Keep Crop Insurance Affordable in New Farm Bill

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By Bing Von Bergen

There is a lot of buzz in Washington again this year about the prospects of a farm bill. For those of us in agriculture, a five-year farm bill is one of the few things Congress can do to take some of the guesswork out of farming.

That’s because farming is an inherently risky venture, and Mother Nature never seems to run out of tricks to play on America’s farmers. Floods one year, droughts the next, followed by a year or two of great weather peppered with a tornado, a late-spring freeze, and then a crash in commodity prices just as your crop comes into harvest.

How in the world can one businessman plan for all of those possibilities? The simple answer is crop insurance.

Crop insurance is a nationwide program that enables farmers to purchase insurance to partially protect themselves from both weather-related and market-related disasters. I’ve been a wheat farmer for 34 years, and when I started farming, crop insurance was just a shell of what it is now. Back then, it was not widely available, was not purchased by many farmers, and was completely administered by the federal government.

Today’s crop insurance policy is a completely different animal. It’s partially underwritten by the federal government but sold and delivered by private sector insurance companies, ensuring efficient handling of claims and speedy…

 

Bing Von Bergen of Moccasin is president and acting CEO of the National Association of Wheat Growers

Opinion column: President’s proposals would undermine agriculture’s success

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By Rep. Adrian Smith (R-Neb.)

Earlier this month, President Barack Obama released his budget even though it was due on Feb. 4. While the House and Senate have already passed 10-year budget resolutions and the president’s proposals have little chance of being enacted, it is a revealing look at his priorities and vision for America.

Of particular interest to Nebraskans is how the president’s proposals would affect agriculture, the backbone of our local economy.

For example, President Obama’s 2014 budget proposes cuts to the federal crop insurance program. While we need to reduce our deficit and debt, it is counterproductive to undermine producers who manage risk.

Without crop insurance, only those producers able to purchase their own insurance will be able to afford to farm. Further cuts to this program will discourage participation which could increase premiums for producers and raise the cost of food for consumers.

Given the success of crop insurance, and in light of last year’s severe drought, we should be working to strengthen this fiscally responsible public-private partnership – not cutting it.

While the president has proposed cuts to crop insurance, he maintains increased funding levels for the Supplemental Nutrition Assistance Program (SNAP), also known as “food stamps.” Over four years, spending on the food stamp program has more than doubled, increasing from $35 billion to around $80 billion.

This amount accounts for most of the nutrition title, which comprises approximately 80 percent of the cost of the Farm Bill. Even during times of nationwide economic growth, food stamp spending increased. It is not unreasonable to consider modest changes without hurting families in need.

SNAP and agriculture programs have been enacted together in the Farm Bill since the 1960s, and more recently food stamp funding has been one major sticking point holding up passage of a long-term Farm Bill. Maintaining the status quo on food stamps while gutting crop insurance only complicates Farm Bill passage.

The president’s budget also makes a major shift in how the U.S. provides food aid around the world through the Food for Peace program. The White House budget would reduce the amount of food purchased from American farmers and ranchers and spend more to buy it from foreign producers or give cash payments to foreign suppliers.

We face logistical challenges to getting food to those most in need, and those problems deserve thoughtful deliberation. This does not mean we should push taxpayer dollars to foreign suppliers at the expense of high quality American products and jobs.

Despite these and other frustrations, I am pleased the president proposes bringing negotiations on the Trans-Pacific Partnership toward a conclusion by the end of 2013 – an ambitious goal which could open markets to more American agriculture products. I hope the president continues to pursue avenues of new market growth.

As the budget process continues, Congress should prioritize the programs and policies which encourage growth. Agriculture remains a bright spot in an otherwise bleak national economy – we cannot afford to undermine it.

Convo 25

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“The federal government provides crop insurance subsidies to farmers in part to achieve high crop insurance participation and coverage levels, which are intended, according to USDA economists, to reduce the need for ad hoc disaster assistance payment to help farmers recover from natural disasters which can be costly.”

