Farmers cannot afford to spend more on crop insurance.
Michael Swanson, the chief agricultural economist at Wells Fargo, told the Crop Insurance and Reinsurance Bureau recently that if federal crop insurance premiums increase, farmers will reduce their coverage levels.
He said farmers currently spend about four percent of their budget on crop insurance premiums, according to the Hagstrom Report.
Swanson explained that a typical crop farmer’s spending includes 30 percent of the budget for land rents, 26 percent on manufactured inputs including machinery, 10 percent for seed, 10 percent for farm labor and six percent for crop chemicals.
Although farmers complain to bankers about the cost of crop insurance, it is not “mispriced,” Swanson said because the cost has been about the same for the past 15 years.
