Agricultural Economics Department
Date of this Version
5-26-2021
Abstract
The U.S. federal crop insurance is a major farm policy aimed at providing risk protection/reduced risk expo-sure to agricultural producers. A key component of this policy is the provision of multiple contract options and premium subsidies that reduce the cost of crop insurance to agricultural producers. Premium subsidies have been growing over time and accounted for more than $6 billion in government outlays in 2019, with $2 billion being applied to coverage levels of 80% and higher (USDA-RMA, 2020). While the government has justified the use of premium subsidies as a necessary means of increasing producer participation in crop insurance, many have argued that premium subsidies are just another means of income redistribution from taxpayers to producers.
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