Husker study links crop insurance premium subsidies to fewer, larger farms

Aerial photo of cornfield

Recent research conducted by the University of Nebraska–Lincoln’s Department of Agricultural Economics indicates crop insurance premium subsidies offered by the federal government have contributed to fewer and larger farms.

The current taxpayer-subsidized crop insurance program in the United States represents a culmination of a series of legislative acts, beginning in 1980 with the Federal Crop Insurance Act, followed by the Federal Insurance Reform Act in 1994 and the Agricultural Risk Protection Act (ARPA) in 2000.

These acts were aimed at encouraging producer participation through increased premium subsidies and enhanced coverage options. Increased subsidization was effective in increasing participation, as more than 90% of corn acres were covered by some form of crop insurance by 2020.

But counties in Nebraska experienced farm number decreases of 20% to 40% following the rollout of ARPA, according to the research.

For 2021, premium subsidies in Nebraska for all crop insurance policies ranged from just over $36,000 in Hooker County to $10 million in Furnas County, with an average of just under $5 million. These subsidies can produce unintended consequences, according to Cory Walters, associate professor of agricultural economics.

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