Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-11-15
CROP INSURANCE VIEWED
NEXT STEP OF NEW DEAL
Score of Problems Confront Farm Off.
Gals in Working Out Plan-Combina-
ton CASH. Produce Premium Likely.

and cents basis. the venture proved
improbable.
A similar attempt by another COM
pany in 1881, also a year of declining
| prices, met no better success. OEyi-.
ously crop insurance cannot work un-
less 1t Is on a national scale, or at
least covers large territory; nor un-
less it protects itself against iuctua-
tons in farm prices.
Secretary Wallace evidently believes
that crop insurance cannot be worked
out by private companies, but must
be Government project. He points
out that when drought or some
other crop disaster befalls a section.
the Government must spend relief
funds there in any event. So even If
Government insurance fund should go
somewhat into the red, the Treasury
might really be breaking even.
One danger would have to be ZEAL
ously guarded against In any Gov
eminent crop insurance: Political
pressure against premium differentials.
Farmers likely to suffer crop losses
might allege discrimination, to say
nothing Of unconstitutionality II they
had TO pay much higher rates than
farmers better situated. Yet higher
premium for the worse risks is cardinal
in good insurance procedure.
In this connection 1t is Of interest to
note that when A. A. A. was alive, it
really operated as kind of crop in
surance. That is, farmer who re-
stricted production got his benefit
payments even though crop disasters
would have prevented him from grow
ing much or anything on the land
taken out Of production If practically
all his crop were wiped out, he still
had the A. A. A. benefit payments to
fall back on. This protection still OBJ
tains under the present benefits paid
in return for cooperating in soil con-
servation programs.
Problems Involved.
One thing is sure: Crop insurancc
cannot function exactly as other form.
OF insurance. For instance, If drought
reduces the national output Of a crop
by 20 per cent, the price on the re-
mainder OF the crop might, because
of scarcity, increase more than 20
per cent. 1t would be silly to indemnify
a farmer who lost 1000 bushels CT
90-cent wheat if as a result he sold
his remaining 5000 bushels at s1.25.
So Secretary Wallace proposes that
crop insurance take account of whether
farmers crops have been damaged
more seriously than the same crops in
the country as whole.
Also, If crop insurance fund, pub
lie or private, were to guarantee an
output Of so many bushels of wheat,
and then we're to collect the premium
in cash, the fund would have to gamble
on the price of wheat needed to make
It's contracts good.
Similarly, if it paid for deficiencies
at given price per bushel, it would
really be insuring not only the crop,
but also the price.
So Wallace, and also President
Roosevelt, have been playing around
with the idea Of insured farmers pay
premiums, and perhaps receive in
demnity, in kind. The portions Of
crops paid as premiums would be
stored. They would be released to
farmers who had low yields, or would
be sold for their benefit. Thus an
ceremonial granary" would be Gre
ated.
Many Crops PerishabIe.
The difficulty here is that certain
crops are perishable. So some au-
thorities hold out for a combination
Of cash and crop premium payments.
Finally, no matter what plan Of
crop insurance might be tried out, it
would prob bly, have to dovetail In
with production restriction program.
Otherwise 1t might have the same I'M
fortunate effect as the Farm Board
under President Hoover in encouraging
an overexpansion in production.
Perhaps crop insurance might be
available only to farmers who CO.
operated in a Nationwide agricultural
program. Perhaps insurance could be
used as the method to enforce salts
factory quotas in all the main crops,
and perhaps the Supreme Court would
hold that this device met constitu-
tional requirements. In that event
crop insurance might prove to be one
Of the central solutions for agricul-
tural distreSs-the most serious and
battling economic difficulty which has
bedeviled the United States In the
last decade.
(Copyright, 1885,