The role of Federal crop insurance for farms and ranches that sell through local food markets

Purpose: The Agriculture Improvement Act of 2018 directed the United States Department of Agriculture (USDA) Risk Management Association to investigate a policy targeted to farms and ranches that sell through local food markets. However, there is no available research that quantitatively documents the extent to which local food producers utilize Federal crop insurance. Design/methodology/approach: The authors utilize 2013–2016 USDA Agricultural Resource Management Survey data to compare farms and ranches with sales through local food markets to those with and without Federal crop insurance expenditure, as well as the distribution of Federal crop expenditure, across market channels and scales. Findings: There is a little variation in Federal crop insurance expenditure across market channels, defined as direct-to-consumer only sales, intermediated sales, and a combination of direct-to-consumer and intermediated sales. Rather, the results show that scale is the primary predictor of Federal crop insurance expenditure; larger operations are more likely to have nonzero Federal crop insurance expenses. Originality/value: This article provides the first national research to document descriptive statistics of the utilization of Federal crop insurance by US farms and ranches that utilize local food market channels.