The United States learned through experience that handling natural disasters after the fact is not only destabilizing for farmers but expensive for taxpayers. To encourage more farmers to purchase crop insurance – thus laying their personal risk management groundwork before a possible disaster – the government began helping discount premiums to ensure that coverage is affordable, available to everyone, and economically viable.
The United States learned through experience that handling natural disasters after the fact is not only destabilizing for farmers but expensive for taxpayers. To encourage more farmers to purchase crop insurance – thus laying their personal risk management groundwork before a possible disaster – the government began helping discount premiums to ensure that coverage is affordable, available to everyone, and economically viable.
In the wake of a devastating disaster, crop insurance offers a lifeline. It is one of the most important, reliable, and cost-effective parts of the safety net here in the United States.
National Crop Insurance Services (NCIS) announced today that its website has been selected by the United States Library of Congress (LOC) to be part of America’s historic collection of Internet materials.
For nearly two decades, the LOC has catalogued digital materials spanning a variety themes, events, and issue areas with the purpose of capturing records of historic significance that would otherwise be lost because they were never printed on paper.
The NCIS website, www.CropInsuranceInAmerica.org, will be a part of the archived public policy records.
“It is an honor that the crop insurance industry was chosen to be part of this esteemed collection,” said NCIS President Tom Zacharias.“Crop insurance has certainly made history in recent years by emerging as the cornerstone of U.S. farm policy and protecting the country’s farmers from historic floods and droughts.”
NCIS launched the website in 2008 to better explain the benefits of crop insurance to farmers, taxpayers, and consumers, and to demonstrate how the program helps drive the nation’s rural economy.
The site contains videos and testimonials from farmers following disasters; a section called “Just the Facts” that is devoted to answering policy questions with academic research and public data; an electronic version of the industry’s quarterly magazine Crop Insurance TODAY®, which dissects the issues facing crop insurance; and links to numerous press reports and quotes about the public-private partnership that has made the system such a success.
NCIS announced its selection to the LOC collection during a conference hosted by the International Association of Agricultural Production Insurers (AIAG). Agricultural leaders from more than 30 countries belong to AIAG and are visiting the United States for the first time to learn about U.S. farm policy and to discuss how insurance can help meet tomorrow’s global food challenges.
Farmers and ranchers are tasked with producing more food and fiber than ever to meet the world’s growing appetite, and they have to do it while preserving scarce natural resources and dealing with extreme weather and volatile markets.
A combination of new technology, smarter farming practices, and government policies will be required to succeed, according to experts at an international agriculture summit here this week.
Don Preusser, executive vice president and chief marketing officer of Farmers Mutual Hail Insurance Company of Iowa, explained that the global agricultural sector is already evolving and altering the way the world farms.
“Agriculture is rapidly changing as operations become larger, more commercialized, technologically advanced, and vertically integrated,” he told attendees of the International Association of Agricultural Production Insurers (AIAG) biennial conference.
“Precision agriculture is driving significant productivity and efficiencies gains, helping to grow and secure global food needs,” Preusser concluded. “And granular field level data combined with predicative analytics will soon create new insights and innovative risk management solutions.”
When it comes to risk management, no tool is as important for U.S. farmers as crop insurance. And AIAG traveled to America for its meeting so leaders from more than 30 countries could learn more about how the dynamic U.S. system operates.
Tom Zacharias, an AIAG board member and president of the Kansas-based National Crop Insurance Services, explained that the U.S. model is characterized by its unique private-public partnership and cost sharing.
“U.S. crop insurance benefits from the efficiency of the private sector, comprised of companies, agents, claims adjusters, and reinsurers” he said. “Meanwhile, the government has made smart investments to keep policies affordable for farmers and widely available across a spectrum of crops and geographic locations.”
Zacharias also said that farmers bear a significant portion of the cost, which has had the desired effect of reducing taxpayer exposure to agricultural risk. “U.S. producers collectively spend $4 billion from their own pockets each year for crop insurance, and they shoulder losses through deductibles before receiving an indemnity,” he noted.
But none of it would have been possible, Zacharias said, without a commitment from U.S. policymakers in recent years. He hopes strong support will continue in the years to come and that America’s successes can provide a roadmap for insurers and farmers world-wide.
As insurance leaders from more than 30 nations gather here to discuss farm policy and the challenges facing the global agricultural sector, National Crop Insurance Services (NCIS) today released an updated version of “Crop Insurance: Just the Facts.”
This resource has been one of the most popular destinations on the NCIS website for years, and it uses government data, academic research, and information from other trusted sources to answer common questions about the U.S. crop insurance system.
NCIS President Tom Zacharias said the web-based tool should be valuable to his international colleagues and explained that it was important to ensure the site contained the most up-to-date information in time for the conference.
“Regardless of your level of knowledge of crop insurance, ‘Just the Facts’ will help you better understand the inner workings of the primary risk management tool for America’s farmers and ranchers,” he said.
The updates not only drill down on the new 2014 Farm Bill, but also cover other issues, including the economics of the crop insurance industry, how crop insurance benefits consumers and producers alike, and rebuttals to farm policy critics.
“It is essential that we provide an informative resource that sets the record straight on key issues in agricultural risk management and farm policy,” Zacharias explained. “Now policymakers and global leaders have a place to go to find just the facts about the questions they have about the cornerstone of America’s farm safety net.”
The International Association of Agricultural Production Insurers (AIAG) – comprised of risk management leaders from Europe, Asia, Russia, and North and South America – are holding their biennial conference for the first time ever in the United States. The event runs through Wednesday.
“Crop Insurance: Just the Facts” is available at www.CropInsuranceInAmerica.org/about-crop-insurance/just-the-facts.
Agricultural leaders from more than 30 nations are in America this week to discuss the challenge of feeding a growing world population and how crop insurance can help farmers rise to the task. U.S. Department of Agriculture (USDA) Secretary Tom Vilsack was on hand to welcome the international delegation and provide his perspective.
“There are few people in the world today who can say that their work touches every single person on the planet, every single day. But farmers can say that,” the secretary observed today during his speech. “Farmers are powerful, but their charge is not without its challenges.”
Today’s farmer must deal with resource concerns and extreme weather, Vilsack explained, and crop insurance will be key to a farmer’s ability to do so in the future.
“In the wake of a devastating disaster, crop insurance offers a lifeline,” he said. “It is one of the most important, reliable, and cost-effective parts of the safety net here in the United States.”
Crop insurance gives farmers “hope during tough times” and “the gift of peace of mind,” according to Vilsack, who also detailed policy advancements made to the U.S. crop insurance system in recent years to improve its availability and affordability.
“Crop insurance has expanded because it works for farmers and it works for our taxpayers,” the secretary said of the public-private partnership, which is overseen by the USDA, serviced by private-sector insurance companies, and partially funded by farmers.
The success of the U.S. system is one reason the International Association of Agricultural Production Insurers (AIAG) chose America as the site for its conference, marking the first time that the group has met outside of Europe.
“We are here because the U.S. crop and revenue insurance program is the most developed and the most efficient system for farmers in the world,” AIAG President Kurt Weinberger said during his opening remarks.
Weinberger also noted that participants in this week’s summit will be busy discussing how farmers can use new technologies, new insurance products, new government policies, and new farming practices to deal with climate change and market volatility. The outcome of those discussions will be vitally important.
“Agriculture was, agriculture is, and agriculture will be the most important sector in the world because farmers are feeding the world’s population,” he concluded. “It is the future for all of us.”
Key members from the United States Senate and House today explained the popularity and importance of crop insurance during a gathering of global insurance leaders from more than 30 countries.
“Your work across the globe to help producers manage the ever risky job of feeding the world is vitally important,” Sen. Pat Roberts (R-Kan.) told the group.
Roberts serves as chairman of the Senate Agriculture Committee and he called strengthening the public-private partnership of America’s crop insurance system one of his top priorities. Not surprisingly, steps to improve availability and access to crop insurance were key components of the 2014 Farm Bill.
“In the last Farm Bill, crop insurance was reaffirmed as the cornerstone of America’s agricultural safety net,” Roberts explained.
His counterpart in the House of Representatives agreed, noting that crop insurance will be essential in feeding a growing world population that is expected to hit 9.6 billion by 2050.
“To meet these challenges, producers must be able to remain in business over long periods of time,” said Congressman Mike Conaway (R-Tex.), chairman of the House Agriculture Committee. “When it comes to navigating swings in both the market and the weather – all of which are out of the control of producers – crop insurance steps in to fill the void.”
Conaway said that private-sector delivery of crop insurance, with its unique cost-sharing structure to minimize taxpayer risk exposure and its ability to be tailored to individual farmer needs, have helped make it such a success.
But that success story will stall unless crop insurers continue to beat back political attacks in the annual budget and appropriations process. Luckily, they won’t be alone in the fight.
