Congress created and provides funding for the modern-day crop insurance system through the Federal Crop Insurance Corporation (FCIC) as a way to help farmers manage the risks of natural disasters and market fluctuations. The activities of FCIC are carried out by the Risk Management Agency (RMA) of USDA. Lawmakers intended for the system to shelter taxpayers from the full costs of agricultural disasters.
To this end, FCIC/RMA sets program standards, approves new products, sets premium rates and discounts farmer premiums. The Federal government further makes crop insurance affordable for farmers by offsetting a portion of the delivery costs that would otherwise be built into the premium. Finally, the government reinsures crop insurance providers and shares in the underwriting gains and losses of the program.
* Updated February 2019