Current Government Subsidized Crop Insurance Program Works Against Beginning, Small and Mid-sized Farms

Apr 07, 2015

By Traci Bruckner

If you are a farmer, or you live in rural America, you have likely dealt with or at least heard about government subsidized crop insurance. If you are not familiar with the issue, we will get you up to speed in a hurry.

Crop Insurance and the need for reform is a topic we have grappled with for roughly the last decade. That was when we started hearing from farmers across the Great Plains and Midwest about the negative impacts of federally subsidized crop insurance.

While we believe a farm safety net, like crop insurance, is an important tool to help farmers mitigate risks, we also believe there are some real problems with the current program.

The federal crop insurance program began in 1938 when Congress authorized the Federal Crop Insurance Corporation. The current government-subsidized private program, which is administered by the U.S. Department of Agriculture’s Risk Management Agency (RMA), provides producers with risk management tools to address crop yield and/or revenue losses on their farms.

The federal government pays the majority of the premium (62%, on average, in 2012). Insurance policies are sold and completely serviced through 19 approved private insurance companies. Not only does the federal government pay the majority of producer premiums on every single acre, regardless of how large they are or how much money they make, insurance companies’ losses are also reinsured by USDA. In addition, the federal government reimburses the insurance company’s administrative and operating costs. In total, these insurance companies have negotiated (or lobbied) for a guaranteed 14% administrative profit.

The current government subsidized crop insurance program is working against the very farms we all believe deserve a safety net. The program is non-transparent, props up private insurance company profits, helps mega-farmers drive beginning and small and mid-sized farms out of business, and puts our natural resources in harms way.

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Video: Evolution of Beef Cattle Farming

The Clear Conversations podcast took to the road for a special episode recorded in Nashville during CattleCon, bringing listeners straight into the heart of the cattle industry. Host Tracy Sellers welcomed rancher Steve Wooten of Beatty Canyon Ranch in Colorado for a wide-ranging discussion that blended family history and sustainability, particularly as it relates to the future of beef production.

Sustainability emerged as a central theme of the conversation, a word that Wooten acknowledges can mean very different things depending on who you ask. For him, sustainability starts with the soil. Healthy soil produces healthy grass, which supports efficient cattle capable of producing year after year with minimal external inputs. It’s an approach that equally considers vegetation, animal efficiency, and long-term profitability.

That philosophy aligned naturally with Wooten’s involvement in the U.S. Roundtable for Sustainable Beef, where he served as a representative for the Colorado Cattlemen’s Association. The roundtable brings together the entire beef supply chain—from producers to retailers—along with universities, NGOs, and allied industries. Its goal is not regulation, Wooten emphasized, but collaboration, shared learning, and continuous improvement.