Convo 24

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“Over the last 15 years, crop insurance is where we have been trying to help move farmers in terms of taking advantage of risk management tools for their crops.

“It is still the central focus of where we think farmers ought to be able to have easy access to insure their crops and insure some type of revenue out of it. It makes the most sense to me and always has.”

 

Crop insurance one way to help protect farmers

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Right before our very eyes, the nation’s specialty crop capital has turned into the nation’s frozen food section, as the San Joaquin Valley suffered several consecutive nights of freezing temperatures. While the extent of the damage to some crops could take weeks to assess, one thing is clear: Some farmers will take a big loss.

Loss is common in agriculture, and there has been a lot of it lately, though most of it was not here in California. In 2011, we saw a a freeze in Florida that hit the citrus crop, then Midwestern droughts, floods in the South and even hurricanes. Last year started off looking like a banner year but morphed into the worst U.S. drought in decades. Much of the Midwest is still suffering.

Thankfully, most farmers are protected by crop insurance, a backstop for when the bottom falls out. Crop insurance helps farmers manage risk. It combines the public sector with the competitiveness of the private sector. Farmers buy policies that are partially underwritten by the government, but the private sector services the policies and pays off…

 

 

Convo 23

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Crop insurance payments made a huge difference for many farmers that suffered drought losses. U.S. crop insurance is easy and a comprehensive marketing tool that protects against yield losses and price declines. The program works.

Farmers rely on crop insurance when nature turns on them

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There is a huge story playing out right before our very eyes this year in agriculture that nearly everyone is missing: Despite the fact that this nation has faced two of the worst farming years in decades – with devastating drought in the Southern Plains and flooding in the Midwest in 2011, and widespread drought over major corn and soybean growing regions in 2012 – there has not been a single call for an ad hoc disaster bill from America’s crop farmers.

And why no calls for disaster assistance from crop farmers? Because 86 percent of planted farmland in 2012 was protected by crop insurance, the best risk management tool available to farmers. Before crop insurance was widely available, natural disasters like we have just experienced would have triggered a very costly, unbudgeted ad hoc disaster bill. Forty-two such emergency disaster bills in agriculture have cost taxpayers $70 billion since 1989, according to the Congressional Research Service.

Crop insurance was designed by Congress to largely replace the need for ad hoc disaster legislation, thereby helping to shelter taxpayers from the full costs of agricultural disasters and avoiding the need to enact new disaster assistance following every major farm disaster, such as was recently experienced…

Convo 22

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But there are those who are making uninformed and uneducated criticisms about crop insurance – and America’s farmers – in the midst of this national tragedy. According to the Washington-based Environmental Working Group, farmers have been ‘praying for drought, not rain.’ Really?  I’ve seen a lot of looks on the faces of my fellow farmers this past summer, as their crops and have withered despite their best efforts and their hopes for a great harvest have been dashed.”

Insurance important for farmers

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It would be nice to talk about the great drought of 2012 in the past tense, but unfortunately, the entire state of Missouri remains in drought.

But if Missouri’s farmers hadn’t purchased a crop insurance policy last year — as most do every year — they could have lost more than their crops. They could have lost their farms, or their life savings, which is why crop insurance has become the primary risk management tool for farmers across the country.

Crop insurance is a modern-hybrid risk management tool. It’s a public-private partnership whereby farmers purchase insurance — partially underwritten by the federal government — to cover crop losses. Policies are sold, serviced and delivered by the private sector, and when disaster strikes, the…

Convo 21

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Crop insurance was the No. 1 tool that farmers said they needed, that they rely on. As we look at eliminating direct payments, we think that it’s very important that crop insurance be intact.