The chairman of the Senate Agriculture Appropriations Subcommittee, Jerry Moran (R-Kan.), told the group, “I will continue to defend farmers and ranchers and to work against those who want to dismantle this very valuable program.”
Moran, who called crop insurance a “bright spot in our federal policies,” applauded insurers for supporting agriculture, strengthening the economy and securing the food and fiber supply.
“Without farmers and ranchers, rural America just doesn’t exist,” he concluded. “Without a viable crop insurance program, family farmers don’t exist.”
The conference is hosted by the International Association of Agricultural Production Insurers (AIAG) and is the first time this biennial meeting has been held in America. Roberts, Conaway, and Moran were unable to attend the event, which is being held in Kansas City, due to congressional votes in Washington, D.C., but sent personalized videos to the AIAG conference.
National Crop Insurance Services (NCIS) today released a detailed explanation of the evolution of U.S. farm policy over the past two centuries and crop insurance’s recent rise to prominence.
The paper was included in NCIS’s quarterly magazine, Crop Insurance TODAY® and was made available at an international conference of agricultural leaders who traveled to the United States to discuss the policies and technologies that will be needed to meet the challenges facing the global farming community.
Maintaining a thriving agricultural sector, which supports the U.S. economy and domestic food security, has been a top policy priority in America from the beginning, NCIS explained. That protection currently comes in the form of a public-private insurance system that is delivered by insurance companies, partially funded by farmers, and can be tailored to suit an individual producer’s unique needs.
“What tomorrow holds is anyone’s guess, but charting a course for the future is not possible unless we understand the policy decisions of our past,” the article noted.
The advancement of crop insurance was largely in response to modern-day realities, including tight federal budgets, the capital-intensive nature of farming, extreme weather, and the efficiency required to compete in today’s global marketplace.
Like crop insurance, previous farm policies reflected the issues of the times in which they were written. For example, the 19th century focused on educating and communicating with farmers to improve efficiency; the concept of a safety net sprung out of the Great Depression; and disaster assistance became more prevalent after the weather disasters and market collapses of the 1980s.
“Getting to this point has required the foresight of leaders dating back to the founding of this great nation who shared a common goal of securing America’s food and fiber supply,” the article concluded. “It will be important that future leaders share this same overarching goal, and as a crop insurance industry, we must remain ready to do our part in meeting whatever challenges tomorrow may bring.”
The entire paper is available here. It was published to correspond with the biennial meeting of the International Association of Agricultural Production Insurers (AIAG), which is being held this week for the first time in America.
As a crop insurance agent who was on more than a few farms the day after Hurricane Katrina struck, I can tell you first hand that crop insurance was a financial lifeline for many farmers. Katrina hit so many farmers who had never before gone through a large-scale natural disaster that wiped out their entire crop at harvest time.
As a crop insurance agent who was on more than a few farms the day after Hurricane Katrina struck, I can tell you first hand that crop insurance was a financial lifeline for many farmers. Katrina hit so many farmers who had never before gone through a large-scale natural disaster that wiped out their entire crop at harvest time.
I’ll never forget the faces of young farmers shaken by the sight of their year’s income slowly withering in the fields. Most of them had purchased crop insurance, which allowed them to put their worries on the back burner and focus on what they could do right then to make things better.
So how do farmers gain some control over the uncontrollable and add stability to the region’s economy? Crop insurance is key. Farmers purchase protection from weather disasters and price volatility, while private-sector insurers underwrite policies, verify claims and speed assistance to farmers when it is needed most. The government, in turn, helps discount premiums to promote farmer participation and shield taxpayers from unbudgeted disaster aid that would be necessary without the private-sector insurance structure.
Farmers who filed crop insurance claims in 2014 collectively shouldered approximately $10 billion in deductible losses before collecting any payments, according to new data unveiled today by the National Crop Insurance Services (NCIS).
When combined with the $3.9 billion spent to buy insurance coverage in 2014, farmers absorbed at least $14 billion in out-of-pocket costs, which is well in excess of the $9 billion in insurance indemnity payments that flowed to rural America.
NCIS President Tom Zacharias said this is significant for several reasons.
“First, it shows that U.S. farmers are actively participating in the funding of their own safety net and minimizing taxpayer risk exposure,” he explained. “It also proves that crop insurance is working as designed by helping farmers recover – not profit – from disaster.”
This was even the case after the historic 2012 drought, when farmers shouldered $17 billion in deductible losses and premium payments and received $17 billion in insurance payments.
Because farmers have substantial “skin in the game,” crop insurance helps reduce the cost of U.S. farm policy while discouraging risky behavior that may otherwise occur if taxpayers picked up 100 percent of the tab.
Zacharias said that growers favor the current system over past farm policies because crop insurance can be tailored to a farm’s unique characteristics and because efficient private companies administer crop insurance and speed relief when it is needed most.
The newly released deductible calculation completed the 2014 crop insurance picture. Other relevant statistics were detailed in the May edition of NCIS’s Crop Insurance TODAY magazine and included:
NCIS noted that the $10 billion in deductible losses only reflects losses for crops on which an insurance claim was filed. Farmers who shouldered smaller losses but did not file a claim are not included in the calculation.
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As someone who has spent more than four decades managing a fourth-generation farm and the past 10 years building my family’s crop insurance agency, I believe I have valuable perspective worth sharing regarding how essential today’s federal crop insurance policies are to America’s farmers and consumers.
Specifically, I would like to explain how essential the Harvest Price Option has become to the modern agricultural producer. The Harvest Price Option insures a crop at its actual harvest-time value. Think of it like a homeowner’s insurance policy. If your home appreciates in value after you purchase it, you are protected at the home’s current value if it burns down and you have to rebuild.
Unfortunately for agriculture, this policy that makes rebuilding possible has come under fire from those who misunderstand the unique risks for farmers who are constantly exposed to the ravages of Mother Nature. It is important to note that farmers pay an additional premium for this type of protection and it supports their risk management in two distinct ways.
First, a farmer often prices a large percentage of his anticipated – or before harvest – crop using forward price contracts with a local elevator. If a natural disaster strikes causing production to fall short of the quantity sold, the farmer would need to purchase enough of the crop to fulfill his contractual obligation. But, the price of the commodity is likely to have increased because of the overall drop in production due to the disaster. Consequently, the remaining crop available to purchase is priced much higher than what was covered under the spring contract.
By purchasing the Harvest Price Option as part of his crop insurance policy, the farmer is able to meet his contractual obligations either by buying grain to deliver under the contract or by making a financial settlement with the purchaser.
A second way the Harvest Price Option becomes essential to producers is if the grain being produced is intended to support the farm’s future animal feed needs. If a natural disaster destroys the grain that is to be harvested, then the producer will be forced to purchase feed instead. If there is a widespread short crop, the feed costs will be much higher. With the Harvest Price Option on the producer’s crop insurance policy, the farmer will be paid the actual harvest price on his lost production. This, in turn, allows him to purchase the feed needs for his livestock operation and still maintain a viable business.
In fact, allowing farmers to maintain a viable business when the unexpected happens is what crop insurance is all about. The beneficiary is not just the farmer, but also the American consumer. Crop insurance enables farm families like mine to pick up the pieces after a disaster and continue to produce food and fiber without significant price increases or supply shortages for consumers. The fact that Americans spend less of their disposable income for food than any other country speaks volume as to how critical it is that farmers have risk management tools like crop insurance. The critics would do well to try to understand the link between a viable crop insurance program and an affordable, stable food supply before proposing measures that would destroy it. In other words, before biting the hand that feeds them.
Gary Riekhof is a farmer and crop insurance agent from Higginsville, Missouri. This op-ed appeared in the Columbia Tribune on June 6, 2015.
“Frost threatens northern U.S. corn; rains soak southern Plains.”
This recent headline says it all. The diversity of American agricultural production coupled with the varied growing conditions across the country and the swings in weather explains why farmers need a safety net. More importantly, it describes why crop insurance is the centerpiece of the farm safety net.
U.S. multi-peril crop insurance is a risk management tool that farmers, regardless of their location, crop, or production method, purchase to protect against the loss of their crops due to natural disasters such as hail, drought, freezes, floods, fire, disease, or the loss of revenue due to a decline in price. Farmers buy policies to fit the individual needs of the their operations. In 2014, 1.2 million policies were sold protecting more than 120 different crops covering 294 million acres.
I have been farming corn and soybeans for about three decades and I have always purchased crop insurance because it gives me some peace of mind even though we are in a climate setting that typically doesn’t experience wide weather extremes like some of our neighbors in other parts of the country.
That’s not to say we haven’t been hit with our share of unpredictable weather that made planting and harvesting a crop challenging. It does mean I customize the policy I purchase to meet the needs of my operation.
