Babcock, left, began working on the issue of crop insurance in the 1990s.
Not many agricultural economists get asked to be on a TV comedy show, and not many would probably dare go on, if asked. But Iowa State University’s Bruce Babcock, one of the crop insurance system’s most prominent critics, showed up on “The Colbert Report” last year in the middle of the drought that devastated the Midwest corn crop.
He handled it with aplomb.
“A federal insurance program? That’s just Obamacare for our corn,” host Stephen Colbert teased Babcock, who appeared via satellite.
“In essence, you are right. It is Obamacare for the corn,” Babcock responded.
When Colbert fired back, “So that means that all the farmers are going to be facing death panels?” Babcock was ready.
Farmers will be counting on rain, he assured Colbert. They “usually look on the bright side of things.”
No state has a bigger stake in the crop insurance debate than Iowa, thanks to its prolific and valuable corn crops. The federal government subsidized $14.3 billion worth of policies there last year, the most of any state. So it would seem an odd place to find a critic of the program, and Babcock says he didn’t start out to be one.
Babcock, a Southern California transplant who got his doctorate in economics at the University of California, Berkeley, first began working on the issue in the 1990s on behalf of corn growers. He said he believed they were paying excessive rates for the insurance and still believes that was the case then.
“People weren’t buying” the policies “because the rates were too high,” he said.
But his mind has changed, and he now works with organizations, such as the Environmental Working Group, that are broadly critical of federal farm policy. As a result of a congressional overhaul of the system in 2000, Babcock contends that the program is unfairly generous to farmers and the insurance industry to the detriment of taxpayers.
“I fought a huge battle with the companies to get the rates down,” he said, and then farmers “started overbuying the insurance” after the passage of the Agricultural Risk Protection Act (PL 106-224), which significantly raised premium subsidies. Farmers, insurance industry groups and banking interests defend the system, saying it has provided valuable protection to farmers at a reasonable cost to taxpayers. Both sides of the issue have leading agricultural economists making their case. Keith Collins, a former top economist at the Agriculture Department, where he oversaw the program’s operation, is a consultant to the industry.
Babcock’s next project is a paper he thinks will show that crop insurance is more expensive than the agricultural disaster aid packages that Congress used to pass on a regular basis.
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Each year since 1990, CQ Roll Call has reviewed the financial disclosures of all 541 senators, representatives and delegates to determine the 50 richest members of Congress. This year's report, derived from forms covering the calendar year 2012, shows it took a net worth of $6.67 million to crack the exclusive club.