What Repeated Crop Insurance Premium Interest Deferrals Mean for Farmers

Premium interest deferrals are a lesser-known financial support mechanism within the U.S. Federal Crop Insurance Program (FCIP), temporarily waiving interest charges on unpaid producer premiums during disaster years. Originally intended as exceptional relief, these deferrals have become increasingly routine, occurring in eight of the past thirteen years and consecutively from 2019 to 2024. This study examines whether repeated deferrals have altered farmers’ crop insurance demand by shaping expectations of continued payment flexibility. Exploiting differences in premium billing schedules between spring and winter wheat, we implement an instrumented two-way fixed effects framework using county-level crop insurance data from 2015–2023. The results indicate that interest deferrals are associated with a 1.6% increase in coverage levels and a 7.4% expansion in insured acreage for spring wheat, with effects strengthening over successive deferral announcements. These findings suggest that farmers may increasingly view deferrals as a standard feature of the FCIP rather than temporary disaster relief. While deferrals provide short-term liquidity benefits, their repeated use may generate longer-term behavioral responses and increase implicit federal subsidy exposure. Policy reforms that better align premium billing with post-harvest cash flows may offer a more sustainable alternative.