This post is the second in a two-part series analyzing a United States Department of Agriculture Economic Research Service (USDA-ERS) report on the state of farms and ranches across the United States. Part One began by discussing the way farms are classified by the USDA, farm financial performance, and the use of credit and loans. You can read Part One by visiting this link: https://extension.illinois.edu/blogs/farm-focus/2025-01-10-state-us-agriculture-2024-key-findings-and-future-trends-part-one. This post will analyze the remainder of the USDA report with a discussion of government payments to farms and ranches and farm household wellbeing.
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Government Payments and Federal Crop Insurance
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Government payments for farms and ranches are often an essential lifeline for operations that are struggling with decreased production, financial difficulties, or a combination of other factors. The report found that 24% of all farms in the United States received some government payments. Small family farms had the highest share of farms receiving payments from the Conservation Reserve Program (CRP) and other Natural Resources Conservation Service (NRCS) programs, with 76% of CRP funds and 41% of all other NRCS program funds going to small family farms. Large-scale family farms represented the highest share of farms receiving other types of payments, with 39% of “countercyclical-type” (i.e., Price Loss Coverage or Agricultural Risk Coverage) and 39% of all other payments (i.e., Dairy Margin Coverage or ad-hoc assistance) going to large-scale family farms. One reason to explain the distribution of payments among different programs could be the types of commodities/products produced by each kind of family farm. The report notes that small family farms represent more significant proportions of production for products like eggs or forages, which are not covered under countercyclical-type programs. In contrast, large-scale family farms represent more significant proportions of production for cash grains, oilseeds, or dairy, which are covered by countercyclical-type payments. This means farms not covered under countercyclical-type programs resort to other government programs, like CRP or others administered by the NRCS.
Federal crop insurance is another form of payment that farm and ranch operations depend on, particularly when adverse weather conditions affect their production. The report found that only 16% of farms and ranch operations in the United States participated in federal crop insurance. The report further found that 66% of farms producing row crops purchased federal crop insurance, but only 17% of specialty crop operations and 12% of livestock operations purchased federal crop insurance. While midsized family farms had the highest share of participants in federal crop insurance (23%), large-scale family farms had the highest share of all harvested acres (46%) and indemnities paid to participants (48%). This, again, can be attributed to the likelihood of large-scale family farms having higher rates of participation in federal crop insurance due to the types of crops they grow. As discussed earlier, large-scale family farms represent higher proportions of production for cash crops and other row crops. In comparison, small family farms represent higher proportions of production for specialty crops. This would mean that large-scale family farms would be more likely to participate in and possibly receive indemnities from federal crop insurance than small family farms.