For example, just two years ago, we had a hard time getting a crop in the ground because nine inches of snow blanketed the area on the second day of May, which is normally the time when we’re wrapping up the planting season. The soil was already soaked from a rainy spring season. That year we didn’t start planting until the middle of May and didn’t finish until the first week in June.
Late planting can potentially put a farmer in double jeopardy – not only are they expecting lower yields because of the delay in planting, but that crop is also vulnerable to frost around the autumn harvest time.
This was the first time in more than 20 years of farming that we planted corn in June – more than a third of our crop. It was also the first time we elected to take prevented planting provisions for roughly 5 percent of our acres as part of our crop insurance policy. Prevented planting provisions are designed to provide coverage when extreme weather conditions prevent a farmer from getting in the fields.
Crop insurance helped us cover some of the loss from that bad year. It made it manageable, which is why it’s an essential risk management tool for my farm and others like mine all across the country. The cost of growing crops has increased substantially. It wasn’t too long ago that it took about half of what it takes to grow an acre of corn. Because of these costs, a substantial crop loss would be a major financial setback for anyone. With crop insurance, we are able to level the highs and lows.
There have been a lot of changes to farm policy through the years to reflect the changing times, but given the diversity of agriculture in our country and the way crop insurance can be uniquely tailored to address disastrous conditions in an efficient and effective way, it should only be strengthened in the years to come.
Bruce Peterson is a farmer from Northfield and the president of the Minnesota Corn Growers Association. This op-ed appeared in The Hill on June 3, 2015.
“Frost threatens northern U.S. corn; rains soak southern Plains.”
This recent headline says it all. The diversity of American agricultural production coupled with the varied growing conditions across the country and the swings in weather explains why farmers need a safety net. More importantly, it describes why crop insurance is the centerpiece of the farm safety net.
U.S. multi-peril crop insurance is a risk management tool that farmers, regardless of their location, crop, or production method, purchase to protect against the loss of their crops due to natural disasters such as hail, drought, freezes, floods, fire, disease, or the loss of revenue due to a decline in price. Farmers buy policies to fit the individual needs of the their operations. In 2014, 1.2 million policies were sold protecting more than 120 different crops covering 294 million acres.
I have been farming corn and soybeans for about three decades and I have always purchased crop insurance because it gives me some peace of mind even though we are in a climate setting that typically doesn’t experience wide weather extremes like some of our neighbors in other parts of the country.
That’s not to say we haven’t been hit with our share of unpredictable weather that made planting and harvesting a crop challenging. It does mean I customize the policy I purchase to meet the needs of my operation.
For example, just two years ago, we had a hard time getting a crop in the ground because nine inches of snow blanketed the area on the second day of May, which is normally the time when we’re wrapping up the planting season. The soil was already soaked from a rainy spring season. That year we didn’t start planting until the middle of May and didn’t finish until the first week in June.
Late planting can potentially put a farmer in double jeopardy – not only are they expecting lower yields because of the delay in planting, but that crop is also vulnerable to frost around the autumn harvest time.
This was the first time in more than 20 years of farming that we planted corn in June – more than a third of our crop. It was also the first time we elected to take prevented planting provisions for roughly 5 percent of our acres as part of our crop insurance policy. Prevented planting provisions are designed to provide coverage when extreme weather conditions prevent a farmer from getting in the fields.
Crop insurance helped us cover some of the loss from that bad year. It made it manageable, which is why it’s an essential risk management tool for my farm and others like mine all across the country. The cost of growing crops has increased substantially. It wasn’t too long ago that it took about half of what it takes to grow an acre of corn. Because of these costs, a substantial crop loss would be a major financial setback for anyone. With crop insurance, we are able to level the highs and lows.
There have been a lot of changes to farm policy through the years to reflect the changing times, but given the diversity of agriculture in our country and the way crop insurance can be uniquely tailored to address disastrous conditions in an efficient and effective way, it should only be strengthened in the years to come.
Bruce Peterson is a farmer from Northfield and the president of the Minnesota Corn Growers Association. This op-ed appeared in The Hill on June 3, 2015.
When the 2014 Farm Bill became law, it marked a pivotal moment in the history of U.S. farm policy. The new Farm Bill eliminated direct payments and reduced some of the price support policies of the past in favor of expanding crop insurance, which allows farmers to purchase varying levels of protection for their crops.
Gone are the days when farmers got a check every year regardless of weather or market conditions. Gone are the days when large-scale natural disasters would trigger wildly expensive disaster bills aimed at helping farmers get back on their feet. From here forward, farmers who want risk protection will receive a bill, not a check, when they sign on the dotted line every year.
This is a good thing for several reasons. First, crop insurance ensures farmers have a risk management plan in mind early in the year. In addition to that plan, they must put their money towards purchasing a crop insurance policy. This is no small amount of money for many farmers, who in 2014 spent roughly $3.8 billion on crop insurance premiums.
All told, those policies protected 295 million acres of farmland valued at $129 billion. Today, 90 percent of planted cropland is protected by federal crop insurance, which protects more than125 different varieties of crops in all 50 states.
The evolution to crop insurance has effectively moved risk management away from the public sector, funded exclusively by taxpayer dollars, and toward the private sector, where farmers and crop insurance companies help shoulder part of the cost of natural disasters. This is good for taxpayers because it takes them off the hook for the entire bill when disaster strikes, good for farmers who must always keep their risk management plan in mind, and good for rural America because farmers are the engines that generate economic activity.
Crop insurance has been around since 1938, but it wasn’t until Congress decided to make it affordable and ubiquitous that farmers really began to sign up. And when disaster struck – as it does nearly every year somewhere here in the Northwest – farmers turned to their crop insurance policy and their insurance company, not their member of Congress, for help.
The demographics of farming can be rather scary, with the age of the average age of the nation’s 3.2 million farm operators at 58 years old and rising daily. For young and beginning farmers, access to affordable and reliable crop insurance is honestly a make-or-break issue. For those just entering farming, the costs are high and their ability to sustain a loss is very limited. For them, purchasing a crop insurance policy not only protects their crops, but their careers paths as well.
Crop insurance is very popular here in the Northwest, with farmers and ranchers in Washington, Oregon and Idaho spending more than $96 million out of their own pockets last year to purchase the peace of mind offered by crop insurance. Those policies protect the region’s apples, potatoes, sugar beets and a long list of other crops from the ravages of Mother Nature and volatile market swings.
In the old days, farmers largely relied on disaster assistance from the federal government in times of crisis. According to the Congressional Research Service, some forty-two ad hoc disaster assistance bills cost taxpayers $70 billion since 1989.
With access to affordable, available and viable crop insurance policies, farmers have the backstop they need to bounce back when our rapidly changing climate throws them a curve ball. That’s good for farmers, good for consumers who eat their produce, and good for the rural economy, which is largely supported by local farmers and ranchers.
Kent Wright is president of Northwest Farmers Union. This op-ed appeared in the Tri-City Herald on May 30, 2015.
When the 2014 Farm Bill became law, it marked a pivotal moment in the history of U.S. farm policy. The new Farm Bill eliminated direct payments and reduced some of the price support policies of the past in favor of expanding crop insurance, which allows farmers to purchase varying levels of protection for their crops.
Gone are the days when farmers got a check every year regardless of weather or market conditions. Gone are the days when large-scale natural disasters would trigger wildly expensive disaster bills aimed at helping farmers get back on their feet. From here forward, farmers who want risk protection will receive a bill, not a check, when they sign on the dotted line every year.
This is a good thing for several reasons. First, crop insurance ensures farmers have a risk management plan in mind early in the year. In addition to that plan, they must put their money towards purchasing a crop insurance policy. This is no small amount of money for many farmers, who in 2014 spent roughly $3.8 billion on crop insurance premiums.
All told, those policies protected 295 million acres of farmland valued at $129 billion. Today, 90 percent of planted cropland is protected by federal crop insurance, which protects more than125 different varieties of crops in all 50 states.
The evolution to crop insurance has effectively moved risk management away from the public sector, funded exclusively by taxpayer dollars, and toward the private sector, where farmers and crop insurance companies help shoulder part of the cost of natural disasters. This is good for taxpayers because it takes them off the hook for the entire bill when disaster strikes, good for farmers who must always keep their risk management plan in mind, and good for rural America because farmers are the engines that generate economic activity.
Crop insurance has been around since 1938, but it wasn’t until Congress decided to make it affordable and ubiquitous that farmers really began to sign up. And when disaster struck – as it does nearly every year somewhere here in the Northwest – farmers turned to their crop insurance policy and their insurance company, not their member of Congress, for help.
The demographics of farming can be rather scary, with the age of the average age of the nation’s 3.2 million farm operators at 58 years old and rising daily. For young and beginning farmers, access to affordable and reliable crop insurance is honestly a make-or-break issue. For those just entering farming, the costs are high and their ability to sustain a loss is very limited. For them, purchasing a crop insurance policy not only protects their crops, but their careers paths as well.
