Crop insurance costs to leap by 29%, says CBO

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 will cost the government nearly $125 billion for the decade ending in 2033, said the CBO, up 29% from last year’s estimate of $97 billion over 10 years. 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.

While crop insurance would cost sharply more, USDA spending on crop and livestock subsidies and on land stewardship programs would be roughly the same as estimated last year, said CBO data. 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.

SNAP 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.

Livestock insurance has 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.

The livestock policies provide protection against events such as a decline in revenue for dairy farmers, a fall in livestock prices, or a squeeze between feed prices and the market value of livestock. There also are policies that protect producers against dry weather that reduces forage production or reduces vegetation on pasture and rangeland. Forage policies, for example, are available in the Plains on land planted annually to produce feed and fodder for livestock.

More than 539 million acres of U.S. farmland were enrolled in crop insurance last year, far above the 320 million or so acres planted annually to the two dozen “principal” crops, such as corn, soybeans, wheat, and cotton. The growing popularity of forage policies was expanding the reach of the crop insurance program.

Crop insurance has an army of supporters among farm-state lawmakers. The program is easier to defend than traditional crop subsidies because farmers bear part of the cost.