Farmers’ Crop Insurance Choices in Iowa and Michigan: Survey Summary

Crop insurance is an important tool that allows farmers to manage risks in agricultural production. This report is a summary of a survey of farmers’ crop insurance choices in Iowa, a state typical of the central US Corn Belt, and Michigan, a state with a more diversified crop portfolio. Survey data indicate that Michigan farmers were less likely to purchase insurance than Iowa farmers. A smaller share of Michigan farmers received an indemnity payment from 2011 to 2015 than those in Iowa. Michigan farmers were more likely to report that they felt they have paid more for crop insurance policies than they have received in indemnity payments. For farmers in Iowa, downside yield and price risk was rated most important by the largest number of respondents, followed closely by out-of-pocket premium price. The ranking of these two factors was reversed for farmers in Michigan. The cross-state differences reported by the survey respondents imply that the federal crop insurance program has different regional impacts. In order to assist in informed policy debate, it would be useful to understand how different regions can achieve all the potential benefits afforded by the program. Specifically, it will be useful to know whether Michigan farmers are not taking best advantage of existing crop insurance opportunities or whether simple adjustments could result in program uptake as high as in some other states.