Uninsured: Federal Crop Insurance Program Leaves Most Farms Unprotected

Crop insurance is the cornerstone of the farm safety net, insuring farms for losses from unpredictable weather, market fluctuations, and other risks. Consequently, the federal crop insurance program (FCIP) is the costliest part of agriculture production spending, as taxpayers subsidize the program to the tune of billions of dollars each year. Despite being a cornerstone program, crop insurance caters primarily to the largest farms while stifling the participation of those with specialty crop production, diverse production systems, and direct marketing models. 

This post offers a deep dive into federal crop insurance coverage, looking at which farms are being left out of current coverage, why, and how the program can be strengthened to serve all American farmers.

How Does Federal Crop Insurance Work?

In the FCIP, agents working for private companies sell and service a wide range of insurance policies to farms. Federal tax dollars subsidize up to 60% of a farmer’s premium as well as insurance companies’ administrative and operating (A&O) expenses and costs to reinsure losses when policies actually pay out. The FCIP is extremely expensive to run, with federal costs up to $17.3 billion in 2022 – $12 billion in premium discounts and almost $4 billion to subsidize insurance companies. 

The 2022 Census of Agriculture revealed that 369,393 farm operations had crop insurance, covering a total of 298 million acres. While fewer farms were enrolled compared to the 2017 Census (which reported 380,236 farms with insurance), the total acres covered actually increased by more than 10 million. This means a slightly higher percentage of cropland is now insured—26.5% of all farms with cropland, up from 25.8% in 2017, and 78% of all cropland acres, up from 72%.

Figure 1: Crop Insurance Coverage in the Census of Agriculture

At first glance, these numbers suggest that farmers are seeing the value of crop insurance. But a deeper look reveals a troubling trend: coverage is increasingly concentrated among the largest farms, leaving small and mid-sized operations without the same financial protection.

Smaller Farms Are Less Likely to Have Insurance

The Congressional Research Service (CRS) has reported that the average insured farm with cropland is larger and has higher annual sales than their uninsured counterparts, according to the 2017 Census of Agriculture. The 2022 Census confirmed that small farms continue to be less protected by crop insurance.

Figure 2: Small Farms are Less Likely to be Insured

While 74% of farms that are 500 or more acres are insured, only 32% of farms 180 to 499 acres and only 23% of farms between 50 and 179 acres are insured. Just 9% of farms with less than 50 acres are insured. Previous reports have shown that among farms with crop insurance, the largest operations receive the bulk of premium subsidies, with the smallest 80% of farms receiving only 23% of crop insurance subsidies. 

But there is an even more fundamental issue: smaller farms are far less likely to have crop insurance in the first place. Before we even consider how subsidies are distributed, we need to recognize that many small and mid-sized farms are not part of the system at all. Likewise, farms with lower farm sales are much less likely to be insured than their larger peers. While 78% of farms with sales of more than $500,000 are insured, only 12% of farms with sales of less than $50,000 and 40% of farms with sales between $50,000 and $99,999 have insurance. 

Figure 3: Higher-Income Farms Are More Likely to be Insured

Small and mid-sized farms, which often grow multiple crops and sell into local markets, are left more vulnerable to financial losses. The Economic Research Service classifies only 27% of large farms as “high risk,” while between 52% and 79% of small farms, depending on farm type, are classified as high risk. The “risk” measured here is non-comprehensive, taking into account only profit margins without considering risk associated with weather events, loss of biodiversity, or soil erosion. 

The National Sustainable Agriculture Coalition (NSAC) has long advocated for crop insurance reforms to address this disparity, arguing that the system works exceedingly well for large commodity farms while leaving smaller, diversified, and beginning farmers behind.

Specialty Crop Farms Are Less Likely to Be Covered

Farms that grow specialty crops – fruits, vegetables, and horticulture products – are much less likely to have crop insurance than farms that produce oilseeds and grains – corn, soy, wheat, sorghum, barley, rice, canola, sunflowers, dry edible beans, and dry edible peas. Only 15% of specialty crop farms were insured in 2022 compared to 71% of oilseed and grain farms. 

Figure 4: Specialty Crops Are Left Uncovered

*Note: Specialty crop operations include those classified by their North American Industry Classification System (NAICS) number as: vegetable and melon farms (NAICS 1112); fruit and tree nut farms (1113); or greenhouse, nursery, and floriculture production (NAICS 1114). 

*Note: Oilseed and grain farming operations include those classified by the NAICS number 1111. This “comprises establishments primarily engaged in (1) growing oilseed and/or grain crops and/or (2) producing oilseed and grain seeds. These crops have an annual life cycle and are typically grown in open fields. This category includes corn silage and grain silage.”

