The cost of the federal crop insurance program and farm sector income and wealth has grown significantly since 2003. The cost has risen from an average of $3.4 billion per year in 2003 to $8.4 billion a year for fiscal years 2008 through 2012, according to the U.S. Government Accountability Office’s (GAO) website.
Federally subsidized crop insurance, which farmers can buy to help manage the risk inherent in farming, has become one of the most important programs in the farm safety net. Revenue policies, which protect farmers against crop revenue loss from declines in production or price, are the most popular policy type accounting for 80 percent of all premium subsidies.
The GAO was asked to investigate the cost of the crop insurance program. This report examines “(1) trends in federal crop insurance costs and farm sector income and wealth from 2003 through 2012 and (2) the potential savings to the government and impacts on farmers, if any, of reducing federal premium subsidies for revenue policies.”
GAO analyzed U.S. Department of Agriculture (USDA) crop insurance program data and farm sector income and wealth data from 2003 through 2012, reviewed economic literature and documents from stakeholders, including farm industry groups and researchers, and interviewed USDA officials.