NSAC's Blog

Final LSP Crop Insurance White Paper Released with Principles for Reform

December 10, 2014

On December 9, the Land Stewardship Project (LSP) released a new white paper, How Crop Insurance Hurts the Next Generation of Farmers, the final of three white papers on the federal crop insurance program .

This final white paper was released alongside a “Principles of Reform” document that outlines LSP’s ideas for reform of the federal crop insurance program.

Crop Insurance and Beginning Farmers

This white paper makes three main points:

  • That the federal crop insurances program artificially increases land values by essentially eliminating the risk of farming corn and soybeans, allowing the largest farms to bid up the price of land, thus making it harder for new and beginning farmers to purchase land.
  • By artificially increasing the price of land and favoring larger established farms, the program promotes land consolidation, which further harms new and beginning farmers who have few assets to leverage when purchasing land.
  • The system for assigning yields to new farms (T-Yields) is unfair to beginning farmers, by favoring existing landowners, leading to further land consolidation.

The white paper uses interviews with new and beginning farmers who have been unable to compete for land as examples of the impacts of the federal crop insurance system.

Federal Crop Insurance Program Reform Position Paper

The Principles of Reform document that accompanied the final white paper provides an outline of the needed reforms to the federal crop insurance program.

The major reform principles LSP outlines in the paper include:

  • Ensuring that public expenditures are for the public good and not wealth transfers to private entities.
  • Ensuring that the federal crop insurance program is returned to its roots as a modest, cost effective, risk-management strategy, and that it does not unnaturally influence land prices and planting decisions.
  • Ensuring that crop insurance is fair and available to farmers of all stripes including socially disadvantaged farmers, and new and beginning farmers.

NSAC and the 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 are low, then sales of other products will make up the difference.

Additionally, a healthy farm and food system depends on public policies that help farmers manage risk effectively while not unduly influencing planting decisions or inflating land prices. A federal crop insurance program that is accessible to all types of farmers and provides a basic safety net can be part of a good farm and food system.

However, the current federal crop insurance program is skewed in favor of less diverse crop production systems that are not only more vulnerable to markets, weather, and pests, but that also have serious environmental impacts. It also contains no limits, subsidizing every last acre regardless of size or need for high subsidy rates, which has serious affects on the structure of agriculture, encouraging consolidation and reducing farming opportunity.

NSAC will continue to advocate for an accessible, environmentally sound, and fair crop insurance system.


Categories: Commodity, Crop Insurance & Credit Programs, Conservation, Energy & Environment

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