Strengthening Crop Insurance
Eight Republican senators have introduced legislation to help farmers afford more crop coverage.
In early April, Sen. John Hoeven (R-N.D.) introduced legislation that would strengthen crop insurance and make higher levels of coverage more affordable.
He was joined by a handful of Republican colleagues representing states heavy in agriculture: Sens. John Boozman (R-Ark.), Joni Ernst (R-Iowa), Chuck Grassley (R-Iowa), Deb Fischer (R-Neb.), Cindy Hyde-Smith (R-Miss.), Roger Marshall (R-Kan.), and Kevin Cramer (R-N.D.). Together, they hope to include the measure in the long-awaited farm bill.
Aptly named the “FARMER Act,” the Federal Agricultural Risk Management Enhancement and Resilience Act of 2024 (S 4081) would amend the Federal Crop Insurance Act to increase premium support for certain revenue protection and yield protection policies at the 80% coverage level, up from 68% to 77%, and at the 85% coverage level, up from 53% to 68%, respectively.
Revenue protection provides coverage against crop yield losses from natural causes such as drought, hail, wind, frost, insects, and disease, as well as revenue losses caused by a change in the harvest price from the projected price.
Yield protection policies also cover yield losses due to those same naturally occurring risks, but they use futures contracts to determine projected prices. Coverage levels are based on a farmer’s expected yield, which is calculated from the farm’s actual production history.
The FARMER Act would also increase support for the supplemental coverage option (SCO) to 80% from 65% and increase the SCO coverage level to 90% from 86%.
If this legislation becomes law, the federal government would cover 80% of the premium cost of the SCO, which provides farmers with the option for additional coverage for a portion of their underlying crop insurance policy deductible. A farmer would purchase it as an endorsement.
Crop insurance is an essential piece of the overall safety net that provides farmers with vital risk management tools. Hoeven and others believe that enabling farmers to purchase higher levels of coverage will lessen the need for ad hoc disaster assistance.
The legislation is widely supported by the agricultural industry, including the nongovernmental Crop Insurance and Reinsurance Bureau.
After being introduced, the bill was referred to the Senate Agriculture, Nutrition, and Forestry Committee.
The House and Senate agriculture committees earlier this month released frameworks for the broader reauthorization of the federal farm bill, which is scheduled to expire on Sept. 30 of this year. That legislation, formally called the Agriculture Improvement Act of 2018, can change the administration and other aspects of the Federal Crop Insurance Program.
