The reason why crop insurance has become the cornerstone risk management tool for farmers is because it is available, affordable and viable.
Available: Congress cemented crop insurance’s role as the centerpiece of the farm safety net during the 2014 Farm Bill. However, that safety net will collapse if crop insurance policies aren’t widely available.
Affordable: Crop insurance policies must remain affordable for farmers and ranchers or the entire farm safety net will fail. Farmers have spent roughly $42 billion out of their own pockets since 2000 purchasing crop insurance policies—roughly $4 billion a year—and also shoulder a portion of losses in the form of deductibles before receiving assistance. The fact that farmers invest in the system keeps it affordable.
Viable: Private companies are integral to crop insurance’s future because they shoulder risk that would otherwise be borne by taxpayers and because they maintain the system used to efficiently provide assistance to farm families following disasters. If the business does not remain viable, private-sector participation could wane, weakening crop insurance.
- In 2014, farmers spent nearly $3.8 billion to purchase more than 1.2 million crop insurance policies.
- Farmers and ranchers can purchase policies protecting 128 different crops, including nearly all major commodities and a long list of specialty crops including apricots, bananas, blueberries, cherries, coffee, olives and tangerines.
- In 2014, almost 90 percent of planted cropland was protected by crop insurance.