Crop insurance is very popular here in the Northwest, with farmers and ranchers in Washington, Oregon and Idaho spending more than $96 million out of their own pockets last year to purchase the peace of mind offered by crop insurance. Those policies protect the region’s apples, potatoes, sugar beets and a long list of other crops from the ravages of Mother Nature and volatile market swings.
In the old days, farmers largely relied on disaster assistance from the federal government in times of crisis. According to the Congressional Research Service, some forty-two ad hoc disaster assistance bills cost taxpayers $70 billion since 1989.
With access to affordable, available and viable crop insurance policies, farmers have the backstop they need to bounce back when our rapidly changing climate throws them a curve ball. That’s good for farmers, good for consumers who eat their produce, and good for the rural economy, which is largely supported by local farmers and ranchers.
Kent Wright is president of Northwest Farmers Union. This op-ed appeared in the Tri-City Herald on May 30, 2015.
Crop insurance products were improved in the recent farm bill because Congress recognized that these products are a necessity for farmers, regardless of size. To me, a federally-supported crop insurance policy is defensible because a portion of the product’s cost is borne by the farmer.
I am one of those farmers. I raise cotton, corn, soybeans, wheat, peanuts and cattle in north Mississippi. Crop insurance is my most important risk management tool absent the direct payments that were available under previous farm law programs. Effective crop insurance products have allowed Congress to move away from providing ad hoc disaster assistance, thus reducing pressure on the federal budget.
We all have witnessed how farmers across the country have suffered from historic droughts, flooding, hail and other severe weather. Many cotton producers, in fact, have incurred particularly excessive yield losses the past three years from these weather events.
Without a doubt, the volatility of weather and commodity markets necessitates government assistance with crop insurance premiums so that our nation’s farmers have access to affordable and dependable crop insurance products.
Regarding cotton, the Stacked Income Protection Plan, known as STAX, is an insurance product that was included in the 2014 federal farm law and is available to upland cotton producers beginning with the 2015 crop year.
The U.S. cotton industry believes that STAX, like all other insurance products, should not be subjected to limits or eligibility restrictions. With cotton’s safety net now comprised solely by the marketing loan program and crop insurance, the U.S. cotton industry is especially concerned by any attempt to eliminate or place limits on key crop insurance tools.
Farm policy generally, and cotton policy specifically, was substantially reformed, funding reduced, and market orientation increased in the 2014 farm law, so now is not the time for further changes that will only undermine production agriculture’s risk management foundation.
The bottom line is that America’s farmers need an affordable and dependable insurance policy if they are going to continue producing safe, abundant, and affordable food and fiber – which is essential to our national security. Affordable and dependable crop insurance will provide the stability needed for U.S. cotton producers – and undergird an industry that provides employment for some 200,000 Americans and produces direct business revenue of more than $27 billion. Accounting for the ripple effect of cotton through the broader economy, direct and indirect employment surpasses 420,000 workers with economic activity well in excess of $100 billion.
Sledge Taylor is a farmer from Como, Miss., and chairman of the Memphis-based National Cotton Council of America. This op-ed appeared in the Southeast Farm Press on May 21, 2015.
Crop insurance products were improved in the recent farm bill because Congress recognized that these products are a necessity for farmers, regardless of size. To me, a federally-supported crop insurance policy is defensible because a portion of the product’s cost is borne by the farmer.
I am one of those farmers. I raise cotton, corn, soybeans, wheat, peanuts and cattle in north Mississippi. Crop insurance is my most important risk management tool absent the direct payments that were available under previous farm law programs. Effective crop insurance products have allowed Congress to move away from providing ad hoc disaster assistance, thus reducing pressure on the federal budget.
We all have witnessed how farmers across the country have suffered from historic droughts, flooding, hail and other severe weather. Many cotton producers, in fact, have incurred particularly excessive yield losses the past three years from these weather events.
Without a doubt, the volatility of weather and commodity markets necessitates government assistance with crop insurance premiums so that our nation’s farmers have access to affordable and dependable crop insurance products.
Regarding cotton, the Stacked Income Protection Plan, known as STAX, is an insurance product that was included in the 2014 federal farm law and is available to upland cotton producers beginning with the 2015 crop year.
The U.S. cotton industry believes that STAX, like all other insurance products, should not be subjected to limits or eligibility restrictions. With cotton’s safety net now comprised solely by the marketing loan program and crop insurance, the U.S. cotton industry is especially concerned by any attempt to eliminate or place limits on key crop insurance tools.
Farm policy generally, and cotton policy specifically, was substantially reformed, funding reduced, and market orientation increased in the 2014 farm law, so now is not the time for further changes that will only undermine production agriculture’s risk management foundation.
The bottom line is that America’s farmers need an affordable and dependable insurance policy if they are going to continue producing safe, abundant, and affordable food and fiber – which is essential to our national security. Affordable and dependable crop insurance will provide the stability needed for U.S. cotton producers – and undergird an industry that provides employment for some 200,000 Americans and produces direct business revenue of more than $27 billion. Accounting for the ripple effect of cotton through the broader economy, direct and indirect employment surpasses 420,000 workers with economic activity well in excess of $100 billion.
Sledge Taylor is a farmer from Como, Miss., and chairman of the Memphis-based National Cotton Council of America. This op-ed appeared in the Southeast Farm Press on May 21, 2015.
Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.
Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.
I would not have had the opportunity to grow my farm without crop insurance.
I would not have had the opportunity to grow my farm without crop insurance.
We are blessed in this country to have the ability to grow our own food and have enough to export to other nations.
In fact, that is what inspired me to farm. I had a passion for growing food and, in the case of my home state of Washington where wheat is a highly exported commodity, I had the satisfaction of knowing that my work as a farmer contributed to feeding people not only at home, but all across the globe.
The food security we enjoy in this country is made possible in no small part through United States farm policy. With the 2014 Farm Bill, Congress shifted the focus of farm policy to risk management. It made crop insurance the centerpiece, and quite rightly. It helps farmers recover from natural disasters and volatile market fluctuations. It enables them to plan and budget for the long term in the most effective and efficient way.
Farming is an inherently risky business. Even my wheat farm, which is located in the rolling hills above the Palouse River, and considered some of America’s most fertile ground, is vulnerable to serious weather events that can devastate my crops in any given year. I have been farming for more than three decades and I can say, without question, if it weren’t for crop insurance I would not be in business.
And, crop insurance is good for consumers and taxpayers, too.
Without effective and affordable crop insurance, catastrophic production losses would sap the rural economy by setting in motion a series of harmful events: farm failures and consolidation, job losses, financial stress on rural banks and reduced investment in U.S. agriculture.
Emergencies can happen to all of us. There have been enormous emergency bailouts for victims of floods, hurricanes, earthquakes and other disasters. But because of modern crop insurance, farmers have survived some of the worst production years in memory without that kind of disaster relief. Crop insurance fills the need.
This reality is why I am always concerned by those who criticize farm policy or, worse, advocate for its demise, usually by spreading misinformation about the cost and mechanics of farm policy and crop insurance.
One of the misconceptions is that crop insurance is a handout to farmers. Actually, farmers spend $4 billion a year out of their own pockets for insurance protection. They only collect an indemnity after they’ve suffered a verifiable loss and they’ve shouldered their deductible.
Another attack includes barring farmers with large operations from participating in crop insurance. This would be foolish policy because any risk management pool needs a large and diverse group of participants. We want the most productive farmers in the pool to spread the risk. In the same vein, car insurers want safe drivers to buy insurance to help balance losses from more accident-prone drivers.
A financially healthy rural economy requires a financially healthy farm production sector. And that sector relies on a safety net when catastrophic events happen. It is a modest investment considering the return, which is a stable and affordable national food and fiber supply.
Brett Blankenship is the president of the National Association of Wheat Growers. He farms winter wheat in southeast Washington.
I started farming and ranching with my father and grandfather in southwest Oklahoma and the Texas panhandle 40 years ago, and I am the fourth generation to farm cotton, peanuts, wheat, corn, milo and cattle on our family’s land.
I was 17 when I started farming on my own, and although I have four decades of experience under my belt, the many issues we face today on the family farm — worked by me, my son, my brother-in-law and my son-in-law — are no less challenging than they were when I began. In most careers, things get easier as you move along. In farming, since the weather and prices are so unpredictable, it really never gets easier.
With few risk management tools available in the early days, it could take years to recover from a hailstorm, an early freeze or any of the many other natural perils that could be thrown at you. When I first learned of crop insurance, I didn’t purchase it because premiums were unaffordable and margins were too slim to afford it. Thankfully, Congress made crop insurance more available and affordable — by partially discounting the premium — and now I wouldn’t farm without it.
