Nearly every civilization in human history has had some form of farm policy because of agriculture’s importance. The United States is no different, and its farm policy history can be traced back to colonial times. Through the years, public support for agriculture has taken many forms, from investments in research and education and individual commodity support programs and often needed disaster aid. That journey has led us to today’s safety net, with Federal crop insurance as its centerpiece.
Federal crop insurance, which started as an experimental program, has been around since 1938. For almost a half a century it was largely unknown, limited in nature, and underused. Because of this, natural disaster management and response was mostly accomplished in the form of costly ad hoc disasters bills. These bills were not only slow in delivering assistance, but also fell fully on the laps of taxpayers to fund.
Following repeated weather disasters and free disaster coverage offered under Farm Bills throughout the 1960’s and 1970’s, the crop insurance program was greatly expanded by the Federal Crop Insurance Act of 1980. While more farmers started participating in the program, it still faced stiff competition from ongoing free disaster assistance occurring in the 1980s, and accompanied by an equally painful farm debt crisis, Congress turned to the General Accounting Office (GAO) – now the General Accountability Office – for guidance on how to better structure farm policy. The resulting GAO report would help pave the way for today’s safety net.
GAO noted “crop insurance treats disaster victims more equitably” and “provides farmers disaster assistance more efficiently because farmers generally have more incentive to reduce risk under the program than they do under loan and direct payment programs.”
And so, Federal crop insurance began its evolution from a small program with limited crops insured under the 1980 Act to a program that insures 90 percent of planted acres today. Legislation in 1994 began requirements for producers to participate in Federal crop insurance in return for benefits received from other USDA programs, offered producers more assistance in purchasing higher buy-up levels of coverage, established a catastrophic level of coverage available to all for a small fee, and directed a number of general program improvements. The 2000 and 2014 Farm Bills continued the emphasis on buy-up coverage, expanded the role of private-sector involvement through new crop research and development, made the program more actuarially sound, provided innovative new tools and efforts to increase program integrity, and improved coverage availability by expanding policies into new crops, areas, greater levels of coverage, and new types of coverage, including loss of revenue, reducing the reliance on traditional farm crop loss and disaster programs..
Now, farmers design risk management plans that work best for them, and when disaster strikes, private insurers process claims and speed payments to growers—usually within 30 days or shortly thereafter. Best of all, taxpayer exposure is lessened because farmers and private-sector insurers share in the program’s cost.
Watch a video about the evolution of farm policy here.
*Updated April 2021