Farm Finance, Safety Net, and Risk Management

Three keys to the future health and vitality of agriculture, the food system, and rural communities are the successful entry of new farmers, the availability of viable and responsible risk management tools for all farmers, and the availability of credit for farmers regardless of race, gender, production scale, or methods of production.

Independent family farms, the mainstay of American agriculture and our rural communities, are in jeopardy. Farm consolidation has led to very large farms accounting for a majority of total farm product sales, putting a squeeze on mid-sized family farms. While the number of small farms continues to grow, the operators of those farms generally depend on non-farm income primarily. In the middle, and hanging in the balance, are full-time family farms, intermediate in size, which still account for a sizable share of total sales. They can be very successful provided they find a market niche that rewards their labor and skilled management.

Over the next two decades an estimated 400 million acres of U.S. agricultural land will be passed on to heirs or sold as farmers 65 and older retire (currently one-third of all farmland owners are retirement age). While there is a growing number of young people and new immigrants who want to enter into farming, they face a myriad of challenges such as the rising cost of farmland, a critical shortage of training, and lack of financing.

This is why NSAC has had a long held commitment to increasing the availability of credit to all farmers; breaking down barriers that federal agriculture programs pose to beginning, small and mid-size farmers; and altering the structure of federal safety net programs that favor the largest and richest farmers, those least in need of assistance.

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  • Credit: Ensuring that small and mid-sized farms, diversified operations, and beginning and underserved farmers have access to appropriate credit is essential to support the future of a sustainable farm and food system.
  • Commodities: The federal agricultural safety net must be reformed to better target assistance to family farms and good stewardship and reduce subsidies to farm consolidation and environmental harm.
  • Crop and Revenue Insurance: Federal crop insurance program must to be reformed to cap subsidies, provide viable insurance options for all farmers, remove incentives to engage in environmentally risky practices, and support advanced, risk-reducing conservation systems.


Farming is a business, and just like any business, farmers need access to financial resources – capital – to grow and build their businesses. For many farmers just starting out, access to credit is a make-or-break issue that will largely determine whether or not they decide to pursue a successful career in agriculture. Over the past century, farming has endured a dramatic transformation, and has become a very capital intensive pursuit. Depending on the scale, location, and method of production, there are basic costs associated with every farming operation, such as land, seeds, and other annual operating expenses. Recent trends, such as the skyrocking price of farmland and high startup costs have made farming a very expensive career that is nearly impossible to enter without some accrued savings or other financing options.

Over the years, NSAC has worked to ensure that there are a variety of credit options available for aspiring and growing farmers – including private banks, Farm Credit, and USDA’s Farm Service Agency. Due to dramatic changes in legislative direction in the early 1990s championed by NSAC, USDA credit resources are now aimed very significantly at beginning farmers. Federal loan programs provide a crucial source of capital for beginning farmers and others often not well served by commercial credit.

As more and more farmers transition to organic and diversified production systems, launch value-added agricultural businesses, and shift their production towards local and regional markets, it remains vitally important that our country’s agricultural credit programs adequately meet the needs of these more non-traditional and smaller borrowers.

These farmers may include those who are young or beginning producers, diversified operations selling directly to consumers (i.e. CSA and farmers’ market farms), small farmers, and urban and peri-urban farms. Operators of these types often have difficulty obtaining financing due to a lack of credit history, the increased risk associated with lending to a new or young farmer, or unfamiliarity with small, diversified farming operations.

Increasing access to credit for the next generation of sustainable and innovative producers remains a core federal policy issues to which NSAC remains committed. We continue to work with USDA to develop new and creative financing options, such as the new FSA Microloan program, that meet the smaller credits needs and reflect the scale of operations of small, beginning farmers and diversified farms serving local and regional markets.

Recent NSAC actions on Credit programs

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This country’s farm safety net has for decades had the same goal, to ensure a modest safety net for family farms to protect against sudden price declines and allow them to stay in business for another year. Commodity support programs that are a measure of protection against wide price swings and market declines with respect to basic commodities is a legitimate function of government. The resulting safety net, however, should be just that – a safety net, not a subsidy system that encourages land price inflation, soil-depleting farming practices and systems, farm consolidation, and declining farming opportunities. The current subsidy system is badly broken and needs to be fixed.

