Crop Insurance Indispensable Risk Management Tool
April 10th, 2007 by David Graves
The modern federal crop insurance program is an indispensable risk management tool. The program has grown more complex, including more policy choices and more stringent regulations, in becoming an efficient and effective risk management tool. An important factor in the growth of crop insurance is the growth in the number of policy options available to farmers. These additional options provide farmers with the capacity and the flexibility to insure a wider array of agriculture enterprises. They also permit the customization of risk management strategies to individual farm and farmer needs and requirements. And it is acutely important to know and understand that the expansion in policy options was a direct result of farmer requests and demands for more coverage options in more specific enterprise situations. The result has been vast improvements in the matching of farmer risk management needs to actual coverage.
Along with more complexity there are more regulations. And while regulations are certainly burdensome, they do generally serve to help enhance program integrity, which is a fundamental requirement for continuing a high level of congressional and public support for the crop insurance program.