Since the passage of the 2014 Farm Bill, crop insurance is the best tool farmers have to manage risks and revenue. It’s not cheap, but it is something that we budget for annually and can’t imagine not having.
The key to crop insurance’s success has been its affordability, its availability and its viability. Last year, farmers spent nearly $4 billion on crop insurance policies that protected 90 percent of planted cropland in the United States. I’d bet that many of the farmers in our area wouldn’t be surviving the current drought — which started in 2011 — if it wasn’t for crop insurance.
Despite the fact that agriculture’s safety net programs took a huge cut in the last farm bill, some in Congress seem to think we need to give more. I wonder if some of those people have any idea where their food and clothes come from or what it takes to get it from the farm to their plate or closet.
It seems almost daily that someone in Congress is proposing a bill to cut the premium support on crop insurance. It would not serve anyone to cut these risk management tools to farmers, as they allow farmers to concentrate on producing higher-yielding, better-quality crops that reduce the costs to the consumer.
Crop insurance is not a gift but insurance, just like homeowner’s insurance, that farmers buy. And like homeowner’s insurance, we don’t collect a dime without a verifiable loss and paying a deductible. Without crop insurance, many farmers couldn’t get financed and it would be almost impossible for a beginning farmer to get started.
Crop insurance is critical in meeting these challenges, and guarantees the American consumer a safe, affordable supply of quality food and fiber that is unsurpassed anywhere in the world.
Kelly Horton lives in Hollis.
I always knew I was going to be a farmer. I grew up learning from my grandfather who turned me loose and gave me a lot of responsibility on his farm from a young age. I was driving machinery by the time I was 10 years old and running my own harvest crew by the time I was 14.
When I was in school, I entertained being a veterinarian and farming on the side mainly because people told me it was a tough life and I wouldn’t be able to make a living.
That kind of talk only made me more determined, so when I came home from college I started farming full time despite the fact that I barely had a dollar to my name and farming is a capital-intensive business.
I remember the first time I went to borrow money, my banker asked me right off if I had crop insurance and how much was the coverage. I was prepared to answer those questions as crop insurance was then and remains today my primary risk management tool. I wouldn’t think of trying to grow a crop without it.
It’s essential — especially for young farmers, like I was at the time, just starting an operation.
It enables farmers to get financing and also enables them to survive a major catastrophic weather event.
Young farmers are particularly vulnerable to such risks because they are more leveraged than more established farmers. They can’t afford a major hit in their finances or a year without any income.
Just look at my state of Texas where we have suffered a historic drought for the last five years. 2012 and 2013 were particularly bad.
Without crop insurance, this sustained drought would have wiped out an entire generation of farmers. They would not have had the means to make it to another year without something to at least help cover part of the losses.
That’s why it is critical that crop insurance remain affordable and widely available. Thankfully the 2014 Farm Bill strengthened crop insurance and added provisions to help beginning farmers. But, the critics of farm policy, including some lawmakers in Congress, never seem to rest and are already clamoring once again for cuts.
They would be wise to take note of an alarming trend that puts the average age of a U.S. farmer at 58. Moreover, in 2012, the number of beginning farmers – those operating fewer than 10 years – was down 20 percent from 2007.
My desire to farm at such a young age is the exception, not the rule. Many young people can’t stomach the risk that is involved and have no desire to try.
Cuts to the farm safety net only make an inherently risky business, riskier. The expense of raising crops, the perils of weather-related disasters, and the low returns on investment, are enough to make anyone run in the other, more secure direction.
Now is not the time to create barriers at the starting point of farming and ranching. Now is the time to give certainty to young people with farm policy they can afford and count on.
Matt Huie farms cotton, corn, sorghum, and livestock in Southeast Texas near Corpus Christi.
We live in one of the richest nations in the world and virtually anything you want to eat is right at your fingertips. But that doesn’t occur by accident. It’s possible due to good farm policies and hardworking farmers, who together produce the cheapest and most reliable food in the world. Nowhere else has been able to compare to the efficiency we’ve achieved in this country. And I’ll be forever proud of that fact.
Some stereotypes about U.S. farm policy just won’t die.
For example, the belief that farmers get paid for not growing; or that benefits just go to big agribusinesses; or that farm spending is out of control.
Such criticisms make splashy headlines but are no longer relevant thanks to the significant evolution of farm policy over the past 20 years. Over that time, government control of agriculture has given way to a system where farmers take more responsibility, make decisions based on market forces, and are asked to help fund their own safety net.
The most significant reforms occurred in the 2014 farm bill, which is projected to reduce farm spending by billions over the next decade.
The farm bill repealed direct payments – checks that some farmers received every year no matter the market conditions or how crops fared. In their place are crop insurance policies made available to all growers regardless of size, geographic location or cropping decision.
With crop insurance, most farmers get bills in the mail instead of government checks, and because producers are now paying more of the farm policy tab, spending has trended downward over the years (to less than three-tenths of 1 percent of the federal budget).Here’s how it plays out on my sugar beet, soybeans and wheat farm.
Every year, I analyze input costs, market prices and yield trends. Then I purchase crop insurance tailored to the unique risks on my farm.
Most years, my crops succeed and no insurance check is collected, meaning insurance companies and the government keep my premiums to offset other policy costs.
In disaster years when we suffer from drought, frost, flood, hail or a host of other calamities, insurance only kicks in after I’ve shouldered a sizable deductible, meaning I share the cost of aid.
Collectively, farmers spend about $4 billion out of their own pockets every year to buy insurance. They do this because the government ensures policies are affordable and widely available and because an efficient infrastructure maintained by the private sector speeds assistance to us much faster than old government disaster programs, which were 100 percent taxpayer-funded.
Crop insurance is just part my story. Our farmer-owned cooperative also takes out government-backed operating loans on our sugar crop. These loans help cash flow the operation as the sugar is sold over the course of the year, and, like any other business loan, it is repaid with interest.
As a result, sugar policy typically operates at no taxpayer expense and is projected by the U.S. Department of Agriculture to cost $0 over the next decade.
Admittedly, agriculture’s transition to lower costs isn’t fast enough for some detractors. But, as a farm leader involved in the 2014 farm bill debate, I can attest that tremendous headway has been made, and I know that it is vital to remove remaining stumbling blocks to further reform.
For example, unnecessary environmental regulations on agriculture breed bureaucratic inefficiencies, drive up costs of production and make it difficult to compete.
And, while U.S. farm supports are getting smaller, foreign subsidies are rapidly increasing abroad and distorting global markets.
In the case of sugar, foreign subsidies have created the most volatile commodity market in the world, where global prices currently cover just half the cost of producing the crop. In other words, exporters would lose 50 cents for every $1 worth of sugar sold if it weren’t for subsidies propping them up.
Putting an end to the domestic and foreign policies that stifle U.S. agriculture’s competitiveness should take top priority in the years ahead as the current farm bill is implemented.
And as we wage that fight, taxpayers can take comfort in the fact that they are shouldering less risk and that U.S. farm policy is headed in the right direction.
Kelly Erickson is immediate past president, American Sugarbeet Growers Association, and farms with his son near Hallock, Minn.
Living through the drought of 2012 as an Illinois farmer gave me a whole new appreciation for risk management tools. There are things that farmers can do to try and deal with the curveballs served up by Mother Nature and with the ups and downs of market swings, but many things — like a massive drought or a heat wave — are completely out of our control.
If this drought would have happened a decade before, it would have left many farmers completely devastated and on the verge of bankruptcy, with nowhere to turn but to Congress for an expensive, taxpayer-funded bailout package. In fact, past disasters have cost taxpayers tens of billions of dollars since 1979.
What was different about the drought of 2012, which was the worst natural disaster to hit this state in my lifetime, is that the vast majority of the state’s farmers had purchased the best risk-management tool around: crop insurance. In fact, farmers spent well over $4 billion out of their own back pockets in 2012 purchasing the protection and peace of mind of crop insurance, which meant when disaster struck, they had a backup plan in hand.
The recent Farm Bill took three long years to pass and cut $23 billion out of farm programs. But for those who for whatever reason are always looking to criticize farm policy that still wasn’t enough. Now they have their sights set again on crop insurance, and are pushing forth ideas to make it more expensive for farmers to purchase.
What these misguided groups and members of Congress seem to miss is that the reason why crop insurance has become the best risk-management tool for farmers is that it’s affordable and reliable. In fact, 90 percent of planted cropland was protected by crop insurance in 2014. It’s this level of protection — made possible by crop insurance’s affordability — that keeps expensive disaster bills from hitting taxpayers when Mother Nature strikes.
Unlike direct payments in the past, crop insurance is not a handout. In fact, when farmers purchase crop insurance, they receive a bill, not a check, and only receive a payment if they incur a loss, and only after paying a deductible. Just like homeowners’ insurance, when farmers buy crop insurance, they do so hoping that they will never have to use it. And many of them rarely do. In fact, since 2000, farmers have paid out more than $38 billion purchasing the protection of crop insurance, and in most years, they don’t collect a dime.
