The Farmers’ Bailout

Rain falls on drought-damaged corn on July 17, 2012, near Somerville, Ind.
Rain falls on drought-damaged corn on July 17, 2012, near Somerville, Ind.

Photograph by Scott Olson/Getty Images.

If you’re in some line of business and then bad luck creates bad business conditions, you’re generally just in trouble. For example if drought hurts corn crop yields and pushes up food prices, that’s bad for a restauranteur’s profit margins. But those are the risks of doing business. Unless you’re a farmer that is, in which case there’s a special government program to help bail you out:

Agriculture Secretary Tom Vilsack today designated 39 additional counties in eight states as primary natural disaster areas due to damage and losses caused by drought and excessive heat. During the 2012 crop year, the U.S. Department of Agriculture (USDA) has designated 1,297 counties across 29 states as disaster areas, making all qualified farm operators in the areas eligible for low-interest emergency loans. The additional counties designated today are in the states of Arkansas, Georgia, Indiana, Mississippi, New Mexico, Tennessee, Utah and Wyoming. The U.S. Drought Monitor currently reports that 61 percent of the continental United States is in a moderate to exceptional drought.

Given the current macroeconomic climate, basically anything the government does to offer low-interest loans to anyone is pretty helpful and smart policy. But sometimes drought strikes when the economy isn’t in severe recession. And more broadly, there’s no good reason that what amounts to generalized “bad luck insurance” should be specially offered on preferential terms to people who happen to be farmers. But many of the people most inclined to think of themselves as hostile to big government and “welfare” are precisely the residents of rural areas that heavily receive it on a targeted basis.