The new program also may be charging some farmers too little while overcharging others for the coverage, according to the General Accounting Office, the investigative arm of Congress. Faced with declining government subsidies, farmers have been snapping up the new policies even though the premiums are 30 percent higher than those for traditional crop insurance. Where both plans are offered, the Crop Revenue Coverage program has taken a third of the market. Insurance has become much more important to farmers since Congress in 1996 scrapped the Depression-era system that tied government subsidies to changes in commodity prices.
Farmers now get a fixed payment that is declining each year.
Farmers who can't get insurance are finding they can't get credit to plant their crops. Traditional insurance protects farmers against the loss of their crops. Revenue insurance is tied to changes in commodity prices as well as production. So when yields drop and prices rise, claims will be higher. Agriculture Department officials say they are confident that the premium structure set by the Federal Crop Insurance Corp., which oversees the revenue program, will cover the losses and is fair to farmers.