US cuts crop insurance rates for soybeans, rice despite drought

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Corn, cotton, sorghum, spring wheat rates revised too

* USDA will phase in changes to cushion drought impact

* Agency expects little impact on 2013 planting decisions

WASHINGTON, Nov 28 (Reuters) – The U.S. government has ordered crop insurers to charge lower premiums to soybean growers for the second year in a row as part of rate revisions for six major crops, even as many farmers collect on claims following this year’s severe drought.

The changes are part of an Agriculture Department project to improve the actuarial soundness of the crop insurance program, which is federally subsidized but privately run.

Lenders often require insurance or other collateral to be pledged by farmers to assure repayment of farm operating loans. USDA pays 62 cents of each $1 in premiums, which totaled $11 billion this year.

USDA’s Risk Management Agency on Wednesday said that the revised rates are not expected to affect planting decisions among various crops in 2013.

The new rates will be phased in “to limit year-to-year premium changes and potential increases due to losses experienced in 2012 as a result of drought,” the agency said.

Indemnities for crop losses could hit a record $20 billion this year following the worst drought in half a century, analysts say, double the mark set in 2011. So far, $6.3 billion has been paid out on insurance policies.

Overall, premiums for soybeans will fall by 6 percent and for rice by 8 percent for 2013 crops while the premium for spring-planted wheat will rise by 4 percent.

Corn, cotton and grain sorghum premiums will decline in the core growing states for those crops but will rise in outlying states. The same pattern applies to soybeans,…

Keeping crop insurance is critical

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It’s no big secret that Missouri is facing its worst drought in 30 years. This has had a catastrophic effect on the state’s farm and livestock sector, prompting Secretary of Agriculture Tom Vilsack to declare every county in the state a disaster area in July. And while tropical storm Isaac brought us some much-needed rain, every county in the state remains in some level of drought.

As a Missouri farmer, I can tell you that there are few disappointments in life bigger than losing a crop. The loss not only robs you of income but also robs you of the joy of the harvest, which is what we farmers are all about.

If I hadn’t purchased a crop insurance policy this year to help me through an event like this, I possibly wouldn’t be able to farm again next year. But that’s the main reason why the federal government teamed up with the private sector years ago to form this public-

 

Convo 20

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If I hadn’t purchased a crop insurance policy this year to help me through an event like this, I possibly wouldn’t be able to farm again next year. But that’s the main reason why the federal government teamed up with the private sector years ago to form this public-private partnership that helps farmers manage their risk while shielding taxpayers from expensive farm disaster bailouts.

Bob and Mike Buntin: Insurance means drought won’t ruin farmers

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As Illinois farmers, our biggest concerns regarding the whims of Mother Nature are late spring freezes, heavy spring rains that delay planting, wind, hail, and possibly flood damage.

But this year, we’re in a whole other ballgame. We live in a part of the state that is affectionately known as “Little Egypt,” which could be quite appropriate given the fact that our climate seems more like the Sahara Dessert than the Midwest.

The entire state finds itself in a drought, with all but five counties in a state of “severe, extreme or exceptional” drought. To put that in perspective, a good part of our state is a foot or more below average on rainfall this year. And about 66 percent of our entire corn crop is currently in poor or very poor condition.

It’s times like these that farmers who purchase crop insurance will be able to sleep at night. That’s because crop insurance was designed by Congress for years like this, as a tool to move some of the risk of America’s farm sector from the taxpayers to the private sector.

Convo 20

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But like all farm policies, crop insurance has taken its fair share of criticism from those in Washington who would like to see a much less robust agriculture sector. These critics are actually using this year’s drought to paint farmers as self-serving and living off the government; people who, according to the Environmental Working Group, are ‘praying for drought, not rain.’ What nonsense. Suffice it to say that only in Washington, D.C., would a group think that a check for an insurance loss could possibly be anywhere close to as satisfying – both financially and emotionally – as a bountiful harvest.

Crop insurance good for farmers, taxpayers

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There are those who say that the grass is always greener on the other side of the fence. But the opposite can be true as well. Sometimes, it’s not until you look on the other side of the fence that you realize just how green your own grass is.

