Drought aid could cost taxpayers billions

INDIANAPOLIS (WISH) - You can bet farmers around the state of Indiana are already calculating their losses from our drought conditions. And many will make a claim on their crop insurance. Since taxpayers subsidize that crop insurance the drought could cost taxpayers billions.

One analyst predicts this will be a record year for losses to the insurance underwriters. And taxpayers subsidize a good portion of those losses.

There is concern there will be more of an incentive for farmers to collect on insurance rather than try to save their crops through irrigation and pesticides. But even if we get rain, conditions are difficult.

"The trick is to get people through this, maximize their opportunities for crop coverage, work with them
on their credit situation, and to help them move along," said Dallas Tonsager.

Adding to the uncertainity is the lack of a Farm Bill. The current one expires the end of September.

Farmers say they need the bill to be able to plan.

We have been following the 2012 Farm Bill for some time now. As we've reported, direct payments to farmers may be phased out.

The key is how much taxpayers will subsidize crop insurance.