An Iowa State University study authored by Economics Professor Bruce Babcock shows farmers getting an annual return of 125 percent on their crop insurance. The study looked at crop insurance from 2000 to 2014. Babcock says farmers were able to get over $ 200 back in crop insurance payments.
He says with those levels of premiums, crop insurance becomes an income support program rather than a risk management tool.
Babcock says both Congressional leaders and the Administration are looking to get a higher level of participation in the crop insurance program. And the administration wants to cut $ 18 billion from the program over 10 years. He says they could get more participation if they changed crop insurance where they use a fixed per acre credit.
Taxpayers cover about 60 percent of crop insurance premiums and pay for costs of administering the program while shelling out a large share of payouts for claims.
