What if Crop Insurance Subsidies Disappears?
Neiffer: “Most of those producers if they are no longer getting the subsidies, they not going to want to deal with the government. So they are just going to go to a private insurance company or create their own captive insurance companies of large producers. So let’s say you get a group of 25 farmers from around the United States — so they spread their risk. They will come together and form what is called a captive insurance company and they will go ahead and insurance the risk of somebody in Washington and somebody in Colorado and somebody in Illinois. There is some potential tax savings to that. Most of these guys are likely larger producers and perhaps better producers and a lot of them are irrigated producers, so they are worried about the price risk not necessarily the yield loss. Likely that would drive up the premium for the rest of the farmers out there — that are likely smaller farmers probably in areas of higher risk than the other ones that would opt out of the system. So that is going to drive up the premium for everybody else.”
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