A Growing Moral Hazard

Last week, the House passed the Agricultural Disaster Assistance Act of 2012 (H.R.6233) over the objection of conservatives.  At the time, Heritage Action warned the bill “continues making farmers, ranchers and orchardists more dependent on government and bails them out for not adequately preparing for hardship.”

A writer at Salon took issue with the claim that ranchers could have prepared for the expiration of the livestock-specific disaster programs:

…I think it’s absurd to imagine that in the few months that passed since assistance programs ended in late 2011, farmers could have been able to appropriately prepare for one of the two or three worst droughts in a century

Of course, farmers did not have just “a few months” to prepare; rather, they’ve had more than four years to prepare.  From the moment the 2008 farm and food stamp bill was signed into law on May 22, 2008, ranchers knew the livestock-specific disaster programs would expire on September 30, 2011.

Washington’s policies are growing – in economic terms – a massive “moral hazard” whereby taxpayers subsidize farmers to such an extent that risk is all but mitigated.  Don’t believe me?  Just take it from one Minnesota farmer:

When you can remove nearly all the risk involved and guarantee yourself a profit, it’s not a bad business decision.  …  I can farm on low-quality land that I know is not going to produce and still turn a profit.

The Washington Post editorial board summed it perfectly:

For decades, federal policy has been training farmers to depend on government instead, and taxpayers have been picking up the tab.

Now is the time to reverse the culture of dependency.

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