That’s certainly true this year. After good precipitation in the spring, weather in Eastern Montana has been on the dry side since July; but the drought is not yet as severe as that in the Midwest. Weather is top of mind every year, since I’m a farmer who worries every year when I plant 2,300 acres of durum wheat, peas, lentils, flax and canola.

Last year, it was so wet from spring rains that I couldn’t get all of my land seeded. This year, after a promising start, it has become too dry. Mother Nature can be unpredictable, and a few bad years in a row without a good risk management strategy in place could mean the end of your farming career. That’s why I’ve purchased crop insurance every year since I started farming in 2001.

Crop insurance is a public-private partnership that not only reduces taxpayer exposure to risk, but also saves them money. When disaster struck last year with floods in the Midwest, drought in the Southern Plains and hurricanes on the East Coast, farmers who lost everything didn’t send their representatives back to Washington asking for a big farm disaster bill…

 

 

Crop insurance: Smart, fiscally responsible farm policy

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Every county in the state of Iowa is experiencing severe or extreme drought conditions, according to the U.S. Drought Monitor. This time last near, not a single county in the state was experiencing drought. In fact, it would be fair to say that farmers saw quite the opposite conditions last year, especially here in western Iowa.

We had water, and lots of it. In fact, counties bordering the Missouri River had thousands of acres of farmland – homes and communities – that were under water for four months. The Missouri River, which is typically less than 1,000 feet wide, was roughly six miles wide from bank to bank.

From a farmer’s perspective, the only thing last year and this year have in common is that crop losses will be steep. But this is the nature of agriculture, where we are blessed with some of the most productive land on earth in the good years, and then the threat of losing an entire crop, back to back, in the bad years. Thank goodness most farmers purchase crop insurance to help us get back on our feet after those bad years strike.

Last year, Iowa farmers shelled out more than $444 million from their own pockets to purchase crop insurance. Crop insurance has become the best risk management tool available for most farmers because it is a public-private partnership…

Crop insurance: Smart, fiscally responsible farm policy

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Every county in the state of Iowa is experiencing severe or extreme drought conditions, according to the U.S. Drought Monitor. This time last near, not a single county in the state was experiencing drought. In fact, it would be fair to say that farmers saw quite the opposite conditions last year, especially here in western Iowa.

We had water, and lots of it. In fact, counties bordering the Missouri River had thousands of acres of farmland – homes and communities – that were under water for four months. The Missouri River, which is typically less than 1,000 feet wide, was roughly six miles wide from bank to bank.

From a farmer’s perspective, the only thing last year and this year have in common is that crop losses will be steep. But this is the nature of agriculture, where we are blessed with some of the most productive land on earth in the good years, and then the threat of losing an entire crop, back to back, in the bad years. Thank goodness most farmers purchase crop insurance to help us get back on our feet after those bad years strike.

Last year, Iowa farmers shelled out more than $444 million from their own pockets to purchase crop insurance. Crop insurance has become the best risk management tool available for most farmers because it is a public-private partnership…

Crop Insurance Saves Taxpayers Money

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The same farmers who faced record flooding last year are facing severe drought this year, which underscores the need for effective risk management tools in agriculture. The Sept. 2 article “Highest cost of drought falls on taxpayers” misses the reasons why crop insurance has gained such broad public and political support.

Farmers purchase crop insurance as a way to shelter themselves from the whims of nature. Most Iowa farmers purchase crop insurance yearly, but rarely collect indemnities. For example, in 2011, Iowa farmers spent $444 million of their money to purchase 124,000 crop insurance policies, of which only 15,000 were indemnified.

The crop insurance system saves taxpayers money. It has all but eliminated the historical response to agricultural disasters, which was 42 supplemental ad hoc disaster bills — measures that cost taxpayers

$70 billion since 1989, according to the Congressional Research Service. And spending on farm programs has gone down substantially over the last few years, roughly 36 percent, as crop insurance use has risen.

