Americans will spend ONLY two cents per meal on crop insurance – the risk management tool most used by farmers to protect themselves from the whims of Mother Nature – through FY 2023, according to CBO’s latest 10-year budget projections. That figure is up from one cent per meal, which was the average cost for the period of FY 2000 to 2011.
Those estimates might come as a surprise to many Americans, who are watching ongoing Congressional action surrounding the five-year, $100 billion per year Farm Bill. But most of that money actually goes towards spending on domestic food programs, with roughly 15 percent directed to farm programs and crop insurance.
The cost per meal figure is derived from CBO’s projected crop insurance program outlays, the Census Bureau’s projections of total U.S. population, the Department of Commerce’s data on consumption spending on food, and the assumption that consumers eat three meals a day.
Total government spending on crop insurance is projected at roughly $8.5 billion per year, with farmers paying $4 billion out of their own pockets to purchase their policies. With the elimination of direct payments in the Farm Bill currently being discussed, crop insurance will be the primary risk management tool available to many farmers, and the only risk management tool available to some farmers, like specialty crop growers.
But crop insurance faces some hurdles in the upcoming House and Senate debate, which could leave it strained or incapable of handling upcoming farm crises. “The U.S. experienced the worst drought in decades last year and we didn’t have a crisis in agriculture,” said Keith Collins, former USDA chief economist. ““Do we want to risk unraveling that?”
Because most farmers carry crop insurance, despite back-to-back years of poor harvest due to weather anomalies, the U.S. farm sector remained vibrant and was one of the driving forces that pulled the U.S. out of the prolonged, deep recession.
Learn more about crop insurance here.