While the Risk Management Agency (RMA) has prioritized improving crop insurance coverage for specialty crop producers in the 2018 Farm Bill, coverage still lags substantially compared to their peers in row crop production, suggesting that existing crop insurance programs are not meeting the needs of specialty crop producers. Specialty crops are a vital component of nutritious food production and are also a significant economic driver for the local and national economy. 

Where Is Crop Insurance Most Common?

Not all states participate in crop insurance at the same rate. Nebraska leads the nation, with 62% of its operations with cropland insured. Just four other states have high participation rates with more than 50% of cropland insured, including Iowa, North Dakota, South Dakota, and Illinois – regions where large-scale commodity production dominates.

In contrast, crop insurance coverage is significantly lower in many states with smaller farms and more diversified agriculture: a shocking 23 states have less than 15% of their operations insured. Regionally, states in the Northeast have the lowest proportion of farms insured, with low rates also in parts of the South and Southwest. Without targeted reforms, these farmers remain exposed to financial risks that threaten their livelihoods and local food systems.

The interactive map below shows the coverage rates in each state.

Why Don’t Small Farms Use Crop Insurance?

There are several barriers preventing smaller farms from accessing crop insurance:

1. Single-Crop Insurance Policies – Most crop insurance policies are designed for large single-crop farms, and availability of individual coverage for crops changes by county. Multi-crop farms usually cannot find or use traditional crop insurance policies to cover the crops they grow.
2. Agents Do Not Sell to Small Farms – Compensation for crop insurance agents is tied to the value of the premium. It takes more time to tailor insurance coverage to small and multi-crop farms, which are invariably quoted for smaller premiums. With the exception of a few crop insurance agents who make it a niche specialty, this effectively dis-incentivizes agents from selling to small, diversified, and direct-to-consumer farms. 
3. Underinsured Value – Fruits and vegetables, especially in organic production systems, can often fetch a premium price on the market. But arbitrary ceilings on insurable value often prevent these farmers from insuring the full value of their crop, even if they are able to overcome initial hurdles to enroll.
4. Lack of Production History – Beginning farmers and those newly transitioning to organic production often run afoul of production history requirements; depending on the product, all producers need three to five years of yield or revenue history to be eligible for crop insurance coverage.
5. Limited Outreach and Support – Federal programs have historically prioritized large-scale operations, leaving many small farms unaware of their options or without sufficient guidance on how to enroll.

The Path To Expand Access

Whole-Farm Revenue Protection (WFRP) and the Noninsured Crop Disaster Assistance Program (NAP) are the existing programs best-positioned to reach small and uninsured farmers. 

NAP is an insurance-like program administered by the Farm Service Agency (FSA) to provide a basic level of coverage for new farmers without production history and to insure crops in counties where coverage is not available. WFRP was subsequently authorized in the 2014 Farm Bill as the first insurance policy designed for diversified farms, allowing a farmer to insure the revenue of their entire operation under one plan. It is the only crop insurance policy available nationwide and, in FY2024, WFRP policies covered nearly $3 billion in liabilities, showing growing demand for a more flexible insurance model. 

Despite this promise, uptake remains limited. Both NAP and WFRP are hindered by some of the same barriers outlined above. NAP, for instance, does offer coverage for new farmers, but exhaustive paperwork does not reflect the records farmers keep when growing multiple crops or selling directly to consumers. Further, enhanced coverage options are cost-prohibitive and leave farmers using the program’s basic catastrophic coverage woefully underinsured. WFRP, meanwhile, is designed for diversified and local farmers with its revenue-based model – especially with recent changes from USDA to streamline paperwork requirements – but finding a crop insurance agent willing to sell WFRP remains a prohibitive barrier. Likewise, arbitrary coverage limits give the program a sour reputation among farmers who do manage to enroll but find themselves underinsured. 

NSAC supports a number of recommendations to improve both WFRP and NAP, to ensure they can reach and meaningfully insure farmers of all sizes. These include:

• Expanding Micro Farm eligibility (an option within WFRP that features streamlined paperwork) to include all farms with up to $1 million in revenue. 
• New compensation bonuses and performance metrics for crop insurance agents to incentivize sales of WFRP and other insurance products to small, specialty crop, and uninsured farms.
• Creating a revenue-based option within NAP to both streamline paperwork burdens for new farmers to access coverage and to serve as an on-ramp to enroll in WFRP once the necessary production history is established. 

To read more about the barriers that prevent most farmers from accessing crop insurance and policy recommendations to strengthen the program, see NSAC’s publication: Unsustainable: State of the Farm Safety Net.