Crop insurance has come under fire in some quarters over the past few months. While this subsidized federal program remains very popular among many farmers, others have complained that the program helps mega-farmers outbid beginning, and small farmers on land. Others insist that the program forces land values to rise in an unfair way.
In response to these concerns, the Center for Rural Affairs decided to investigate with the help of an emeritus professor of Economics from Iowa State University. They determined that federal crop insurance is an important tool “in the risk management toolbox.” However, their study also found that crop insurance does indeed drive up production costs by increasing the price of land.
The study at last concluded that the net effect of federally subsidized crop insurance is to prop up the nation’s largest and wealthiest farms. And unfortunately, the ultimate effect often comes at the expense of smaller farms.