The Federal Crop Insurance Corporation (FCIC) is meant to provide security for the nation’s farmers. For some farmers and insurance agency employees, however, it’s provided an easy way to steal millions from taxpayers.
The FCIC is a government corporation managed by the U.S. Department of Agriculture that encourages farmers to purchase insurance policies. These policies protect them in case their crop is damaged, ruined, or compromised. While it was once a voluntary program, the FCIC is now obligatory for farmers wishing to receive government subsidies. The majority of the nation's farmers are participants. Ideally, insurance protects farmers whose existence depends on elements beyond their control. But this area is also ripe for fraud that can involve not just farmers, but also insurance agents and claims adjusters. Because there are so many factors that can wreak havoc on crops, there is no shortage of possible false claims to file involving drought, pests, freak weather, and overworked soil.
The most flagrant example of farm insurance fraud in recent years occurred in North Carolina, where a group of twenty-two people (among them farmers, insurance agents and adjusters) pleaded guilty to defrauding the government to the tune of $22 million. They claimed bad weather had ruined the farmers’ tobacco fields. The federal money wasn’t enough—they are also accused of secretly selling the tobacco to further increase their profits. This group was caught, but many are not and farm insurance fraud, while not common on such a large scale, is costing taxpayers millions each year. According to a recent article in the Los Angeles Times, farmers have been caught staging photographs of "damaged" crops (one farmer placed ice cubes in his fields to make it look like a hailstorm), making false or exaggerated claims, and fabricating whole fields of crops that were never even planted.
Forget cheating taxpayers out of their money; if perpetuated further, farm insurance fraud could have much more disastrous effects on the country. Were the federal government to become less generous in insuring farmers because of fraud, 99 percent of the farmers who take part in the program—the estimated percentage of farmers not filing false insurance claims—could, and in the long run probably would, suffer immensely.
Farming is an extremely volatile and risky business. Weather, pests, or simply bad luck often ruins entire harvests, and there is absolutely no guarantee that a farmer’s labor (which is more often grueling than not) will be rewarded with healthy, abundant crops. That’s the whole reason behind government backed insurance: farmers would be crazy to invest their lives in food production for an entire nation of people if they didn’t have a fallback in case their yield was compromised. Unlike most professions, farming is not a job you take on lightly or casually. It is the dedication and work of a lifetime, very often not for just a farmer but his or her family as well. And of course, because our current economy supports mostly large-scale crop production instead of small-scale, local agriculture, if we don’t have people who are willing to produce our food, well—good luck surviving as a nation.
Keeping farmers and insurance agencies honest isn’t only a way to avoid wasting millions of federal dollars. It’s crucial if we want to have food on our plates.
Watchdogs at the General Accounting Office have been sounding the alarm about farm insurance fraud for years (see below). Let's hope that recent revelations of ongoing fraud will prompt the Obama Administration to pay attention.