The federal government is so large that many of its policies work at cross-purposes. The government exhorts us to eat healthy, but subsidizes junk food in the food stamp program. It urges moms to breastfeed but subsidizes baby formula. It condemns tobacco use but subsidizes tobacco farming.

Subsidizes tobacco? Yes, it’s crazy, but tobacco farmers still get subsidies from the US Department of Agriculture’s crop insurance program, which is the largest farm subsidy program.

The program is not really “insurance” but rather a way for politicians to smuggle $15 billion a year from taxpayer pockets into the pockets of wealthy farmers. The government pays about 60 percent of farmer premiums and about $4 billion a year in administrative costs and underwriting gains to the 12 private insurance companies that administer the program.

EWG.org has compiled federal data on tobacco crop insurance. From 2015 to 2024, the government paid an average of $60 million a year in premium subsidies to farmers, which means that farmers themselves paid about $40 million in premiums. In return, farmers received annual average insurance payouts of about $190 million. Thus, on net, tobacco farmers are profiting about $150 million a year from the federal program.

The tobacco share of the overall crop insurance program is small, but it’s a scandal that tobacco is subsidized at all. Also, tobacco subsidies have attracted an inordinate amount of fraud over the years.

Tobacco Subsidy Fraud

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