Carroll: USDA’s ‘Farm’ Definition and What It Means for Crop Insurance

By J.C. Carroll

A recent USDA statistic making the rounds suggests that only 13% of U.S. farms purchase crop insurance. This figure is being cited by critics of crop insurance, particularly those interested in highlighting perceived weaknesses in coverage for specialty crops.

But this interpretation misses a critical point: the USDA’s definition of a “farm” is outdated and overly broad – so broad, in fact, that it includes hundreds of thousands of entities that are not commercially viable and may not grow any crops at all.

According to USDA’s Economic Research Service, a farm is defined as “any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the year.”

This definition hasn’t changed at all since the 1970s to account for radical changes in agriculture, technology, or even inflation. And it’s not much different to the $500 sales threshold used by the USDA in 1870.

In fact, USDA’s current definition includes properties with no actual production – such as hobby farms, gardens, timber lots, and even old farms converted into rural residences.