Essential Strengths

Crop insurance helps make America’s farmers and ranchers world leaders in agriculture, allowing them to stay competitive and be more innovative. It also helps them sleep better at night knowing that, should the unexpected happen, they will have the financial security to stay in business and go on to plant the next season.

Crop insurance is a key component to the tremendous success of our country’s agricultural economy. Here are six reasons why crop insurance is an essential tool for America’s farmers and ranchers.

1. Provides an Individualized Risk Management Solution

Unlike many other farm programs, crop insurance is not a one-size-fits-all product. Instead, protection is personalized to fit an individual farmer’s risk management needs while considering the type of coverage needed and the crops being grown. There are 13 private-sector crop insurance companies that deliver crop insurance, all driven by competition to meet farmers’ needs.

2. Strengthens American Food Security

Every American relies on farmers to provide a secure food supply, and family farmers depend on crop insurance to keep growing after disaster. Farmers use crop insurance to financially recover from natural disasters and volatile market fluctuations. Crop insurance also gives farmers the confidence to make long-term investments in the health of their farm and in efficient production methods that support the health of the planet. For many rural towns, a healthy and resilient agricultural economy is vital to their economic success, making crop insurance vital to more than just farmers.

3. Requires Farmers to Share in the Risk

Crop insurance requires farmers to invest in their own protection and share in the risk. Last year, America’s farmers collectively paid $6.8 billion to purchase crop insurance premiums and shouldered losses through deductibles. The government discounts crop insurance premiums to make crop insurance affordable. The coverage that a farmer chooses determines how much of a discount they receive. If farmers choose to take on more risk through lower crop insurance coverage, then they will receive a smaller discount.

4. Adapts to the Changing Climate

As farmers face increasing challenges due to climate change, the safety net provided by crop insurance is their first line of defense. Crop insurance not only works to protect farmers when disaster strikes, but it also complements efforts to incentivize the voluntary adoption of climate-smart farming practices and can be quickly adjusted to meet the changing needs to farmers. Congress, USDA’s Risk Management Agency (RMA), and crop insurers have worked together to improve the voluntary adoption of farming practices that increase resiliency, improve conservation, and support a healthy environment.

5. Delivers Aid Quickly to Keep America Growing

The public-private partnership between the Federal government and private crop insurers increases efficiency and ensures that aid is delivered quickly. Following a weather disaster, private-sector claims adjusters quickly and accurately assess damages and calculate losses. Delivering aid based on actual losses protects farmers, ranchers, and taxpayers alike. Farmers receive help in just days or weeks.

6. Helps Farmers Secure Credit

Farming is not only risky, but it is capital-intensive. Costs for necessary items such as machinery, seeds, or land are high and add up quickly. Many farmers must take out operating loans to have the financial means to plant a crop, and most lenders require that farmers have crop insurance to ensure farmers can repay their operating loans should disaster strike. Having access to affordable crop insurance is particularly critical for young and beginning farmers who do not have access to substantial capital and must rely on credit.