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Crop Revenue Insurance: Problems With New Plans Need to Be Addressed

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Report Type Reports and Testimonies
Report Date April 29, 1998
Report No. RCED-98-111
Subject
Summary:

Farming is an inherently risky enterprise. Over the years, the federal government has played an active role in helping to mitigate the effects of production and price risks on farm income. A new tool--crop revenue insurance--has been introduced to help farmers manage their risks. Three federally subsidized crop revenue insurance plans--Crop Revenue Coverage, Revenue Assurance, and Income Protection--are now being sold to farmers in various parts of the country. The plans protect farmers from the effect of declines in either crop prices or yields by guaranteeing an agreed-upon level of revenue. In light of the rapid expansion of the new crop revenue insurance plans and the government's significant financial participation in them, this report (1) identifies the differences between the three new revenue insurance plans, (2) reports on the plans' sales and claims experience, and (3) analyzes the methodologies used to set the plans' premium rates.

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