According to new USDA data, farmers and ranchers bought crop insurance policies on more than 500 million acres of land last year, the largest amount ever, driven by the surging popularity of forage policies. Overall enrollment in crop insurance was up 85% in the seven years from 2016. In total, there are roughly 880 million acres of farmland in the United States.
The Federal Crop Insurance Program (FCIP) is authorized by the Agricultural Adjustment Act of 1938 and the Federal Crop Insurance Act of 1980 and operates as a public-private partnership. Through farm bills and appropriations, Congress makes changes to the program, expands coverage and directs research. USDA, through the Risk Management Agency (RMA) and the Federal Crop Insurance Corporation (FCIC), supports a portion of premiums needed for farmers to acquire insurance plans and compensates Approved Insurance Providers for the cost of administering and delivering those plans.
FCIP participation has increased steadily over the last few decades. Insured acreage rose from 206 million acres in 2000 to 296 million acres by 2013. Starting in 2016, insured acres began to rise rapidly—reaching 494 million acres for the 2022 crop year. Much of this recent rise was due to the introduction of policies for Pasture, Rangeland, and Forage (PRF) coverage. Forage crops represented 16 percent of insured acreage in 2016, but this share had risen to 48 percent by 2022.
Increases in insured acreage have been met with corresponding increases in total liability—which, as of 2022, was equivalent to 33 percent of the total U.S. agricultural sector production value. The majority of FCIP liabilities are attributable to row crops which represent 74 percent of insured liability in 2022. Behind row crops, specialty crops contribute the next most to total liability (10 percent for 2022). Forage crops, despite representing a large share of total insured acreage, have relatively low monetary values and represented only 3 percent of total liability in 2022.
According to FBR, in February 2024, the Congressional Budget Office (CBO) projected that crop insurance expenses from 2024 to 2034 would total $124 billion, accounting for approximately one-tenth of 1% of total projected federal spending. To put this in perspective, CBO projects spending on interest to service public debt at $12.44 trillion during this same period, over 100 times larger than the cost of delivering and administering crop insurance. The entire farm bill, including the Supplemental Nutrition Assistance Program (SNAP), plus non-farm bill nutrition programs represent only 2.09% of the total federal budget. Just 2% of federal spending directly supports essential farm and nutrition programs crucial for food security, farm economic sustainability, conservation and natural resource preservation efforts.
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