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Crop Insurance Rises to 31% of Direct Federal Farm Assistance

In 1994 and again in 2000, Congress voted for the government to pay a larger share of the premium for crop insurance subsidies, one of the reasons for increased participation in the insurance program. One measurement shows the larger role: insurance now amounts to 31% of direct financial assistance to farms, compared with 2% in 1989, according to the USDA Economic Research Service.

In its annual report, “America’s Diverse Family Farms,” the ERS notes that “attractive new insurance products,” such as revenue insurance, also were introduced. The USDA pays an average 62¢ of each dollar of premium for crop insurance. “In recent farm acts, the emphasis has shifted to a greater reliance on risk management through insurance and less reliance on income support through commodity programs.”

Grain farms account for two thirds of all participants and 64% of harvested cropland in the federally subsidized insurance program.

The report said 76% of Conservation Reserve payments went to small farms, which occupy 51% of U.S. farmland. Crop subsidies and working-lands payments tend to go to larger operations: “Most U.S. farms, however, do not receive government payments and are not directly affected by them, although they may be affected indirectly by changes in land values and rents.”

FERN’s Ag Insider. Produced by FERN
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