Congressional Research Service News In Focus White Paper on the Federal Crop Insurance Program

WASHINGTON, Aug. 29 (TNSrep) — Congressional Research Service issued an In Focus white paper on the Farm Bill Primer – federal crop insurance program (No. IF12201) on Oga. 26, 2022is an agricultural policy expert Stephanie Rosch.

Here are the comments:

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The federal crop insurance program (FCIP) helps farmers get insurance coverage from the private sector to mitigate the risks of growing and marketable crops. The US Department of Agriculture (USDA) administers programs and provides subsidies to farmers to encourage farmers to participate in the program. Premiums account for nearly 62% of total sales in 2021. Since its inception in 1938, the FCIP has grown from a modestly-participating program to a central pillar of federal farm assistance, with more than $444 million . acres and $150 billion in the value of crops and livestock insured in 2021 (Figure 1).

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Figure 1. Acres and Federal Insurance Value

Crop Insurance Program, 2000-2021

Source: CRS using data from US Department of Agriculture (USDA) Risk Management Agency Business Summary database, has been downloaded August 19, 2022.

Note: Prices have not been adjusted for inflation. Years and years of harvest.

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FCIP is permanently authorized under the Agricultural Adjustment Act of 1938 (PL 75-430, 52 Stat. 72) and the Federal Crop Insurance Act of 1980 (PL 96-365, 7 USC Sec.Sec.1501 is seq.), as amended. Title XI of the Agriculture Improvement Act of 2018 (farm bill of 2018; PL 115-334) made some changes to the FCIP to expand contributions and reduce program rollouts.

Program Summary

FCIP provides insurance coverage for most field crops, specialty crops, livestock and livestock, and pasture. FCIP coverage is available for all purchases US areas, although the distribution of some crops may be limited in some areas. Farmers can choose between many types of policies and procedures to choose from to suit their business needs. The amount of subsidy premium farmers receive depends on the amount purchased. USDA provides adequate coverage for accidental damage (CAT); Farmers only pay administrative fees. Farmers pay an increasing share of the cost of buying more products, up to 62% of the total cost.

FCIP regulations protect agricultural products from damage caused by unavoidable natural events. Some policies also insure against losses from declining market prices. Covered perils or “causes of damage” include severe weather (such as snow, ice, drought, flooding); failure of irrigation water; fire; plant diseases; and insect and wildlife damage. Farmers must comply USDA is guidance on good farm management practices to improve quality of supply.

Approved insurance companies, called Approved Insurance Providers (AIPs), sell and service FCIP policies. USDA they control the policies offered and their prices. USDA It also provides assistance to AIPs to cover the cost of selling and sending FCIP policies and re-establishing a portion of the policies sold under bi-annual contracts between them. USDA and AIPs: Standard Reinsurance Agreement (SRA) and Livestock Price Reinsurance Agreement (LPRA).

Fees and Program Structure

The Federal Crop Insurance Corporation – the agency that funds the FCIP’s operations–reimbursed from authorized funds for “such funds as may be necessary.” Annual federal funding is provided $9.1 billion for FY2012-FY2021, adjusted for inflation (Figure 2).

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Figure 2. Federal Crop Insurance Program Outlays

FY2000-FY2021

Source: CRS using data from USDA, Company proposal Federal Crop Insurance Corporation/Risk Management Agency Financial statements, audit reports, various financial years.

Comment: Adjusted for inflation by use US Bureau of Economic Analysis Implicit Price Deflators of Gross Domestic Product where 2021=100, has been updated July 28, 2022.

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Sales tend to increase with the number of orders being sold and the increase in product prices. Between 2012 and 2021, payments for corn, soybeans, wheat, and cotton accounted for 78% of total payments.

2018 Farm Bill Amendments

The crop insurance title in the 2018 farm bill was not neutral in the budget, with small increases and decreases on several items. Changes expected to increase spending included allowing the provision of CAT for feed and hay; allowing separate cultivation of forage and machine-harvested crops in the same season; redefining the term “farmer” or “farmer” to protect the income of the entire farm; and leave some important information on hemp projects offered by private organizations. Changes expected to reduce budget spending included increasing CAT operating costs; approving shares of various companies; reduce costs for research and development and collaboration; reduce costs for monitoring, compliance, and program integrity; and changes in the way producers’ profits are reduced by planting on conventional sod.

