Crop insurance is an easy and effective tool to transfer risk to someone else.  It is a way of protecting against unexpected loss due to a multitude of unavoidable natural events.  Congress considers crop insurance to be a major risk management tool and has provided money to significantly subsidize the premiums farmers pay.  There is a wide array of insurance products producers can choose from to meet their risk management needs.  (After National Crop Insurance Services’ Crop Insurance and Risk Management Primer, Crop Insurance Overview, page 51.)

Federal crop insurance and/or related risk management programs are now available for most agricultural commodities and have become effective and affordable risk management tools. Available programs vary widely in structure and coverage terms, but all of the programs are heavily subsidized, with some premium costs and all administrative costs covered by the Federal Government. Like all risk management options, crop insurance and related programs such as the Livestock Risk Protection Program (LRP) should be considered in conjunction with other risk management strategies that may be employed in a given enterprise.

Three articles are presented on the following pages:

1.   From the National Crop Insurance Services’ Crop Insurance and Risk Management Primer, we provide an article by Dr. Laurence M. Crane entitled Crop Insurance Overview.

2.   From Ohio State University, we provide an article by Brian Roe entitled Livestock Risk Protection Insurance Policies: Overview and Comparison to Using Put Options.