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Crop Insurance Costs Are Rising, Fueled by Climate Change. Yet Little Has Changed in Federal Program
Kansas Ag Connection - 09/18/2023

Federally subsidized crop insurance made record-high payouts last year. While climate change is making farming more risky, the federal program often shields producers at taxpayer expense. Some argue it’s time that the fast-growing program encourages farmers to mitigate their risks. John Thaemert, who’s well into his 60s, has been farming the high plains near Sylvan Grove, Kansas all his life. The worst drought Thamert’s ever seen destroyed much of his wheat crop this year.

A huge crop failure like this could be a major setback to Thaemert’s third-generation farming operation, but, like most Kansas farmers, he carries federally subsidized crop insurance.

“Thank goodness for crop insurance,” he said while standing in his machine shed. “Crop insurance doesn’t make you money; it keeps you in business to plant again next year. It’s a beautiful thing.”

Farming has always been risky, and success depends on the weather, which is becoming more extreme due to climate. Crop insurance, a sweeping federal program paid for by taxpayers, softens the blow when drought, floods, hail or other natural disasters destroy crops, as well as if commodity prices drop sharply.

And that’s expensive. The government pays roughly 60 cents on the dollar for crop insurance premiums and then shells out hefty subsidies directly to the insurance companies involved to protect against catastrophic losses.

Taxpayers pony up about$9 billion in a typical year, according to Steve Morris, a director at the U.S. Government Accountability Office, and that number is rising fast.

“Part of that is just because of the scale and size of the program, you're having more producers sign up, et cetera. but I think the latest costs were, you know, upwards of $15 billion or so,” he said. “So, it's a very large program and it's getting bigger.”

Congress has expanded and sweetened subsidized crop insurance over the decades. The program now covers more than a hundred crops, and even livestock. Last year it insured 493 million acres.

Jennifer Ifft, an agricultural economist at Kansas State University, said the program keeps growing bigger and more important.

“Crop insurance is a foundation of the federal farm safety net,” said Ifft. “That’s language that is commonly used.”

Ifft said crop insurance guarantees farm income, and in turn, that means banks get paid, farm towns stay afloat, and U.S. farmers continue growing lots of food year after year.


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