If crop insurance becomes more costly, then farmers simply won’t be able to afford it, and they will have nowhere to turn but the federal government when disaster strikes. This is a lesson we learned over and over again before crop insurance became widely available and affordable.
Crop insurance works so well and has been embraced so readily by farmers across the country because it’s a public private partnership that combines the best of the public and private sectors. Crop insurance premiums are partially discounted by the government to ensure affordability and the policies are sold and serviced by the private sector. And when disaster strikes, an indemnity check arrives in weeks, not years.
Like any other public policy, crop insurance isn’t perfect, and I’m sure Congress will do some fine-tuning to the program in the next Farm Bill just like they did in this one. But the most important thing to keep in mind is that farmers are not only enormous producers, they are enormous consumers as well. And with crop insurance policies in hand, they can bounce back from natural disaster or huge market fluctuations and continue to be the engines that drive the economy of rural America.
Keith Mussman is president of the Kankakee County Farm Bureau.
Living through the drought of 2012 as an Illinois farmer gave me a whole new appreciation for risk management tools. There are things that farmers can do to try and deal with the curveballs served up by Mother Nature and with the ups and downs of market swings, but many things — like a massive drought or a heat wave — are completely out of our control.
If this drought would have happened a decade before, it would have left many farmers completely devastated and on the verge of bankruptcy, with nowhere to turn but to Congress for an expensive, taxpayer-funded bailout package. In fact, past disasters have cost taxpayers tens of billions of dollars since 1979.
What was different about the drought of 2012, which was the worst natural disaster to hit this state in my lifetime, is that the vast majority of the state’s farmers had purchased the best risk-management tool around: crop insurance. In fact, farmers spent well over $4 billion out of their own back pockets in 2012 purchasing the protection and peace of mind of crop insurance, which meant when disaster struck, they had a backup plan in hand.
The recent Farm Bill took three long years to pass and cut $23 billion out of farm programs. But for those who for whatever reason are always looking to criticize farm policy that still wasn’t enough. Now they have their sights set again on crop insurance, and are pushing forth ideas to make it more expensive for farmers to purchase.
What these misguided groups and members of Congress seem to miss is that the reason why crop insurance has become the best risk-management tool for farmers is that it’s affordable and reliable. In fact, 90 percent of planted cropland was protected by crop insurance in 2014. It’s this level of protection — made possible by crop insurance’s affordability — that keeps expensive disaster bills from hitting taxpayers when Mother Nature strikes.
Unlike direct payments in the past, crop insurance is not a handout. In fact, when farmers purchase crop insurance, they receive a bill, not a check, and only receive a payment if they incur a loss, and only after paying a deductible. Just like homeowners’ insurance, when farmers buy crop insurance, they do so hoping that they will never have to use it. And many of them rarely do. In fact, since 2000, farmers have paid out more than $38 billion purchasing the protection of crop insurance, and in most years, they don’t collect a dime.
If crop insurance becomes more costly, then farmers simply won’t be able to afford it, and they will have nowhere to turn but the federal government when disaster strikes. This is a lesson we learned over and over again before crop insurance became widely available and affordable.
Crop insurance works so well and has been embraced so readily by farmers across the country because it’s a public private partnership that combines the best of the public and private sectors. Crop insurance premiums are partially discounted by the government to ensure affordability and the policies are sold and serviced by the private sector. And when disaster strikes, an indemnity check arrives in weeks, not years.
Like any other public policy, crop insurance isn’t perfect, and I’m sure Congress will do some fine-tuning to the program in the next Farm Bill just like they did in this one. But the most important thing to keep in mind is that farmers are not only enormous producers, they are enormous consumers as well. And with crop insurance policies in hand, they can bounce back from natural disaster or huge market fluctuations and continue to be the engines that drive the economy of rural America.
Keith Mussman is president of the Kankakee County Farm Bureau.
(OVERLAND PARK, Kan.) — Renowned agricultural economist Dr. Keith Collins reflects on his distinguished career and the future of farm policy in a series of videos released today by National Crop Insurance Services (NCIS).
Collins spent 32 years in federal service, where he served as the U.S. Department of Agriculture’s (USDA) chief economist to four secretaries of agriculture and as chairman of the board of the Federal Crop Insurance Corporation for seven years. After leaving USDA in 2008, he became a consultant to NCIS.
Collins recorded the three videos as one of his last projects before he officially retired from NCIS on March 31.
The videos attest to Collins’ nearly 40 years of farm policy experience, during which time he was a witness at 80 congressional hearings; received five Presidential Rank Awards for Distinguished or Meritorious Executive and was elected a fellow of the Agricultural & Applied Economics Association.
“I have had the best of all possible careers over that period of time,” he said. “I owe a great deal of gratitude to the American farmer for what they have done, for the food that they produced, the way they produced it.”
Collins urged new administrations and members of Congress to recall the farm policies of the past and why decisions were made to make crop insurance the centerpiece of today’s farm safety net.
“Look at the program that we have today, look at where it came from, look at how it evolved, how it emerged as the best of many different programs that were tried over the years,” he said. “And the success of the program has hinged on it being available to producers widely across America, being affordable for producers large and small, and having a private-sector [component] that is financially viable.”
Collins concluded saying, “Looking to the future, we want to prevent anything that would undo the success of this program.”
The first video is Collins’ testimonial, chronicling why Congress turned to crop insurance as the foundation of the farm safety net, and it is available here.
The second video tracks farm policy’s journey from complete government control to being more market oriented and driven by the private sector. It can be viewed here.
Finally, Collins discusses why affordability, availability and viability of crop insurance are so crucial in the third recording, which can be seen here.
With the cost of farming so high, most farmers must show proof of crop insurance to secure production loans from banks. This allows banks to make production loans to folks who might otherwise be judged too risky. One of those groups is young farmers. They are the key to the future of American agriculture. For them, if they haven’t purchased crop insurance, one bad year and they are done.
My husband and I have been farming in Southeastern Colorado for more than 40 years, and during that time it’s safe to say there have been a lot of changes not only in farming practices but also in farm policy.
The biggest policy change through the years has been the affordability and availability of crop insurance.
When we first started farming, crop insurance was not an option because we couldn’t afford it.
It wasn’t until Congress made reforms to the program a couple of decades ago that we were able to participate. Additional reforms through the years have made crop insurance more widely available for a variety of crops, regardless of farm size or method of production.
It is still an expensive part of the operation, but it is a necessary part because it provides us with stability — something we can count on. This is helpful not only when we need to show our lender at the bank what our estimated income will be, but also for our own peace of mind.
You have to realize that out here, we can have a beautiful crop and phenomenal yields one year and then get wiped out by a hailstorm or drought the next.
For the last three years, the ongoing drought and the late spring freezes have dogged our crops. With crop insurance, we have been able to level out the highs and lows so we can make it to another year.
The enactment of the 2014 Farm Bill made crop insurance the centerpiece of the farm safety net — and for good reason. It is an effective risk-management tool for not only farmers, but also for taxpayers.
Gone are the days of large, unbudgeted disaster bills aimed at helping farmers when natural disasters strike. Now, because of crop insurance, everyone — policymakers, farmers and bankers — can plan and budget for those disasters.
Recently, there has been talk in Washington about yet again trying to make changes to crop insurance. This is arising just one year after the Farm Bill was enacted.
Specifically, there have been discussions about cutting the premium support that farmers receive for purchasing crop insurance. This does a disservice to everyone.
If such proposals succeed, it would only serve to increase the costs to farmers and undermine their ability to manage risk. As my husband and I can attest, premium support has helped us to afford crop insurance, which, in turn, has helped our overall farming operation.
Each new farm bill ushers in new changes to farm policy. We’ve experienced those changes firsthand, but the one part that should remain constant going forward is crop insurance. It is the key to a steady, safe food production system in the U.S. The beneficiaries of crop insurance are not just farmers but also consumers.
Cathy Scherler is the president of the Colorado chapter of Women Involved in Farm Economics (WIFE), a national non-partisan organization committed to improving the profitability and production of the agricultural industry. She and her husband grow wheat, grain sorghum, sunflowers and corn on their farm in the Eastern Plains. This op-ed appeared in The Pueblo Chieftain on April 11, 2015.
My husband and I have been farming in Southeastern Colorado for more than 40 years, and during that time it’s safe to say there have been a lot of changes not only in farming practices but also in farm policy.
The biggest policy change through the years has been the affordability and availability of crop insurance.
When we first started farming, crop insurance was not an option because we couldn’t afford it.
It wasn’t until Congress made reforms to the program a couple of decades ago that we were able to participate. Additional reforms through the years have made crop insurance more widely available for a variety of crops, regardless of farm size or method of production.
