TAILIEUCHUNG - Crop Insurance, Disaster Assistance, and the Role of the Federal Government in Providing Catastrophic Risk Protection

Since 1980, the principal form of crop loss assistance in the United States has been provided through the Federal Crop Insurance Program. The Federal Crop Insurance Act of 1980 was intended to replace disaster programs with a subsidized insurance program that farmers could depend on in the event of crop losses. Crop insurance was seen as preferable to disaster assistance because it was less costly and hence could be provided to more producers, was less likely to encourage moral hazard, and less likely to encourage producers to plant crops on marginal lands. Despite substantial growth in the program, the crop insurance program has failed to replace other disaster programs as the sole form of. | Crop Insurance Disaster Assistance and the Role of the Federal Government in Providing Catastrophic Risk Protection Joseph w. Glauber and Keith J. Collins Abstract Since 1980 the principal form of crop loss assistance in the United States has been provided through the Federal Crop Insurance Program. The Federal Crop Insurance Act of 1980 was intended to replace disaster programs with a subsidized insurance program that farmers could depend on in the event of crop losses. Crop insurance was seen as preferable to disaster assistance because it was less costly and hence could be provided to more producers was less likely to encourage moral hazard and less likely to encourage producers to plant crops on marginal lands. Despite substantial growth in the program the crop insurance program has failed to replace other disaster programs as the sole form of assistance. Over the past 20 years producers received an estimated 15 billion in supplemental disaster payments in addition to 22 billion in crop insurance indemnities. Key words catastrophic risk protection crop insurance disaster assistance Joseph W. Glauber is Deputy Chief Economist and Keith J. Collins is Chief Economist . Department of Agriculture Washington DC. The views expressed here are the authors and do not reflect those of USDA or the Federal Crop Insurance Corporation. One of the key characteristics of agriculture is the inherent production risks facing producers from adverse weather pests and diseases. These risks have been used to justify government intervention in the form of disaster assistance payments emergency loans livestock feed assistance programs crop insurance and other subsidized assistance schemes. Yet while government intervention to provide assistance has been widely supported in the United States the form of assistance has been much debated. Since 1980 the principal form of crop loss assistance in the United States has been provided through the Federal Crop Insurance Program. The Federal .

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