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The Risk Management Safety Net: Market Penetration and Potential

XI. Conclusions

Federal crop insurance is a key risk management safety net for producers, providing protection for 86 percent of total U.S. crop acreage in 2015. Risk protection was provided across the U.S. for 89 percent of principal crop acres, a substantial portion of the acres of other field crops, at 63 percent, and 74 percent of fruit and nut crops. The program is operating at a solid 0.85 long term loss ratio which means that premium amounts more than cover losses over time and that the Federal crop insurance program meets the actuarial requirements of a well-functioning insurance program.

However, there is still room for additional market penetration for the Federal crop insurance risk management safety net. One area that the Risk Management Agency is exploring is additional risk management products for vegetables, since market penetration is only 34 percent at this time. There also continues to be room for growth of market penetration in the other field crops, and fruits and nuts categories.

Opportunities for the expansion of existing federal crop insurance policies to additional states exists for many commodities, as evidenced by comparison by state of Federal crop insurance program availability to U.S. acreage of crops reported by NASS suggests that opportunities. The next steps to be taken will be to research the crops identified in this paper for each location to see if specific existing crop policies and procedures are applicable and would be effective for the respective crops in the new states. This research will determine if actuarial information, including price data, are appropriate, if producers are interested in having a risk management program available, and will identify specific counties that should be included.

RMA continues to communicate with stakeholders to identify new commodities or expansion of existing commodities that need risk management protection. RMA will also continue to work with stakeholders and monitor existing plans of insurance to identify issues or modifications needed, or whether new types of coverage should be added for the ever-changing agricultural landscape.

Opportunities to insure livestock are available through Federal crop insurance and there is considerable nationwide market potential to provide unique or innovative risk management products for livestock ranchers and producers. However, very little market penetration will be achieved while the legislated limitation on available funding for livestock insurance expenses is in place. RMA will continue its efforts to find and develop solutions to enhance risk protection for forage and hay producers, adding to or enhancing those programs already available.

The portfolio of Federal crop insurance products is revisited on a regular basis to evaluate the availability and importance of Federal crop insurance products to producers throughout the U.S, and to determine areas of market potential. Continued exploration into new types of products best fitting producer’s risk management needs, working with private submitters to shepherd new and innovative products through the approval process and implementation, and improving existing products and their availability are all important aspects to providing a world-class risk management safety net to U.S. agricultural producers, promote stability in rural communities, and assure a robust food supply across the U.S.

Contact Information

For more information, contact RMA Public Affairs.