According to the Risk Management Agency (“RMA”), in 2023, 539 million acres and 42 million head of cattle and swine were insured through the Federal Crop Insurance Program (“FCIP”). Crop insurance is a critical risk management tool for farmers to protect against financial losses during times of natural disasters, decreased production, and low commodity prices. The FCIP receives funding through the Farm Bill and the United States Senate and House of Representatives have each released proposals to update the FCIP through the Farm Bill.

Background

The FCIP was created through the Agricultural Adjustment Act of 1938 and permanently authorized through the Federal Crop Insurance Act of 1980. The Federal Crop Insurance Act was enacted to “promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance.” Additionally, the FCIP receives funding and has been amended through Title Eleven of the Farm Bill. The FCIP is administered by the RMA, a division of USDA. RMA manages the Federal Crop Insurance Corporation, which provides premium subsidies for insurance policies.

The FCIP provides coverage options for more than one hundred crops, and policies are primarily divided into revenue protection and yield protection policies. Revenue protection policies compensate producers for revenue losses due to lower production and pricing changes. Yield protection policies compensate producers for losses in production based on the producer’s average production history. Both policy options allow producers to choose from several coverage level options. Additionally, RMA offers a supplemental coverage option (“SCO”). SCO policies provide additional coverage over the revenue or yield protection policies on a county-level basis. The types of insurance plans available to producers vary depending on the county and commodity. A prior NALC article provides a more in-depth overview of the FCIP.

Rural Prosperity and Food Security Act

On May 1, 2024, Senator Stabenow of Michigan, the Senate Agriculture, Nutrition, and Forestry Committee Chairwoman, released a section-by-section summary of her version of the Farm Bill, the Rural Prosperity and Food Security Act. This bill makes several changes to crop insurance provisions including provisions related to SCO policies, beginning farmers and ranchers, and specialty crop and diversified operations. The bill would increase the premium subsidy for the SCO policy from 65% to 80% and direct the RMA to increase the availability of SCO policies to additional crops. Additionally, the bill would increase the coverage level for SCO policies from 86% to 90%. Currently, beginning farmers and ranchers can receive a premium subsidy for the first five years of farming. This bill would increase the eligibility period to ten years. Lastly the bill would amend provisions to increase access to crop insurance programs for specialty crop and diversified farms through researching and developing new insurance policies, offering discounts for producers who utilize cover crops, precision irrigation, fertilization, and crop rotations, and researching how to increase the participation of organic producers. A draft of the full text of the bill has not been released by the committee and a markup meeting has not been scheduled.

FARMER Act

On April 9, 2024, Senator John Hoeven of North Dakota, along with seven Republican co-sponsors, introduced S. 4081, also known as the Federal Agriculture Risk Management Enhancement and Resilience Act of 2024. According to Senator Hoeven, the purpose of this bill is to “strengthen crop insurance and make higher levels of coverage more affordable for producers.” To achieve this purpose, the bill proposes to increase premium subsidies for revenue protection, yield protection, and supplemental coverage option policies, and increase the coverage level for SCO policies. Currently, RMA provides premium subsidies at the 80% and 85% coverage levels at 68% and 53%, respectively. The bill would increase the premium subsidy at the 80% coverage level to 77% and the 85% coverage level to 68%.  Similar to the Senate’s version of the Farm Bill, this bill would also increase the premium subsidy for SCO policies from 65% to 80%. The bill was referred to the Senate Agriculture Committee, but Senator Hoeven has encouraged the Senate to include this bill in its version of the Farm Bill. A similar bill has not been introduced in the House of Representatives.

Farm, Food, and National Security Act of 2024

On May 17, 2024, Representative GT Thompson of Pennsylvania, the House of Representatives Committee on Agriculture Chairman, released a draft of the text and title-by-title summary of his version of the Farm Bill, the Farm, Food, and National Security Act of 2024. This bill makes several changes to crop insurance provisions, several of which are similar to the provisions in the Senate’s version of the Farm Bill. This bill would increase the eligibility time period for the beginning farmer and rancher discount from five years to ten years. The bill would also direct RMA to research and develop new policies for many commodities including sugar beets, mushrooms, winter oilseeds, poultry, and wine grapes. Lastly, this bill would increase the premium subsidy for SCO policies from 65% to 80% and increase the coverage level from 86% to 88%. The House of Representative Agriculture Committee held a markup meeting on May 23, 2024, where members offered, debated, and voted on amendments to the bill. The bill was voted out of committee and will now be considered by the entire House of Representatives.

Conclusion

The FCIP is a risk management tool that farmers rely on every year to protect their businesses against financial losses. The FCIP has routinely been amended through the Farm Bill and will likely be amended again through the next Farm Bill. The Farm Bill process will unfold over the next several months.

 

To read the section-by-section summary of the Senate’s version of the Farm Bill, click here.

To read the draft text and title-by-title summary of the House’s version of the Farm Bill, click here and here.

To read a series of NALC articles discussing crop insurance, click here.

For more NALC resources on crop insurance, click here.

For more NALC resources on the Farm Bill, click here.

Conference Opportunity:

  • To learn more about the 2024 Farm Bill, Fitz Elder, Republican Staff Director, Committee on Agriculture, Nutrition, and Forestry at the United States Senate, and Rosy Brummette, Policy Advisory, U.S. Senator Michael F. Bennet will present “Update from the Potomac: 2024 Farm Bill, Public Lands, & Related Federal Issues” at NALC’s Second Annual Western Agricultural & Environmental Law Conference – June 13-14, in-person and livestream available.
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