Farming- a no-lose proposition

Farmers May Gain Amid Drought With U.S.-Backed Insurance - Businessweek: "This year’s once-in-a-generation drought may leave many crop farmers largely unscathed as they are protected by taxpayer-subsidized insurance, a program Congress is moving to make more generous.

With prices for corn, soy and wheat escalating along with estimates of the drought’s severity, government-backed revenue- insurance policies offered through units of companies such as ACE Ltd. (ACE) (ACE) and Wells Fargo & Co. (WFC) (WFC) probably will be paying out billions of dollars in claims. And the program is designed so that the larger the losses for insurers, the greater the share of the payouts the government will pick up.

Farmers “are laughing all the way to the bank,” Bruce Babcock, an Iowa State University economist and critic of the insurance program, said at a presentation in Washington July 19. “If the price goes up, you could end up better off than anticipated if you have a crop loss.”

“I’m not saying this is anything illegal, or immoral,” he added. “It’s just the way it is.”"

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