The drought in the Southwest and Plains States has not gotten any better. Based on weather reports, it probably will get worse. The byproducts of the drought have worsened in the past few days. Soybean and corn prices continue to soar, which will eventually be passed on to consumers in the form of higher food prices. Reuters reports that there is another unanticipated consequence. Farmers have started to abandon their crops and collect insurance. The news service reports:
… farmers who have amped up their insurance coverage may be giving up on their crops early rather than to trying to save them.
Crop insurance has become a moral hazard.
Douglas A. McIntyre