This is a continuation from Understanding Farm Subsidies part 1.

Since the beginning the United States, farm subsidies have been a core part of agricultural policy. However, the purposes and reasoning behind farm subsidies have radically changed over the course of our history. Today, only about .1% of the population work on farms, and less than 1% work in agriculture at all. However, when the country began, nearly half of the population needed to work in agriculture, in order to keep the entire country fed. This means that the policy surrounding farm subsidies has had to adapt to this changing landscape. Here is some information to help you understand the modern farm subsidy situation…

Crop insurance

One way that farmers can receive subsidies from the government, aside from receiving direct payments or price supports (which were discussed in part 1), is in the form of crop insurance. There are multiple forms of crop insurance that be utilized by farmers, such as yield-based or crop-based insurance. However, there is one consistent factor, regardless: the government is able to help them pay the premium. This means that if a farm suffers a bad yield from a season, or if a disaster destroys a considerable portion of a certain type of crop, then the farmer will be compensated appropriately, based on previous years. However, crop insurance isn’t just insurance against destruction of crops, but can also be insurance against rapidly changing prices. For this reason, crops that are susceptible to large changes in commodity pricing are usually covered under crop insurance.

Various agricultural Acts

In recent years, there have been many laws and acts that have been passed with consideration to agricultural policy, and thusly, farm subsides. For example, the Soil Bank Act in 1956 is considered a farm subsidy, due to the actions that it takes to conserve usable soil for farms in the United States. Other acts include the National School Lunch Act of 1946, which reimburses farms for their surplus crops, or the Food Security Act of 1985, which contains legislation about the conservation of wetlands and farm land.