As Federal spending on traditional farm programs diminishes while that for crop insurance expands, crop insurance has drawn increasing scrutiny from critics of farm subsidies and those wanting agriculture to contribute to deficit reduction. At the same time, many want to continue or strengthen the current program for its risk management benefits for producers, while still retaining some Federal farm program support. These views have led to different proposals for future farm safety net programs fashioned around risk management objectives. From a crop insurance perspective, these proposals may be viewed as either reducing crop insurance subsidies, substituting a free farm program for part of the risk that crop insurance now covers, augmenting crop insurance with a new free farm program that covers losses crop insurance does not cover, and expanding crop insurance to replace farm programs.
The 2012 Farm Bill proposal of the House and Senate Agriculture Committee chairs, submitted to the Joint Committee on Deficit Reduction in the fall of 2011, incorporated several of the options discussed here, including a supplemental revenue farm program based on individual farm losses and supplemental area revenue plans sold by the crop insurance industry (Stabenow, 2011). While the area plans would likely expand crop insurance coverage, the supplemental individual farm revenue program would likely displace some crop insurance sales at high coverage levels. While the fate of this proposal is unknown, it illustrates key choices that have to be made, including government versus private delivery, government versus private risk bearing, and the extent of deductible, or shallow loss, coverage. Whatever structure emerges, the debate over farm and crop insurance subsidies is likely to continue. With deficit reduction in prospect for years to come and insurance so fundamental to risk management in all economic areas, the long-term most sustainable safety net program for farmers may be enhanced crop insurance—but likely with more restricted subsidization.