As Sen. Debbie Stabenow (D-MN), the Ranking Member of the Senate Agriculture Committee, noted during the 2014 farm bill debate: “The farmer gets a bill, not a check, with crop insurance…and they don’t get help unless they really need it.”
In other words, farmers do not use crop insurance to make a profit. Farmers benefit, not from disasters, but from good weather and bountiful harvests.
And when they do receive an indemnity to help offset part of a loss, their insurance guarantees in the future may go down and their premium rates may go up. Furthermore, crop insurance, just like other forms of insurance, has deductibles so farmers must shoulder a considerable loss – typically around 25 percent for buy-up coverage policies – before indemnities begin. In 2012, for example, those deductible losses were $12.7 billion. In 2015, those deductible losses were more than $8 billion.
While most farmers purchase crop insurance annually, only a small portion of them collect indemnities in an average year. For example, while more than 1.1 million policies were purchased by farmers in 2017, only 308,000 were indemnified. Even in 2012, one of the worst droughts to occur since the 50’s, 1.17 million policies were purchased by farmers and 495,000 (42 percent) were indemnified.
View a video of farmers responding to critics’ charge that they are “praying for drought, not praying for rain,” here.
* Updated July 2019