NDSU research examines fiscal and market impacts of crop insurance interest deferrals

A new white paper from North Dakota State University’s Agricultural Risk Policy Center reviews more than a decade of interest deferral practices in the Federal Crop Insurance Program (FCIP), revealing both critical benefits for farmers and significant costs to taxpayers.

Authored by Francis Tsiboe and Sandro Steinbach, the study, “When Disaster Strikes the Billing Date: A Scoping Review of Crop Insurance Interest Deferrals,” documents how the Federal Crop Insurance Corporation (FCIC) has routinely waived interest on unpaid premiums in years marked by severe weather or national emergencies.

Between 2019 and 2023 alone, over $18 billion in premiums were deferred — representing about $510 million in implicit subsidies absorbed by the U.S. Treasury. While these waivers give producers vital liquidity during harvest delays, repeated use has lowered the effective cost of insurance, potentially driving higher coverage levels and altering market behavior.

“Interest deferrals have become a lifeline for many producers,” said Tsiboe. “But as they become more frequent, they also reshape expectations and can affect the long-term fiscal sustainability of the program.”

The paper offers policy recommendations, including targeted relief, pre-funded surcharges and limits on frequency of use, to preserve the FCIP’s stability in an era of increasing weather volatility.

Read the full paper online. For more information, contact Tsiboe at francis.tsiboe@ndsu.edu and Steinbach at sandro.steinbach@ndsu.edu.