NSAC's Blog

White Paper: How the Federal Crop Insurance Program Benefits Mega Farms

December 3, 2014

On December 2, the Land Stewardship Project released the second of three white papers on the federal crop insurance program. This paper is entitled, Crop Insurance Ensures the Big Get Bigger.

This paper makes the point that the top 10 percent of crop insurance subsidy recipients took in more than half of all premium subsidies in 2011, meaning the largest of the large, representing only 2.3 percent of farms, are able to out-compete family farmers for land and resources, becoming even larger.

As a result, federal tax dollars are increasing the economic, social, and environmental risks to rural communities, by pushing out family farmers that live and purchase inputs in their local communities. At the same time three-quarters of farmers do not have crop insurance, often because it is not available for the crops they grow in the county they grow them in. The most consistent and widely available crop insurance policies are for corn and soybeans.   Policies for specialty crops like strawberries, tomatoes, and apples, are available in relatively few counties.

The report also contains a case study of Minnesota’s largest premium subsidy recipients. That case study found that the top 10 premium subsidy recipients combined received nearly $8 million in premium subsidies in 2011. It also found that the top ten percent of subsidy recipients in Minnesota represented just 4.1 percent of all the farms in Minnesota.

Federal Crop Insurance Program

Farming is inherently a risky business. Weather, pests, variable costs for inputs, and wild fluctuations in market prices for farm products create a volatile business environment and can cause farm income to vary significantly from year to year.

Traditionally, farmers managed risk by growing multiple crops and raising a variety of livestock. If one crop failed or prices for cattle or hogs were low, then sales of other products would make up the difference.

Additionally, a healthy farm and food system depends on public policies that help farmers manage risk effectively. A federal crop insurance program that is accessible to all types of farmers and provides a basic safety net can part of good farm and food system.

However, as this white paper shows, the current federal crop insurance program is skewed in favor of larger farms with less diverse crop production systems that are not only more vulnerable to markets, weather, and pests, but that also have serious impacts on the environment and rural communities.

NSAC advocates for federal policies that support diverse family farms, which support a healthy environment, a fair and just food system, and strong rural communities.


Categories: Commodity, Crop Insurance & Credit Programs, Farm Bill, Rural Development

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