Farming is inherently risky. Variations in prices and yields can cause changes in revenue that are difficult for farmers to manage. The desire by the general public to help farmers manage this risk is underscored by the growth in spending for the Federal crop insurance program from almost nothing 30 years ago to over $2 annually during Fiscal years 2001-2005.
However, over these same five years, the Federal Government also spent on average an additional $1.8 billion/year on ad hoc disaster assistance. The existence and magnitude of this assistance in recent years suggests the current farm safety net is not effective at helping farmers manage risk.