Title XI: Crop Insurance

Although the Agricultural Adjustment Act of 1938 created Federal Crop Insurance, crop insurance barely hobbled along until 1980.

In 1980, Congress passed the 1980 reforms that turned the sales and servicing of Federal Crop Insurance over to private companies, agents, and loss adjustors. That year marked the beginning of Federal Crop Insurance’s meteoric rise to become what farm and ranch families say is the cornerstone of the farm safety net.

In 1994, another reform measure was approved by Congress in order to provide greater incentives for producers to buy coverage and at higher levels and to reduce the need for ad hoc spending. The impetus for the legislation was the 1988 drought and the 1993 flooding of the Mississippi River.

In 1996, Dr. Art Barnaby at Kansas State University sought approval of a revenue insurance policy for farm families. The Federal Crop Insurance Corporation Board of Directors ultimately approved the request.

By 1998, participation in crop insurance had increased to over 180 million acres covered.

In 2000, Congress again sought to incentivize greater participation in crop insurance at higher coverage levels through the Agriculture Risk Protection Act. The legislation aimed to address shortcomings in the system of actual production history (APH) that determines the production that producers may insure, and to expand availability and enhance effectiveness of crop insurance for all commodities, including specialty crops, livestock, and dairy. The law was an enormous success and helped Congress avoid large ad hoc programs over the next 16 years.

The 2018 Farm Bill further refined the APH system to ensure that producers do not face an effective double-deductible.

In 2017, Congress lifted the cap on crop insurance for dairy and livestock producers, paving the way for these policies to be the fastest growing under Federal Crop Insurance.

The results?

In 1989, roughly 50 commodities were covered under Federal Crop Insurance. Today, over 130 crops are eligible for coverage.

Federal Crop Insurance has grown from $2.5 billion in total premium paid covering 206 million acres and $34.4 billion in total liability to $18 billion in total premiums on 539 million acres with $180.8 billion in liability.

“Increases in insured acreage have been met with corresponding increases in total liability—which, as of 2021, was equivalent to 31 percent of the total U.S. agricultural sector production value. The majority of FCIP liabilities are attributable to row crops which represent 70 percent of insured liability in 2021. Behind row crops, specialty crops contribute the next most to total liability (18 percent for 2021). Forage crops, despite representing a large share of total insured acreage, have relatively low monetary values and represented only 3 percent of total liability in 2021.” – USDA-RMA, 2021

“The data on crop insurance delivery also shows a remarkable positive trend toward greater efficiency. The chart [above] shows total A&O costs of premium paid overtime. There are some serious problems in this area that simply must be addressed and addressed quickly – including the punitive impact of the 2011 cap on specialty crop policy A&O. But in the big picture it should not be overlooked that the agents, loss adjusters, and companies that deliver crop insurance to farmers and ranchers are doing so with incredible efficiency.” – Mr. William Cole, Chairman of the Crop Insurance Professionals Association, May 2023

By design, the public-private partnership that makes up the Federal Crop Insurance Program provides for timely, dependable, and responsive relief for producers facing losses than costly ad hoc assistance.

In a bipartisan Budget Views and Estimates letter written to the House Budget Committee in the spring of 2023, the leaders of the House Agriculture Committee lay out the need for further investment in the farm safety net through both Title I, Commodity Programs, and Title XI, Crop Insurance, citing the extensive use of ad hoc disaster assistance in recent years.

Today, the Federal Crop Insurance Program (FCIP) represents the key cornerstone of the farm safety net for producers across the U.S. At hearings hosted by both the House and Senate Agriculture Committees in the spring of 2023, grower-leaders of several major agriculture organizations reiterated the importance of the program.