Current Government Subsidized Crop Insurance Program Works Against Beginning, Small and Mid-sized Farms

If you are a farmer, or you live in rural America, you have likely dealt with or at least heard about government subsidized crop insurance. If you are not familiar with the issue, we will get you up to speed in a hurry.

Crop Insurance and the need for reform is a topic we have grappled with for roughly the last decade. That was when we started hearing from farmers across the Great Plains and Midwest about the negative impacts of federally subsidized crop insurance.

While we believe a farm safety net, like crop insurance, is an important tool to help farmers mitigate risks, we also believe there are some real problems with the current program.

The federal crop insurance program began in 1938 when Congress authorized the Federal Crop Insurance Corporation. The current government-subsidized private program, which is administered by the U.S. Department of Agriculture’s Risk Management Agency (RMA), provides producers with risk management tools to address crop yield and/or revenue losses on their farms. 

The federal government pays the majority of the premium (62%, on average, in 2012). Insurance policies are sold and completely serviced through 19 approved private insurance companies. Not only does the federal government pay the majority of producer premiums on every single acre, regardless of how large they are or how much money they make, insurance companies’ losses are also reinsured by USDA. In addition, the federal government reimburses the insurance company’s administrative and operating costs. In total, these insurance companies have negotiated (or lobbied) for a guaranteed 14% administrative profit.

The current government subsidized crop insurance program is working against the very farms we all believe deserve a safety net. The program is non-transparent, props up private insurance company profits, helps mega-farmers drive beginning and small and mid-sized farms out of business, and puts our natural resources in harms way.

That is why we will be working towards crop insurance reform. We believe and will advocate for changes to crop insurance that emphasize conservation of our natural resources, tamps down on mega-farm millionaires so we are not subsidizing their competitive advantage over beginning and small and mid-sized farms, and ensures transparency.

Through this blog series, you will find all the latest on crop insurance reform, from analysis on bills being introduced, to the latest discussions in the farm media, to visual information that explains the problem and identifies the solutions. In addition, as we develop our campaign over the coming year, you will find advocacy information to help you take action!

Please consider leaving us your name and contact information so we can keep you posted and let you know when your actions are needed!