What Happened?
The federal crop insurance program pays about two-thirds of farmers' insurance premiums, and its inflation-adjusted yearly federal spending has more than tripled since 2000. A new report by Congress called "Farm Bill Primer: Federal Crop Insurance Program" lays out how the federal government subsidizes insurance premiums for farmers.
The federal government subsidizes roughly two-thirds of all crop insurance premiums, covering more than 572 million acres of farmland. Annual federal outlays averaged $12.1 billion for fiscal years 2016 through 2025, about three times the $3.9 billion spent in fiscal year 2000.
Farmers buy policies from private insurers, called Approved Insurance Providers (AIPs), under contracts with the U.S. Department of Agriculture (USDA). USDA gives AIPs subsidies for administrative and operating costs, provides reinsurance for most policies, and shares gains and losses with them under contract terms.
Why Does it Matter to Me?
The fiscal year 2025 budget law increased crop insurance premium subsidies and expanded coverage, with the Congressional Budget Office estimating it will raise program costs by about $6 billion over fiscal years 2025 through 2034.
Corn, soybeans, wheat, and cotton together received about 74 percent of all premium subsidies paid from 2016 to 2025. Over the ten years from 2017 to 2026, insured acres grew 84 percent and the nominal value of crops and livestock covered grew 96 percent.
Federal outlays rise with more policies sold, higher commodity prices, and natural disasters — meaning a single severe drought or flood year can push costs well above the recent average.
Both Sides, Now
Supporters argue the program protects the food supply by helping farmers survive bad harvests and keeping production stable. The recent budget law increased premium subsidies for farm-level coverage for the first time since 2002 and expanded maximum coverage levels for certain policy types.
Critics say the program costs too much and benefits the wrong people. The investigative arm of Congress known as the Government Accountability Office (GAO) reported in November 2023 that reducing premium subsidies for high-income policyholders could generate federal savings. Separately, Taxpayers for Common Sense reported in September 2023 that federal crop insurance costs had reached a record $16 billion and called for reform.
Other proposals include capping insurer profits, reducing farmer subsidies, and adding an income test so higher-earning farmers receive less support.
What Happens Next?
Two farm bills that would make further changes are moving through Congress: the House-passed farm bill and a Senate committee-reported draft, S. 5526, placed on the Senate Legislative Calendar this past September. Neither has been enacted.
Both bills would freeze rates paid to AIPs for administrative costs on existing policies and establish a specialty crop advisory committee. The full Senate must bring S. 5526 to a floor vote for it to advance.
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