The 2018 farm bill also added hemp to the list of crops eligible for FCIP subsidies and post-harvest outreach; established a special crop coordinator; revising regulations to eliminate cover crops; expanded the definition of marginal farmers; and control USDA conduct a study to establish the coverage of the FCIP in the most important areas, among other changes. In response to research requirements identified in the 2018 farm bill, USDA revised Whole Farm Revenue Protection policies and reintroduced issues of hurricanes, quality loss, water conservation in irrigated rice, and small farms.

Non-Farm Bill Changes Beginning in 2018

Starting in 2018, USDA has exercised authority to make some changes to the FCIP. Exercising FCIP powers based on disclosures made by federal agencies (7 USC Sec.1508(h)), USDA introduced the Enhanced Coverage Option (ECO) – a community-based insurance policy that covers a portion of the farmer’s deductible that cannot otherwise be covered by the FCIP – and the Post-Application Coverage Endorsement (PACE) for farmers who apply.

other fertilizers in autumn and spring. USDA used governments to change grazing laws in areas where cropping is prohibited during the rainy season and to increase livestock payments. Prior to 2018, the Agricultural Risk Protection Act of 2000 (PL 106-224, Sec.132) reduced the amount available for livestock support. Section 60101(c) of the Bipartisan Budget Act of 2018 (PL 115-123) repealed this provision.

In addition, USDA made some changes to the FCIP based on the annual and supplemental provisions. USDA used funds provided by the Disaster Relief Supplement Act of 2019 (PL 116-20) to provide additional funding to insured acres that were prevented from being planted in 2019. USDA expenses are Congress in the Consolidated Appropriations Act, 2021 (PL 116-260) to create the Pandemic Cover Crop Program (PCCP). PCCP gave up to $5 per acre for additional payments to farmers who planted larger crops in 2021 and/or 2022.

Problems a Congress

FCIP is a central part of the federal farm safety net, a group of programs that provide safety and financial assistance to farmers during times of low prices and natural disasters. In the last three farm bills, Congress has expanded the FCIP to cover more products and types of risks. Although market penetration of field crop insurance has historically been high, opportunities exist to expand participation, particularly in specialty crops, livestock, and animals.

Many stakeholders have decided to reduce the cost of FCIP by recording the benefit of writing AIPs, reducing the subsidies for producers, establishing criteria for qualifying for premium subsidies based on the producer’s income, among other proposals. Furthermore, the SRA has been in operation since 2011. In 2017, the Office of Public Accountability recommended that Congress repealing Section 11012 of the Agricultural Act of 2014 (PL 113-79) – which requires SRA discussions to be non-political – and to improve USDA renegotiate with the SRA for additional funding. Congress they can assess whether the existing controls and policies of the SRA and LPRA are sufficient to achieve the desired cost control objectives of the program.

Acceptance of PACE and PCCP provides an incentive within the FCIP for farmers to implement conservation measures. Some environmental stakeholders have decided to further FCIP’s work by promoting the protection and improvement of soil health. Congress they can consider the environmental benefits of these ideas and their impact on the clarity of the program.

The number of insurance companies participating in FCIP has decreased over time, mainly due to mergers with insurance companies. Congress may choose to examine the drivers of this consolidation, as well as any impact of consolidation on reaching farmers in underserved areas and the willingness of insurers to sell new types of crop insurance.

For more information, see the following CRS reports:

* CRS Report R46686, Federal Crop Insurance: Getting started

* CRS Report R46874, Federal Crop Insurance Program (FCIP): Replanting, Delayed Planting, and Plant Protection

* CRS Report R45291, Federal Crop Insurance: Brief Delivery Fees

* CRS In Focus IF11919, Federal Crop Insurance of Hemp seeds

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The white paper is posted on: