacy of the levels of both the loan rate and the target price as set by Congress. In the absence of adequate support prices, bankers have been reluctant to provide loans to farmers who cannot show some certainty in their ability to repay the loans. Crop insurance provides that certainly—well at least in years of high crop prices.

Another factor behind the increased participation in crop insurance is undoubtedly the unpredictability of the ad hoc disaster program.

Given the size of the potential savings and the lack of an unquestionably superior argument on the part of ACCI, it would seem reasonable to expect Congress to give the NASCOE proposal a close examination. So far the most widely reported congressional response has been “dead on arrival.”

Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a Research Assistant Professor at APAC. (865) 974-7407; Fax: (865) 974-7298; dray@utk.edu  and  hdschaffer@utk.edu;  http://www.agpolicy.org