Understanding the insurance overlaps among crop, ACRE, and SURE coverage

Crop InsuranceA report has been released by economists from the United States Department of Agriculture (USDA) on the topic of overlaps by the various farm safety net programs, investigating the possibility for fraud by those crossovers, but determined that there was very little evidence of its occurrence.

However, the hope is that the new Farm Bill will divide the programs in a way that will minimize the potential of overlaps in the future.

One of the best examples of farm program complexity is ACRE. The low participation in the program is a reflection of the fact that its complexity caused the chances for its programs to be successful to suffer. Since farmers weren’t able to understand how the benefits of ACRE were calculated, this could have caused many of them to use crop insurance to compensate for their potential revenue and production risk.

Many farmers weren’t sure if they should sign up for both, since they didn’t know if they would be able to benefit from both types of program. However, at the same time, many remember that crop insurance had been a requirement in order to receive a payment from the SURE program.

As Congress has recently been talking about creating a farm program that will fit within a restricted budget, the topic of payment overlaps came to the surface, and it was evaluated by the Economic Research Service in order to see if programs that overlapped were each paying for the same losses.

It should be noted that while it may appear that such overlaps are obvious, as these programs are designed around very different foundations and concepts, they are not as easy to spot as it might seem.

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