Unfortunately, the Environmental Working Group is critical of crop insurance and was quoted that “farmers are praying for drought, not rain” this year. The statement shows a lack of understanding of how crop insurance works and a callous attitude toward the American farmer.

Americans are accustomed to a bountiful food supply that remains affordable. This is possible only through stability and reinvestment in agriculture by America’s farmers and ranchers. For most of them, crop insurance is the best risk management tool, or only such tool, available.

Steve Hamilton, Oakland, Iowa

 

NCIS Responds to Chicago Tribune Editorial

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It is unfortunate that the Chicago Tribune would choose to criticize crop insurance, a new hybrid of private-public risk management that is saving taxpayers lots of money and shielding them from risk (“Farm Bill? Later. Political gridlock may save U.S. from bad farm legislation,” Editorial, Sept. 17).

In the past, agriculture disasters like this year’s historic drought would have resulted in huge and costly agriculture disaster bills. In fact, since 1989, 42 such bills cost taxpayers $70 billion, according to the Congressional Research Service.

Crop insurance represents a whole new chapter in agriculture risk management. First and foremost, farmers must purchase a policy — ensuring that they have “skin in the game” — to be eligible to collect an indemnity for damages. In 2011, farmers paid more than $4.5 billion in premiums.

Since the emergence of the modern-day crop-insurance system, spending on farm safety-net programs has gone down by roughly 36 percent. Crop insurance alone has had its funding reduced by $12 billion since just 2008.

Last year’s string of natural disasters lasting the entire year was a case study in the efficacy of crop insurance. Despite freezes, floods, droughts, wildfires and hurricanes, there was not a single call fordisaster assistance from America’s farmers.

Why is that? Because 84 percent of eligible farmland, some 266 million acres growing food, feed, fuel and fiber for this nation and the world, was protected by crop-insurance policies.

Crop insurance has become the most lauded risk management tool by farmers, bankers and many elected officials of both parties for onereason: It works.

In today’s politically charged environment, there are few things that both Republicans and Democrats can agree upon. Yet despite thatfact, members from both sides of the aisle have voted for a strong crop-insurance policy as a cornerstone risk-management tool in the 2012 Farm Bill.

— Thomas P. Zacharias, president, National Crop Insurance Services, Overland Park, Kan. (September 25, 2012)

 

Drought Update – September 25, 2012

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The portion of the lower 48 states experiencing moderate to exceptional drought increased yet again, to 65%, according to the September 18 U.S. Drought Monitor. In 41%of those states, the drought conditions are considered “severe, extreme or exceptional.” In addition, 54%of the country was in moderate drought or worse.

The majority of the country’s corn and soybean acres are affected, and while it’s too early to predict the full extent of agricultural damage, based on weather data, the losses will likely be greater than 2011 and could rival the flood losses of 1993. Some think losses could be as great as the 1988 drought, but it is still too soon to make that determination.

Crop Insurance Helpful for Ohio Farmers

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The National Climatic Data Center reported that as the 2012 drought deepened and expanded this summer, it became one of the six largest droughts in modern record keeping. Here in Ohio, you really didn’t need a weather expert to tell you just how bad it was. And before the rains finally came – which were too late for many of crop – the fields were so dry they had cracked, there was only stubble left for cattle to feed on, and creeks and wells were drying up.

This has been one of those years that can be full of disappointment for a farmer like me. Planting this spring the soil looked great, crop prices were high, and there was every indication that a bountiful harvest was a strong possibility. But the rains left and did not return for months, leaving 53 percent of the corn crop in poor or very poor condition, roughly one-third of the soybean crop in poor or very poor condition and almost 70 percent of our pastures the same.

Author – Mark Drewes is a farmer in Wood County, Ohio.

This op-ed was published in the Bowling Green Sentinal-Tribune.

