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Agricultural Disaster Aid Programs

A SURE Invitation to Wasteful Spending
Myles Watts and Anton Bekkerman

This paper examines the structure and cost of the federal government’s primary program to support farmers who lose crops from natural disasters: the Supplemental Revenue Assistance (SURE) program. The authors’ main conclusions are:

1) “Disaster” aid covers much more than real disasters: SURE is sold as a program that protects farmers when they suffer from natural disasters. However, the definition of “disaster” is so loose that virtually any drop in crop production triggers federal aid. If any county suffers a 30 percent drop in production for any one crop, even if that crop is rarely grown, then all farmers in that county are eligible for disaster aid for all the crops they grow if the value of any of their crops is only 10 percent lower than their selected crop insurance coverage level.

2) Farmers who do not suffer from “disasters” are eligible for disaster aid: If one county is declared a “disaster area,” then farmers in all adjacent counties are also eligible for disaster aid. As a result, farmers in virtually every county in the United States were eligible for disaster aid from the SURE program for any crop they grew in either 2008 or 2009. Common sense tells us that the entire United States was not subject to natural disasters in those two years.

3) The SURE program costs taxpayers billions of dollars, nearly five times what it was estimated to cost when approved by Congress: When the SURE program was created in the 2008 Farm Bill, the Congressional Budget Office estimated it would cost $425 million per year. In its first year of operation, the SURE program actually cost taxpayers $2.04 billion.

4) The SURE program must be repealed or substantially reformed: Congress should repeal the SURE program entirely and rely on federally subsidized crop insurance to repay farmers for crop losses. If there must be both crop insurance and a standing disaster program, the program must:

a. Change the definition of disaster. A county should be declared a “disaster area” only if the drop in countywide crop yields is 30 or 50 percent below a five-year average based on all crops grown there. A farmer could receive aid only if his overall crop production decline equaled or exceeded that in the county;

b. Eliminate eligibility for farmers living in counties adjacent to disaster counties; and

c. Reimburse eligible farmers’ losses based on a five-year price average rather than current market prices. This eliminates farmers’ incentives not to take care of their crop in years with abnormally high prices.

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