Farm Service Agency

Crop Insurance

Federal crop insurance covers production losses due to unavoidable causes such as drought, excessive moisture, hail, wind, hurricanes, tornadoes, and lightning. It does not cover losses due to neglect, poor farming practices, theft, or low prices. Currently, 62 crops are able to be insured.

The Federal Crop Insurance Reform Act of 1994 (P.L. 103-354) overhauled the crop insurance program to provide catastrophic yield protection to all producers of insurable crops for a nominal processing fee. Essentially, the reform program replaced the uncertainty of disaster with the predictability of crop insurance coverage. This streamlining of crop insurance and disaster assistance programs is expected to save taxpayers over $150 million over the next five years.

Starting with 1995 crops, producers of all insurable crops who sign up for the annual commodity programs (formerly administered by the Farmers Home Administration) and obtain FSA farm ownership, operating, or emergency loans, or have any new Conservation Reserve Program contracts, must buy at least the minimal catastrophic(CAT) crop insurance coverage on all insurable crops that account for 10 percent or more of their farms' crop production value. CAT coverage can be obtained at a local Farm Service Agency (FSA) office or from a private crop insurance agent.

Higher levels of coverage, known as "additional coverage" are available through crop insurance agents. To encourage participation, the coverage was made more attractive to farmers by increasing the premium subsidy. Buying additional coverage is the only way farmers can benefit from the attractive policy features that permit smaller optional units re-plant payments and coverage for certain quality losses.

Farmers growing crops that are not insurable are eligible for benefits similar to those provided under the catastrophic insurance plan. This coverage is provided free of charge and is available only through FSA offices. To be eligible, the area has to suffer a yield loss of at least 35 percent per crop. If loss occurs, farmers will be paid for individual crop losses in excess of 50 percent at 60 percent of the average market price. Producers must report acres and production to be eligible for protection.

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