Monday, November 14, 2005

Heard this On the Radio and Was Appalled

This is why I don't believe in Farm Subsidies-
The felons are a small group of farmers who falsely claim that weather ruined their crops so they can collect the insurance. The U.S. Department of Agriculture says they cheated the U.S. Treasury and insurance companies out of $160 million last year. An NPR investigation reveals this crime is growing in size and complexity, while some insurance companies look the other way.

Interviews with 50 individuals in eight states -- investigators, prosecutors, farmers, watchdogs and government regulators -- reveal a culture of cheating that has grown up among a small group of farmers who exploit the nation's government-backed crop insurance program. The program was tailor-made for fraud.

Chambers says he bought a bag of cocktail ice and a disposable camera, and, on his boss's order, created a foul-weather tableau. "The way we did it, we was down taking pictures, out this row, and then we just stood behind it and throwed the ice over the top. To me, it looked like a hailstorm," says Chambers.

To complete the scene of devastation, they then picked up wooden tomato stakes and attacked the unsuspecting vegetables. "They had one Mexican who did all the beating, he beat every 16,000 of them. He'd just go through there and knock the leaves off of them," says Chambers, as he illustrates the activity with a long stick. "It made it look like where the hail had beat it up."

To understand the crime, you've got to know who the players are.

The farmer buys an insurance policy that provides partial coverage -- usually 50 to 60 percent -- for the crop he expects to raise.

The insurance agent sells him the policy.

The loss adjustor is dispatched to inspect the field if the farmer claims a disaster.

If the disaster is confirmed, the crop insurance company sends the farmer a check.

And the U.S. Treasury, which guarantees the riskiest farm insurance, often reimburses the insurance company.

And there's one more player: the federal prosecutor. In this case, Richard Edwards was the prosecutor who blew the whistle on the farmers, the agent and the adjustor.

Small Dead Animals
points out the worst of it-

It gets better. Not only does the US Treasury back insurers in the risky business, the USDA subsidizes premiums.

The government is so generous with crop insurance that it subsidizes farmers' premiums. Edwards says the USDA paid the Warrens more than $2 million to help them insure their tomatoes. He compares it to the following hypothetical situation: "Every year a bank gets robbed and they notice the bank robber is using an old getaway car and they ask, 'Would you like a car loan to have a nicer getaway car next year when you come to rob us?' Because the government is subsidizing the farmer's ability to defraud us for the coming season."

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