Is crop insurance targeted to promote the production of a few favored commodity crops and biased against diversity in production, which lowers risks and may enhance sustainability?

In its formative years, crop insurance was available for only a handful of commodities. For example, in 1948, insurance was only available for wheat, cotton, flax, corn and tobacco for a total of 391 county-crop programs. This is a fraction of what is available today.  Now, crop insurance is available for more than 130 commodities and has over 62,000 county-crop programs and premium support discounts are the same across commodities for each plan of insurance. Policies are available for most commodities; however, some policies are currently being tested as pilots or have not been expanded nationwide, principally due to lack of producer interest or insufficient data.

While major field crops, such as corn, soybeans, and wheat have accounted for the most acreage protected by crop insurance, they also account for most acreage farmed today. As the crop insurance industry has matured, extensive efforts have been made to increase the crops and areas covered by expanding to new areas and developing endorsements, special provisions and new plans of insurance to meet the needs of a diverse U.S. agriculture.

Expansion to additional crops and new provisions and plans of insurance have been the result of Congressional actions, notably in farm bills; RMA contracting with private entities often at the request of farmers; and new pilot programs introduced through the 508(h) process, also spurred by producer interest. The Federal Crop Insurance Corporation (FCIC) Board of Directors must approve new pilot programs before they are made available to producers and then must be field tested for three or more years, which is a time consuming process. Through these means, crop insurance has been successfully expanded to many new specialty crops in recent years as well as to pasture, range, forage and livestock products. New insurance plans, such as Actual Revenue History and Whole Farm Revenue Protection, have been designed to improve coverage for specialty crop and diversified farmers. The result of these ongoing efforts has been an increase in affordable financial protection for many farm types across the country. For example, an article on specialty crop insurance notes that “Considering the different perils faced and the available alternative risk management approaches, the average participation rate for insurable specialty crops is a respectable 75 percent.” Such program growth will continue to be a high priority, given the reduced role of traditional farm programs and the increased reliance on crop insurance to uphold the financial security of U.S. farms.