Program

Crop Insurance

Category

Agriculture

Subsidy Type

Insurance

Committees of Jurisdiction

House Agriculture Committee, Senate Agriculture Committee

$8,304 FY 22 Budget Score (in mil.)
$87,132 FY 22-31 Budget Score (in mil.)

Producers can purchase taxpayer-subsidized insurance through the Federal Crop Insurance Corporation (FCIP). Though called “insurance,” it does not operate like insurance that most Americans purchase. That is because the government typically pays 100 percent of the premiums for basic catastrophic coverage and subsidizes an average of 62 percent of farmer’s individual crop insurance premiums. In other words, for every $1 of insurance premiums, farmers contribute 40 cents while taxpayers pay 60 cents. On top of that, taxpayers reimburse the administrative costs, salaries and underwriting gains of private insurance companies who operate the program. And instead of insuring against a potential crop loss, 70 percent of all insured acres are covered by revenue policies that allow businesses to lock in an expected amount of revenue (crops X expected price). Thus even in a year with no crop losses, an agribusiness could receive a generous insurance payout if prices dip below expectations. Over the past 10 years, insurance payouts have exceeded farmer contributions by a ratio of more than two to one, meaning farmers receive $2.34 in payments for every $1 they contribute toward their insurance premiums. Crop insurance primarily benefits larger-than-average agribusinesses that grow just four crops: corn, soybeans, wheat and cotton. For more details, see Taxpayers for Common Sense’s (TCS) fact sheet on Crop Insurance.

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