The 2014 farm law expanded the role of crop insurance in the farm safety net; making it the centerpiece of the farm program, according to some descriptions. In an analysis published by the think tank International Food Policy Research Institute, two economists say, “our assessment is that U.S. crop insurance is over-subsidized…We propose that the (premium) subsidy level be reduced to a level consistent with with share of farm risk that is systemic or farmers pay premiums to cover the production risk idiosyncratic to the individual farm and field.”
The authors, economists David Orden of IFPRI and Carl Zulauf of Ohio State U, say their assessment of systemic risk “justifies subsidies of more higher than 45 percent.” The federally subsidized program pays 62 cents of each $1 of premium. “Due to its size and central place in the crop safety net, the premium subsidy likely will be a focus of the next farm bill debate,” say Orden and Zulauf. They support the requirement for growers to practice soil and water conservation in order to qualify for subsidized coverage. “Crop insurance cannot be both a pillar of the farm safety net and excluded from U.S. society’s expectation that farms improve environmental quality in exchange for subsidies,” they say.