Crop Insurance and the New Deal Roots of Agricultural Financialization in the United States

A range of private and public institutions emerged in the United States in the years before and after the Great Depression to help farmers confront the inherent uncertainty of agricultural production and marketing. This included a government-owned and operated insurance enterprise offering “all-risk” coverage to American farmers beginning in 1938. Crop insurance, initially developed as a social insurance program, was beset by pervasive problems of adverse selection and moral hazard. As managers and policy makers responded to those problems from the 1940s on, they reshaped federal crop insurance in ways that increasingly made the scheme a lever of financialization, a means of disciplining individual farmers to think of farming in abstract terms of risk management. Crop insurance became intertwined with important changes in the economic context of agriculture by the 1960s, including the emergence of the “technological treadmill,” permanently embedding financialized risk management into the political economy of American agriculture.