What is the purpose of crop insurance in agriculture?

The purpose of crop insurance in agriculture is primarily to provide financial protection to farmers against losses resulting from various risks, such as crop failure due to natural disasters like floods, droughts, or pest infestations, as well as fluctuations in market prices. This safety net enables farmers to manage risk more effectively, ensuring that they can continue their operations even when unexpected events occur that could jeopardize their income.

Crop insurance promotes stability within the agricultural sector by allowing farmers to invest in their operations without the fear of total financial loss if adverse conditions arise. It helps them recover from losses, maintain their livelihood, and support local economies.

Other options are less aligned with the primary function of crop insurance. For instance, while reducing labor costs and covering costs of fertilizers and pesticides could be beneficial for farmers, those are not the focus of crop insurance. Additionally, while crop insurance can indirectly help in navigating market fluctuations, it does not guarantee sales prices for crops; it primarily addresses the risk associated with crop yield rather than price assurance.