The 2014 Farm Bill eliminated direct payments. These were payments made to landowners regardless of what was happening with commodity prices and farm income. However, much of the saving from the elimination of direct payments was plowed back into three new subsidy programs which, while they are countercyclical and hence reflect market trends, nonetheless share many of the same problems as the programs they replaced.

While Title I commodity programs, unlike the crop insurance program, do have a payment limits, USDA has never cared to adequately define who qualifies as an eligible farmer, rendering its payment limit meaningless. NSAC has and continues to work diligently for the implementation of a strong payment eligibility rule. During debate on the last farm bill, NSAC championed the Farm Program Integrity Act, which was included in both the House and Senate passed farm bills. Unfortunately, during conference negotiations the provision was dropped in favor of weak direction to USDA to write a new rule. That rule writing is still in process.

Recent NSAC actions on Commodity Program Reform

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Crop and Revenue Insurance

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. A healthy farm and food system depends on public policies that help farmers manage risk effectively. 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. By contrast, current crop insurance policies are 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.

Crop insurance should ensure that a farmer who experiences a significant price or yield loss can survive to farm the next year, in an efficient, accountable, and transparent manner that does not remove so much risk that farmers are discouraged from exploring alternative production methods and alternative crops and livestock products to enhance profitability and provide greater financial security. Under the current program, however, the subsidies are not capped or means tested and as a result the federal government subsidizes every last acre a farmer growers whether they are multi-billionaires or if they farm sensitive areas that they would not normally farm were it not for having highly subsidized insurance.

In recent years NSAC has been successful in reforming the federal crop insurance program in several ways including the removal of the organic surcharge, increased flexibility in RMA’s cover crop termination guidelines, and ensuring that sustainable and organic practices are considered good farming practices by RMA.

While NSAC believes that a crop insurance program and a basic subsidy program backed by the federal government are necessary components of an effective farm safety net, many parts of the current federally backed program favor the largest farms while throwing up barriers to beginning and mid-size farmers. Aspects of crop insurance program harm the environment by incentivizing short-term gains over long-term sustainability.

Currently, taxpayers are on the hook for premium subsidies no matter how large the farm or how wealthy the farmer. If a landowner buys and farms an entire county, the public, under current law, will still be forced to pay for a majority of the owner’s insurance costs, on each and every acre without limit. As a result, the largest farms enjoy a disproportionate percentage of crop insurance benefits. Smaller farmers, beginning farmers, and farmers that don’t grow an insurable crop, receive a smaller percentage of the benefits (or no benefits at all).  This dramatically reduces risk for the largest farms, which frees up capital for these larger farms to purchase more land at higher prices. Smaller, diversified, and beginning farmers have less land and more risk, and are unable to compete with these mega-farms for highly coveted cropland.

This is why NSAC has supported limitations on subsidies to the largest and richest farmers. We support a cap on the total dollar amount of subsidies a farm can received and we support limiting subsidies to farmers with high incomes through an Adjusted Gross Income cap.

NSAC is also seeking to level the playing field so that the federal crop insurance program provides all types of farmers viable risk management options. The federal crop insurance program should include real quality options for the diversity of American agriculture including organic, niche, diversified, small-midsized, and conventional farms.

NSAC successfully advocated for the inclusion of a new Whole Farm Revenue Protection (WFRP) policy in the 2014 Farm Bill, which was made available for the first time in 2015.  This policy allows farmers to cover all of their crops and livestock under one revenue policy.

Conservation compliance requirements were reconnected to crop insurance, with NSAC’s support, as a part of the 2014 Farm Bill. The 2014 Farm Bill also contained a sod saver provision that reduces crop insurance subsidies in certain states if landowners till native sod to plant crops. Learn more about these conservation provisions on NSAC’s Agricultural Conservation

Recent NSAC actions on Crop and Revenue Insurance

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