Crop insurance has become a cornerstone of risk management for farmers, providing financial protection against losses due to natural disasters, pests, diseases and market volatility. Our team at Farm Credit Mid-America had the opportunity to sit down with and discuss the evolution, status and future possibilities of crop insurance with Managing Partner at Watts and Associates, Alex Offerdahl.
The Role of Crop Insurance
Crop insurance is the foundation of the agricultural safety net. Over the past decade, Congress has shifted its focus from disaster relief programs to crop insurance, encouraging farmers to proactively manage risks to their own operations. This shift has led to increased insurance policy holders, with 98% of eligible acres now covered by crop insurance in the United States.
Economic Impact of Crop Insurance
Farmers invest significantly in crop insurance, spending around $6.5 billion annually on premiums. This investment is not a giveaway, but a strategic decision to manage risks to an operation. The high participation rate indicates the effectiveness of crop insurance in providing financial stability to farmers across the country.
Challenges and Improvements to Crop Insurance
Despite its success, crop insurance continues to face challenges. Recent natural disasters have highlighted ways in which crop insurance could improve. For instance, ad hoc disaster payments were necessary in some regions where crop insurance coverage was insufficient. The rules and regulations governing crop insurance are constantly changing, making it challenging for farmers to stay updated. At Farm Credit Mid-America, our crop insurance team and specialized agents bring expertise and knowledge to the table, helping our customers navigate these complexities and make informed decisions for their operations, before disaster even strikes.
Innovations in Crop Insurance
Watts and Associates, along with partners like NAU Country and Great American, have introduced new programs to enhance crop insurance. The area based Enhanced Coverage Option (ECO) allows farmers to buy additional coverage beyond the traditional limit at 90% to 95%, providing better protection against low prices and high costs. This program has been made more affordable through increased cost-sharing implemented by the federal government.
Livestock Insurance
Like crop insurance, livestock insurance has also seen significant advancements in recent years. Programs like the dairy insurance program have increased participation from the livestock sector, providing crucial risk management tools for farmers. With high cattle prices, the Livestock Risk Protection policy assists farmers in protecting their investments.
What’s Next for Crop Insurance
Looking ahead, new programs like the Margin Coverage Option (MCO) are set to further enhance crop insurance. MCO will allow farmers to insure against increases in input costs and decreases in margins, providing a more comprehensive risk management tool. This program is expected to be available for the 2026 crop year.
Crop insurance has evolved significantly, becoming an essential tool for farmers to manage risks to their operations and, ultimately, their livelihoods. As innovative programs and adaptations are introduced, farmers will have even more options to protect their families and businesses for years to come.
Stay informed about the changes to crop insurance programs and start your own personalized risk management plan by connecting with one of our specialized crop insurance agents today.
Farm Credit Mid-America is an equal opportunity provider.
