Availability Key to Crop Insurance’s Success

October 31, 2014
The passage of the 2014 Farm Bill marked a pivotal point in U.S farm policy, whereby the federal government ended direct payments in favor of crop insurance that farmers purchase to meet their unique needs.
Crop insurance has been around since the 1930s and for most of that time was widely underused and unknown. In fact, as recently as the early-1990s, participation in federal crop insurance hovered around 30%, which in practical terms meant that when a natural disaster struck, most farmers had to turn to the federal government – and thus taxpayers – for assistance in the form of unbudgeted, ad hoc disaster assistance.
But those days are largely gone thanks to three broad yet essential public policy guidelines that underpin crop insurance.
This series of articles explores each element of that public policy trifecta, and explains how together, the attainment of the goals of availability, affordability, and viability have propelled crop insurance into a key risk management tool – and in some cases the only risk management tool – available to America’s farmers and ranchers.
In this article, we’ll examine the availability of crop insurance.
Successive Farm Bills since the mid-1990s have continued to expand the number of crops covered by insurance, vastly increasing its availability to U.S agriculture.
Today, crop insurance covers all major commodities, such as corn, wheat, soybeans, and cotton, and a long list of specialty crops including apricots, blueberries, cherries, tangerines and tomatoes, just to name a few.
A full list of insurable crops is available here. And that list continues to grow as the USDA is constantly reviewing and approving new crop-specific policies.
In addition to being widely available on a variety of crops, crop insurance is also available to a variety of farmers, whether they are big or small, new or established, or live in the north, south, east, or west.
Unlike most other forms of insurance, crop insurance must be sold at a rate set by the federal government to any farmer. This ensures that the most vulnerable farmers, who can be some of the smaller producers in the market, can purchase the coverage they need and cannot be turned down.
It also ensures that bigger producers aren’t excluded either, which is important because in crop insurance every acre matters. Every acre enrolled helps risk be spread more widely, which strengthens the system and helps lower the cost of policies for everyone.
All told, farmers spent $38 billion out of their own pockets from 2000 to 2013 to purchase policies best suited for their unique needs – and that doesn’t even include the more than $3 billion spent on insurance in 2014.
Given the weather events and market fluctuations of recent years, thank goodness they did.
In 2012, for example, during one of the worst and most widespread droughts the nation has seen since the Dust Bowl days, farmers turned to their crop insurance policies, not the federal government for help in picking up the pieces.
Why? Because 89% of planted cropland was protected by crop insurance.
And that is precisely why the 2014 Farm Bill broadened crop insurance to cover lots of folks who weren’t as able to access it in the past, including organic farmers, beginning farmers and ranchers, and numerous fruit and vegetable growers.
Congress got it right by making crop insurance more widely available than ever. Now, we just need to keep it that way.
After all, not everyone farms, but everyone eats. So everyone depends on a strong farm policy.