FERN: Payments, crop insurance 31% of farm income
Direct farm payments and crop insurance indemnities total 31% of farm income in 2019, the Food & Environment Reporting Network said today.
According to FERN, “Senior USDA economist Carrie Litkowski said indemnities from federally subsidized crop insurance, estimated at $6.5 billion, and direct government payments, estimated at $22.4 billion, would combine to account for 31% of farm income this year. By themselves, direct federal payments would be 24% of farm income, the largest share since 2006.”
For 31% of farm income to come from government payments and crop insurance is “unusually high,” noted Chuck Abbott, the author of the FERN story and a longtime commodity reporter.
The direct farm payments include trade war aid, land stewardship payments and traditional crop supports, FERN noted. Crop insurance indemnities are funded through crop insurance premiums. The federal government pays about two thirds of the premiums to crop insurance companies while the farmers pay about one third.
The Agriculture Department’s Economic Research Service released its latest forecast of farm income on Wednesday. The ERS forecast that farm income would be the highest in six years, due to the government payments and some price increases.