One doesn't hear much about the financial outcome for farmers at the end of a bad crop year like the one we have now in the middle of our country. As bad as it may be playing out, all is not really gloom and doom for most of them. All of the affected states have huge farming interests and their congressional representatives wield clout in Washington.
The clout comes from the congressional farm assistance appropriation bill, which covers crop losses and profit for the farmers and gets rammed through both chambers every year by the farm-state blocs in each.
The year 2011 also saw severe crop loss from flooding, freezes and drought, but the farmers survived and thrived. According to Bloomberg Business Week, in 2011 farmers bought 1.2 million insurance policies linked to prices at harvest and shared the cost of the premiums with the federal government.
At the end of the day, the insurance companies paid out a record $10.8 billion to farmers for their crop losses and still made a tidy $1.7 billion profit for themselves. Total cost of the crop assistance program in 2011 was $12.5 billion.
We, the taxpayers, covered $8 billion of this amount and the farmers ponied up the remaining $4.5 billion.
But the cherry on top was the record-breaking profit of $98.1 billion earned by farmers in 2011 despite a bad crop-loss year.
This year, corn farmers planted 96.4 million acres. The U.S. Department of Agriculture now predicts 87.4 million acres will be harvested, still the eighth biggest corn harvest in U.S. history. As bad as the weather has been this year, most farmers will survive to plant again.
The takeaway here is that private businesses, big or small, often fail and go down the drain, but U.S. farmers will always get bailed out by farm-state clout, the good old taxpayer and higher crop prices.
MARV FISHMAN
Latham