It is still an expensive part of the operation, but it is a necessary part because it provides us with stability — something we can count on. This is helpful not only when we need to show our lender at the bank what our estimated income will be, but also for our own peace of mind.
You have to realize that out here, we can have a beautiful crop and phenomenal yields one year and then get wiped out by a hailstorm or drought the next.
For the last three years, the ongoing drought and the late spring freezes have dogged our crops. With crop insurance, we have been able to level out the highs and lows so we can make it to another year.
The enactment of the 2014 Farm Bill made crop insurance the centerpiece of the farm safety net — and for good reason. It is an effective risk-management tool for not only farmers, but also for taxpayers.
Gone are the days of large, unbudgeted disaster bills aimed at helping farmers when natural disasters strike. Now, because of crop insurance, everyone — policymakers, farmers and bankers — can plan and budget for those disasters.
Recently, there has been talk in Washington about yet again trying to make changes to crop insurance. This is arising just one year after the Farm Bill was enacted.
Specifically, there have been discussions about cutting the premium support that farmers receive for purchasing crop insurance. This does a disservice to everyone.
If such proposals succeed, it would only serve to increase the costs to farmers and undermine their ability to manage risk. As my husband and I can attest, premium support has helped us to afford crop insurance, which, in turn, has helped our overall farming operation.
Each new farm bill ushers in new changes to farm policy. We’ve experienced those changes firsthand, but the one part that should remain constant going forward is crop insurance. It is the key to a steady, safe food production system in the U.S. The beneficiaries of crop insurance are not just farmers but also consumers.
Cathy Scherler is the president of the Colorado chapter of Women Involved in Farm Economics (WIFE), a national non-partisan organization committed to improving the profitability and production of the agricultural industry. She and her husband grow wheat, grain sorghum, sunflowers and corn on their farm in the Eastern Plains. This op-ed appeared in The Pueblo Chieftain on April 11, 2015.
Farmers buy crop insurance to protect their crops from volatile weather and/or crop prices. It gives farmers and lenders peace of mind. The 2014 Farm Bill solidified crop insurance as the primary tool for farmers in dealing with production and price risk. Farmers urged Congress to strengthen crop insurance because it allows them to tailor the coverage needed for their specific farms and risk tolerance.
Farmers buy crop insurance to protect their crops from volatile weather and/or crop prices. It gives farmers and lenders peace of mind. The 2014 Farm Bill solidified crop insurance as the primary tool for farmers in dealing with production and price risk. Farmers urged Congress to strengthen crop insurance because it allows them to tailor the coverage needed for their specific farms and risk tolerance.
It was 2010 and I was expecting to harvest my best crop. I had done everything right and the weather had been kind. Or so I thought. Then on a late October night, it hailed for six hours and what was anticipated to be my best crop year turned into nothing. But the worst of it was yet to come. It stopped raining. It stopped for 336 days straight. It kicked off what would be the worst drought since the 1950s. The conditions would improve slightly, but it’s not an exaggeration to say that for the last five years, my part of the world – West Texas – has essentially been on fire.
Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.
That’s what today’s crop insurance offers farmers. A safety net that is both affordable and widely available. It’s what’s helped me make it to the next year.
That hasn’t always been the case. When crop insurance got its start in the 1930s, it was a poorly run government program. It hobbled along through the 60s and 70s, but the premiums were too high so the participation was low with limited available coverage. Farmers mainly relied on costly ad hoc disaster assistance when natural disasters wiped out their crops. It was so ineffective that the Secretary of Agriculture, Bob Bergland, told Congress in 1977 that disaster programs “are for the most part…a disaster.” This gave birth to the Federal Crop Insurance Act of 1980 that created a successful public-private partnership that remains today. Since then there have been other pieces of legislation along the way that have made additional improvements to the delivery and mechanics of crop insurance with the most recent being the 2014 Farm Bill.
Sadly, there are some who don’t know or understand the history and improvements that have taken place to make crop insurance what it is today. Meanwhile, there are others who are bent on attacking farm policy regardless.
I was reminded of this on a recent visit to Washington, D.C. where I met with lawmakers and staff on behalf of producers across the country. Each time I visit I am struck by how important outreach is to ensure agriculture remains successful in this country and that crop insurance remains a viable, affordable, and widely available safety net for farmers and ranchers.
I tend to walk away both encouraged and discouraged by my visits. I am encouraged because there are some who understand the challenges that we face; and discouraged because there is always more to be done. The battle never ends and we need more voices in support of American agriculture.
Our form of government requires participation. When we don’t show up and tell our story, without a doubt, someone who doesn’t understand or care about production agriculture and the importance of crop insurance will fill the void.
We all sit on the tractor or the combine and talk to ourselves about how to make things better, but sometimes you have to get off the tractor and find your voice. We can’t assume policymakers understand the anxiety we feel when we’re days away from harvesting a good crop and it’s destroyed in matter of minutes by something beyond our control. We can’t assume policymakers know the one thing that enables us to start again is crop insurance. It’s up to us to tell them.
Wade Cowan is the president of the American Soybean Association. He farms soybeans, guar, cotton, wheat, and grain sorghum in West Texas.
It was 2010 and I was expecting to harvest my best crop. I had done everything right and the weather had been kind. Or so I thought. Then on a late October night, it hailed for six hours and what was anticipated to be my best crop year turned into nothing. But the worst of it was yet to come. It stopped raining. It stopped for 336 days straight. It kicked off what would be the worst drought since the 1950s. The conditions would improve slightly, but it’s not an exaggeration to say that for the last five years, my part of the world – West Texas – has essentially been on fire.
Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.
That’s what today’s crop insurance offers farmers. A safety net that is both affordable and widely available. It’s what’s helped me make it to the next year.
That hasn’t always been the case. When crop insurance got its start in the 1930s, it was a poorly run government program. It hobbled along through the 60s and 70s, but the premiums were too high so the participation was low with limited available coverage. Farmers mainly relied on costly ad hoc disaster assistance when natural disasters wiped out their crops. It was so ineffective that the Secretary of Agriculture, Bob Bergland, told Congress in 1977 that disaster programs “are for the most part…a disaster.” This gave birth to the Federal Crop Insurance Act of 1980 that created a successful public-private partnership that remains today. Since then there have been other pieces of legislation along the way that have made additional improvements to the delivery and mechanics of crop insurance with the most recent being the 2014 Farm Bill.
Sadly, there are some who don’t know or understand the history and improvements that have taken place to make crop insurance what it is today. Meanwhile, there are others who are bent on attacking farm policy regardless.
I was reminded of this on a recent visit to Washington, D.C. where I met with lawmakers and staff on behalf of producers across the country. Each time I visit I am struck by how important outreach is to ensure agriculture remains successful in this country and that crop insurance remains a viable, affordable, and widely available safety net for farmers and ranchers.
I tend to walk away both encouraged and discouraged by my visits. I am encouraged because there are some who understand the challenges that we face; and discouraged because there is always more to be done. The battle never ends and we need more voices in support of American agriculture.
Our form of government requires participation. When we don’t show up and tell our story, without a doubt, someone who doesn’t understand or care about production agriculture and the importance of crop insurance will fill the void.
We all sit on the tractor or the combine and talk to ourselves about how to make things better, but sometimes you have to get off the tractor and find your voice. We can’t assume policymakers understand the anxiety we feel when we’re days away from harvesting a good crop and it’s destroyed in matter of minutes by something beyond our control. We can’t assume policymakers know the one thing that enables us to start again is crop insurance. It’s up to us to tell them.
Wade Cowan is the president of the American Soybean Association. He farms soybeans, guar, cotton, wheat, and grain sorghum in West Texas.
“Let’s face it, if we don’t do that, the government will step in anyway in that kind of disaster and all the costs will be paid by taxpayers. Washington D.C. can help provide the safety net, but they shouldn’t dictate the terms.”
Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?
The answer isn’t health care, transportation, technology or even government. Agriculture is Florida’s second-biggest job supplier, according to the University of Florida.
“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.
Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.
A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.
And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.
So how do farmers gain some control over the uncontrollable and add stability to the region’s economy?
Crop insurance is key.
Read more here.
Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?
The answer isn’t health care, transportation, technology or even government. Agriculture is Florida’s second-biggest job supplier, according to the University of Florida.
“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.
Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.
A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.
And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.
So how do farmers gain some control over the uncontrollable and add stability to the region’s economy?
Crop insurance is key.
Read more here.
We want crop insurance for all commodities in all states. It’s very clear every commodity wants to have crop insurance.
Representatives of various agricultural groups in Washington, D.C. voiced support for crop insurance during the annual meeting of the American Association of Crop Insurers and the National Crop Insurance Services. The session was designed to give crop insurers perspective not only from Capitol Hill, but also from farmers across the country.
