By Scout Nelson
A new white paper from North Dakota State University’s Agricultural Risk Policy Center takes a closer look at more than ten years of interest deferrals in the Federal Crop Insurance Program (FCIP).
The study highlights both the value of these waivers for farmers and the growing costs they bring to taxpayers.
The research, led by Francis Tsiboe and Sandro Steinbach, reviews how the Federal Crop Insurance Corporation (FCIC) has often chosen to waive interest on unpaid premiums during years of severe weather or national emergencies. These deferrals give farmers extra time to pay, helping them manage cash flow when harvest delays or disasters hit.
From 2019 to 2023 alone, over $18 billion in premiums were deferred. This added up to about $510 million in indirect subsidies covered by the U.S. Treasury. While this support has been a financial lifeline for farmers, the study points out that frequent waivers have lowered the real cost of insurance. This may encourage farmers to take higher levels of coverage and could influence market behavior in ways not originally intended.
The paper suggests policy changes to balance support for farmers with long-term program stability. Recommendations include more targeted relief options, pre-funded surcharges to cover future costs, and limits on how often deferrals are offered.
As weather extremes and farming risks increase, the study stresses the need for careful management of crop insurance policies. Ensuring that farmers receive timely help while protecting the program’s fiscal health will be key to its success in the years ahead.
Photo Credit: gettyimages-eugenesergeev
Categories: North Dakota, Crops, Government & Policy