Crop Insurance

Since the 1996 Farm Bill’s seminal policy change that gave farmers the freedom to decide which crops to plant or not plant, land in US farms has declined by 75 million acres or -8%. Most (88%) of the decline occurred in pastureland. It is thus incorrect to equate the loss of farmland to a loss of cropland. Cropland has declined by only -2% while pastureland has declined by -13%. The sizable decline in pastureland is consistent with the growth in confinement animal production.

A steep decline in prices across years has resulted in low to negative average returns to Midwest farms in 2023 and projected for 2024. Crop insurance programs are not designed to cover the risk of multi-year price declines and current commodity title programs are also expected to provide little relief for these low prices. Modifying commodity title programs to make them more market-responsive would aid in providing relief to farmers.

Since 1989, the role of crop insurance as a payment program has tripled, even after taking into account the increase in economic cost of production per acre. The increase in crop insurance’s payment function is enough to prompt an important policy question: “Has the US crop insurance program become a payment program that also provides growing season risk coverage or does it remain an insurance program that makes payments triggered by a covered risk event?”