Alyn Smith MEP, Scottish full member of the European Parliament's Agriculture and Rural Development Committee, has welcomed a new study on the impact of the current US Farm Bill (presented to MEPs in a special session) as further evidence of the malign impact of publicly-funded crop insurance and risk management programmes, and a clear warning to EU policy makers not to adopt such proposals at the heart of the new Regulation on Rural Development in CAP reform.
Publicly-subsidised crop insurance was also criticised for creating moral hazard, and encouraging farmers to take on excessive risks, such as "plant crops in more risky areas, and create incentives for diversifying less, hence accruing the use of pesticides" or even incentivising the bringing into production of more vulnerable land. Finally, crop insurance schemes, while currently not counted towards crop-specific support under the US's Aggregate Measurement of Support quota at the WTO, could easily be vulnerable to challenge from a trading partner, due to the crop-specific nature of the contracts. A successful challenge would leave the US in violation of its
international trading requirements.
"This is important information, and fully bears out the opinion of Henry Waxman (ex-Chair of the House Oversight and Government Reform Committee) that insurance is "a textbook example of waste, fraud and abuse in federal spending."
"I have always been strongly opposed to subsidies from European funds for crop insurance and income insurance tools, because the financial commitments could potentially be extortionate and gobble up the entire Rural Development Budget; because we should not be spending European funds on hand-outs to insurance companies; and because, in a time of limited financial resources, we should be focusing help on measures which prevent risk through upgrading our agri-landscape systems, such as agri-environmental schemes and diversification tools, not on compensatory measures for disasters which already have occurred.
"If Europe wants to act on risk management, it should focus on the proposals for mutual funds, where farmers pool their own resources to help deal with common risks and problems, not through subsidising the profits of private insurance companies. Farmers are of course welcome to invest their own money as they see best fit to deal with their risks, but limited taxpayers money should and can be far more