Crop Insurance Helpful for Ohio Farmers

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The National Climatic Data Center reported that as the 2012 drought deepened and expanded this summer, it became one of the six largest droughts in modern record keeping. Here in Ohio, you really didn’t need a weather expert to tell you just how bad it was. And before the rains finally came – which were too late for many of crop – the fields were so dry they had cracked, there was only stubble left for cattle to feed on, and creeks and wells were drying up.

This has been one of those years that can be full of disappointment for a farmer like me. Planting this spring the soil looked great, crop prices were high, and there was every indication that a bountiful harvest was a strong possibility. But the rains left and did not return for months, leaving 53 percent of the corn crop in poor or very poor condition, roughly one-third of the soybean crop in poor or very poor condition and almost 70 percent of our pastures the same.

Author – Mark Drewes is a farmer in Wood County, Ohio.

This op-ed was published in the Bowling Green Sentinal-Tribune.

Drought Update – September 18, 2012

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Although the rains from Hurricane Isaac brought relief to some, the portion of the lower 48 states still experiencing moderate to exceptional drought increased to 64%, up one percent from last week, according to the September 11 U.S. Drought Monitor.  In 42%of those states, the drought conditions are considered “severe, extreme or exceptional.” In addition, 54%of the country was in moderate drought or worse.

The majority of the country’s corn and soybean acres are affected, and while it’s too early to predict the full extent of agricultural damage, based on weather data, the losses will likely be greater than 2011 and could rival the flood losses of 1993. Some think losses could be as great as the 1988 drought, but it is still too soon to make that determination.

Recent Flooding and Drought Conditions Have Made Crop Insurance More Important Than Ever

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Last year’s flooding, coupled with this year’s extreme drought, have made crop insurance more important than ever to Missouri farmers.

“Crop insurance is a completely different industry than it was a few years ago. It has gone from being something producers buy in order to receive their disaster payments to something they consistently rely on,” says Amanda Hurley, a licensed crop insurance agent with C&H Insurance Services LLC in Charleston, Mo. The industry has responded by offering several more insurance options, says Hurley, including additional replant and prevented plant options.

Recent crop disasters, as well as the increased risk from higher input costs, have prompted both growers and lenders to use insurance programs more effectively, says Hurley.

“Wise lenders and producers are much more aware of risk these days and are looking for ways to mitigate that risk,” she says. “Crop Insurance is a government program. Your basic yield and revenue products are the same no matter what agent you buy them from. What producers need to realize is they are shopping around for service, not a better premium price. You have to sign up for crop insurance long before you are even sure what/where you are going to plant. Farmers need to have a strategy that will…

Recent Flooding and Drought Conditions Have Made Crop Insurance More Important Than Ever

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Last year’s flooding, coupled with this year’s extreme drought, have made crop insurance more important than ever to Missouri farmers.

“Crop insurance is a completely different industry than it was a few years ago. It has gone from being something producers buy in order to receive their disaster payments to something they consistently rely on,” says Amanda Hurley, a licensed crop insurance agent with C&H Insurance Services LLC in Charleston, Mo. The industry has responded by offering several more insurance options, says Hurley, including additional replant and prevented plant options.

Recent crop disasters, as well as the increased risk from higher input costs, have prompted both growers and lenders to use insurance programs more effectively, says Hurley.

“Wise lenders and producers are much more aware of risk these days and are looking for ways to mitigate that risk,” she says. “Crop Insurance is a government program. Your basic yield and revenue products are the same no matter what agent you buy them from. What producers need to realize is they are shopping around for service, not a better premium price. You have to sign up for crop insurance long before you are even sure what/where you are going to plant. Farmers need to have a strategy that will…

Convo 19

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The crop insurance program is a dramatic risk mitigator for the farmer.

Convo 19

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The crop insurance program is a dramatic risk mitigator for the farmer.

