In the United States, a subsidized multi-peril federal insurance program, administered by the Risk Management Agency, is available to most farmers.
106-224), USDA is authorized to offer basically free catastrophic (CAT) coverage to producers who grow an insurable crop.
The Federal Crop Insurance Corporation reinsures the companies by absorbing some of the losses of the program when indemnities exceed total premiums.
These early efforts were not particularly successful due to high program costs and low participation rates among farmers.
[2] In 1980, Congress passed legislation to increase participation in the Federal Crop Insurance Program and make it more affordable and accessible.
And in 1996, the Risk Management Agency (RMA) was created in the U.S. Department of Agriculture to administer the Federal Crop Insurance Program.
Many farmers pay crop insurance premium costs for a number of years without receiving indemnity payments because they have not experienced an actual loss.
[6] In Canada, the history of CI (Crop Insurance) begins in 1939 with the introduction of the Prairie Farm Assistance Act by the Canadian Government.
This act provided permanent crop loss disaster assistance for grain producers in the Prairies and the Peace River area.
CI has been a key federal support program since 1959 aimed at helping to stabilize farm incomes against production related risks.
Furthermore, the single cost-sharing formula was adopted, where the federal government and provinces each pay 25% of total premiums and 50% of administration costs.
Although federal legislation establishes the national framework, much flexibility exists for provinces to modify the program to meet the needs of their producers.
CI is available in all provinces for a wide variety of crops but coverage is not universal, nor are participation rates necessarily high although the cost of the program is subsidized by government.
By far the largest component of the program covers grain and oilseed production on the Prairies, but even here participation has fallen below 60% of seeded area.
The claim is calculated on the basis of crop cutting experiments carried out by agricultural departments of respective states.