“We want crop insurance for all commodities in all states. It’s very clear every commodity wants to have crop insurance,” said American Farm Bureau Federation’s Mary Kay Thatcher.
“Our farming members are by and large very happy with the crop insurance options in front of them,” added Bev Paul of the American Soybean Association.
The message was consistent with a letter that more than 30 groups sent to Congressional committees last week expressing disappointment in the president’s budget proposal that undermined crop insurance. The groups encouraged Congressional leaders to look elsewhere when they prepare their own budget plans. In the letter, they explained “budget levels currently in place for crop insurance ensure the affordability and availability of risk protection, while maintaining the viability of private-sector delivery.”
Indeed, these three tenets of affordability, availability, and viability were mentioned as the key to keeping the crop insurance system working effectively and efficiently. Another takeaway from panelists was the importance of sticking together and building alliances to make sure crop insurers can continue to offer a variety of options to farmers.
“Our focus in the years to come will be defending what we have,” said Robbie Minnich of the National Cotton Council of America.
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(BONITA SPRINGS, Fla.) – Financial returns for crop insurers have fallen nearly 60 percent below expectations since 2011, according to the National Crop Insurance Services, the industry’s main trade organization.
The Standard Reinsurance Agreement — the business contract between the federal government and private-sector insurers that went into effect in 2011 — targeted average returns on retained premium of 14.5 percent. Returns on retained premium have averaged only 6 percent over the four-year period.
And because these calculations only measure gross revenue, not net profit, the actual financial pain has been far greater, said NCIS Chairman Tim Weber. When expenses are subtracted from gross revenue, average net profit since 2011 has been less than 1 percent, with the industry experiencing negative returns in 2012.
This “falls well short of the averages for other lines of property and casualty insurance,” Weber noted when he spoke today at the industry’s annual convention.
Weber explained that unexpected premium reductions implemented by the U.S. Department of Agriculture (USDA) in 2012, $600 million a year in reduced funding under the SRA, increased regulatory burdens, falling crop prices, and bad weather have caused the poor financial performance.
The worst year, 2012, saw companies absorb $1.3 billion in underwriting losses when premiums collected failed to cover indemnities paid out during the record drought.
“Companies need to make a reasonable return on their investment to stay in business…but we cannot do it for free, or worse yet, a negative return,” Weber said.
Crop insurers at the convention expressed disappointment in recent remarks by the Agriculture Secretary, who misinformed reporters about industry returns while advocating for additional funding cuts.
“One of those reforms would be to take a look at what the average rate of return is on crop insurance. Today it’s roughly 14 [to] 15 percent on average of return on investment,” Secretary Tom Vilsack said during an interview with Politico.
“The Secretary is pointing to revenue projected by the USDA, not what has actually materialized in the marketplace,” noted Tom Zacharias, president of NCIS. “And the budget proposed by this administration would only further jeopardize the farm safety net.”
The President’s proposed budget would strip an additional $1.6 billion a year from the crop insurance system, which, Zacharias said, “leaves farmers and taxpayers more vulnerable to the whims of Mother Nature.”
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(BONITA SPRINGS, Fla.) — The new leaders of the agriculture committees in Congress addressed crop insurers during the annual meeting of the American Association of Crop Insurers and the National Crop Insurance Services and pledged to protect and strengthen this public-private partnership.
In separate taped videos, Sen. Pat Roberts, the chairman of the Senate Committee on Agriculture, Nutrition and Forestry, and Rep. K. Michael Conaway, the chairman of the House Committee on Agriculture, delivered parallel messages explaining how the 2014 Farm Bill made crop insurance the key risk management tool available to farmers.
“Crop insurance is the cornerstone of the farm safety net,” said Roberts. “You have my word to continue to protect, preserve, and improve the number one risk management tool in every farmer’s toolbox.”
They also warned about the challenges ahead and stressed the need to work as a team to stave off attacks.
“The critics of farm policy and crop insurance are not going to go away,” explained Conaway. “Despite some $17 billion in cuts to crop insurance, some are pushing for even more. They bill it as reform, but we all know their real end game is to kill crop insurance.
Roberts added, “Together we must be ready and willing to tell stories of the great successes” of crop insurance.
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(BONITA SPRINGS, Fla.) — With crop insurance now cemented as the cornerstone of U.S. farm policy, political attacks are inevitable. But crop insurers will make education a top priority in 2015 and will address the critics, said Tim Weber, chairman of the American Association of Crop Insurers and National Crop Insurance Services.
“Those with an agenda or an anti-agriculture bent cannot be given free rein to define our industry or the policies that underpin the rural economy,” he explained today during the industry’s annual convention. “No one knows the virtues of crop insurance better than the men and women in this room, and I challenge us all today to leave no attack unchallenged in 2015.”
Weber noted three pillars that are essential for the continued success of crop insurance. They will be the focus of educational efforts and include: Keeping crop insurance affordable for producers to promote wide-scale participation; making sure it is widely available for numerous crops in all geographic locations; and ensuring the viability of private-sector insurance delivery.
“We have a great story to tell, and if we don’t tell it, then no one will – certainly not the way it must be told,” Weber said.
In addition to stepped-up education efforts, Weber said 2015 priorities will include working with allies and building new partnerships, making investments in the private-sector delivery system to constantly improve efficiency, and tirelessly guarding program integrity by stamping out waste, fraud and abuse.
“Make no mistake, crop insurance’s days of flying under the radar are done,” he concluded, “but we have a wonderful industry, supporting a sector that is arguably more important to America than any other, [and] we have lots of friends on Capitol Hill and in the farming community.”
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On the eve of the annual convention in Florida, the president of the National Crop Insurance Services (NCIS), Tom Zacharias, penned an editorial for the Fort Myers News-Press highlighting how important agriculture is to the state’s economy and how crop insurance is the key to protecting this industry from disaster.
In the piece, Zacharias explains how, contrary to popular belief, crop insurance is available for a variety of crops nationwide and more specialty crop growers are using crop insurance as their key risk management tool. Florida growers purchased more than $1.3 billion in annual protection for orange trees alone and another half a billion for nursery crops.
Over the next few days, crop insurers, agricultural leaders, and government officials will be discussing ways to continually improve the system so that crop insurance remains affordable, widely available, and viable for growers in Florida and all across the country.
The full editorial follows and is linked here:
Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?
The answer isn’t healthcare, transportation, technology or even government. Agriculture is Florida’s second biggest job supplier, according to the University of Florida.
“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.
Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.
A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.
And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.
So how do farmers gain some control over the uncontrollable and add stability to the region’s economy.
Crop insurance is key.
Farmers purchase protection from weather disasters and price volatility, while private-sector insurers underwrite policies, verify claims and speed assistance to farmers when it is needed most.
The government, in turn, helps discount premiums to promote farmer participation and shield taxpayers from unbudgeted disaster aid that would be necessary without the private-sector insurance structure.
Crop insurance was long viewed as a tool primarily used by corn, soybean and wheat farmers in the nation’s midsection. But lately, specialty crop participation along the coasts is growing and insurance protection is available on more than 100 different crops nationwide.
More than $1.3 billion in annual insurance protection is being purchased for Florida orange trees alone with another half a billion for nursery crops. And thank goodness farmers are purchasing these policies.
In the back-to-back disaster years of 2004 and 2005, for example, more than $400 million in indemnity checks flowed to farmers in the state to help them pick up the pieces following hurricanes.
More can be done, too, to make insurance even more attractive to Florida’s farming community and help growers buy higher coverage levels to shield against tomorrow’s disasters.
The 2014 Farm Bill took initial steps by strengthening insurance for organic growers and making it more accessible for beginning farmers. Other provisions boosted protection for livestock producers and will help bring new insurance products to the marketplace.
From Feb. 8-11, leaders from the crop insurance industry, American agriculture and the federal government will be at the Hyatt Regency Coconut Point Resort in Bonita Springs to discuss risk protection in the 21st century and what can be done to continually improve the system.
Among the key discussion points: Keeping crop insurance affordable for all farmers regardless of their size or planting choices; ensuring widespread availability of insurance across all states and numerous crops; and maintaining the viability of private-sector delivery, which is far more efficient and effective than a government-managed alternative.
It is a packed agenda, and as the cornerstone of today’s farm policy, crop insurers have a lot to discuss. However, I fully expect us to do our part in supporting the other major Florida employer – tourism – while we are in town.
Tom Zacharias is president of National Crop Insurance Services, based in Overland Park, Kan.
Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?
The answer isn’t health care, transportation, technology or even government. Agriculture is Florida’s second-biggest job supplier, according to the University of Florida.
“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.
Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.
A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.
This op-ed by Tom Zacharias, president, National Crop Insurance Services, appeared in the Fort Myers News-Press on February 6, 2015.
National Crop Insurance Services
8900 Indian Creek Parkway, Suite 600
Overland Park, KS 66210-1567
Phone: 913-685-2767