Crop Insurance Costs Projected to Jump 29%

Successful Farming’s Chuck Abbott reported Tuesday that “the federally subsidized crop insurance program will cost an additional $27.7 billion over the coming decade, said the Congressional Budget Office in projections released on Monday. The government pays roughly 62¢ of each $1 in premiums, and sales of livestock and forage policies are exploding.”

“Crop insurance costs are estimated to rise by 29% to nearly $125 billion for the decade ending in 2033,” Pro Farmer Editors reported. “Despite this increase, USDA spending on crop and livestock subsidies and land stewardship programs is expected to remain stable.”

While crop insurance costs are projected to increase, the Senate Ag Committee wrote that projected costs for all farm bill-related programs are now “at $1.46 trillion over the 10-year window from fiscal years 2025 to 2034 – down 3.5% from the previous 10-year baseline of $1.5 trillion.”

Crop and Livestock Subsidy Costs

Abbott reported that, “in recent years, crop insurance has become the largest strand in the farm safety net. The government has paid $15.6 billion in indemnities so far on losses for 2023 production. Commodity supports would cost marginally less in the decade ahead because crop prices would be stronger in the decade ahead than expected a year ago.”

Agri-Pulse reports that both the Price Loss Coverage program and the Agriculture Risk Coverage Program are projected to cost less from 2024 through 2034. “CBO is forecasting the Price Loss Coverage program, which triggers payments when market prices fall below certain reference prices, will cost $28 billion from 2024 through 2034. The 2023-2033 forecast issued last May was for $33.1 billion. The Agriculture Risk Coverage program is now projected to cost $15.6 billion, down from the $28.4 billion forecast for 2023-33,” Agri-Pulse wrote.

For livestock insurance, Abbot reported, programs have “grown dramatically since 2018 when Congress increased premium subsidy rates for coverage. Policies covered $26.4 billion of liabilities in 2023, compared to $512 million in 2018. Premiums paid on livestock policies neared $1.1 billion in 2023, nearly double the premium paid in 2021, according to the Risk Management Agency, which oversees the program.”

“‘These are big jumps,’ said former USDA chief economist Joe Glauber, who writes regularly on crop insurance,” Abbott reported.

Supplemental Nutrition Assistance Program

While crop insurance costs are projected to increase, Abbott reported that the Supplemental Nutrition Assistance Program, which accounts for roughly 80% of Farm Bill spending, “was projected to cost $1.148 trillion in the decade ahead, 6% less than last year’s estimate due to declining enrollment. Costs are down by 17% in the current year with the end of emergency benefits authorized during the pandemic.”

The Senate Ag Committee wrote that “reflecting trends in overall food price inflation and other factors, projected SNAP benefits per person continue to increase in the baseline, rising from $206 per person in 2025 to nearly $260 per participant in 2035 – an increase of 26%.”