Are Large Farms Less Risky to Insure than Small Farms?

In fact, a commonly proposed cut to crop insurance is a cap on crop insurance subsidies per recipient per year. For example, the President’s budget proposal for 2019 includes a $500,000 adjusted gross income crop insurance subsidy cap. The implication of an effective premium cap would be to fully subsidize small farms while subsidizing larger farms up to a point, after which all premiums would be unsubsidized. Since subsidy is a function of risk, coverage levels, unit structure, and insurance plan chosen, subsidies per acre across all crops vary (Figure 2). Some have suggested that capping subsidies may either cause producers to evade the cap or that a cap will cause large producers to leave the crop insurance program. A further assertion is that larger farms are potentially less risky.