NCIS Responds to American Enterprise Institute

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The American Enterprise Institute (AEI) released a paper in September 2012 claiming potential costs of $20 billion per year for the Price Loss Coverage (PLC) and Supplemental Coverage Option (SCO) programs in the Congressional 2012 Farm Bill proposals. The release is apparently intended to create alarm over potentially high costs of future farm policy. Unfortunately, AEI is following the model of other farm policy critics by employing inaccurate data and failing to tell whole story.

Read more…

Crop Insurance Payments Not a ‘Bailout’ for Farmers

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Farm income is forecast to increase over last year, helped by insurance payouts from the crop-insurance program covering losses from the disastrous drought in much of the country, but a insurance associations argue that the program is not a “bailout” that guarantees profits for farmers.

The 2012 Farm Sector Income Forecast from the United States Department of Agriculture says net farm income is forecast to be more than $122 billion this year, up close to 4 percent over last year.

The USDA, which issued its report during the last week of August, says that the increase will, in part, be helped by crop-insurance payments. The forecast also reflects market impacts of “widespread drought and high temperatures during the growing season [and] large increases in the value of this year’s crop….”

Drought conditions are putting corn and soybean yields at nine-year lows, the report says, but the factors hurting corn producers helps another segment of the farm market: wheat farmers. Wheat farmers will see prices increase by almost 13.5 percent, says the report, with the increase in demand to replace corn with wheat.

Drought Update – September 10, 2012

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Despite the rains from Hurricane Isaac, most of the continental U.S. remains parched, with 63% of the lower 48 states still experiencing moderate to exceptional drought, according to the September 4 U.S. Drought Monitor. In 42%of those states, the drought conditions are considered “severe, extreme or exceptional.” In addition, 53% of the country was in moderate drought or worse.

The majority of the country’s corn and soybean acres are affected, and while it’s too early to predict the full extent of agricultural damage, based on weather data, the losses will likely be greater than 2011 and could rival the flood losses of 1993. Some think losses could be as great as the 1988 drought, but it is still too soon to make that determination.

A Silver Lining for Farmers

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Northeast Indiana looks more like West Texas this summer than America’s heartland. According to the U.S. Drought Monitor, nearly 70 percent of the state, including a wide swath from around the Kentucky border in the south north through Fort Wayne and all the way to the Michigan border, is in an “extreme or exceptional” drought. Sadly, there is not a county in the state where some degree of drought does not exist.

A total of 73 percent of the state’s corn crop, the nation’s most valuable commodity, is in poor or very poor condition. Some 53 percent of our soybean crop, the second-biggest revenue-generating commodity in the state, is in poor or very poor condition as well. Ranchers in the state are quickly running out of options to feed their livestock, as 89 percent of the state’s pastures are in poor or very poor condition.

While we’ve been blessed with adequate rainfall for the past month, for the corn crop it’s too little and too late. We’re also still at a level of subsoil moisture that, if it doesn’t improve, will potentially make it difficult to produce a crop in 2013.

For farmers like me who have purchased crop insurance, it will be a hard year, maybe even a bad year, but it won’t be the end of farming for us. Crop insurance, which covers crises like the one we find ourselves in, was designed by Congress as a way to encourage farmers to put some “skin” in the risk-management game while moving some of the risk of America’s farm sector from the taxpayers to the private sector.

Rob Schuman is a corn, soybean and cattle farmer from Churubusco and vice president of the Whitley County Farm Bureau. He wrote this for The Journal Gazette.

Drought Update – September 4, 2012

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The continental United States is parched, with 63% of the lower 48 states experiencing moderate to exceptional drought, according to the August 28 U.S. Drought Monitor. Crop insurance is helping farmers pick up the pieces. So far in 2012:

• Farmers have invested more than $4 billion to purchase more than 1.2 million crop insurance policies.

• The policies provide $115 billion in liability protection.

• 15,000 private crop insurance agents and 5,000 loss adjusters are already helping farmers with claims.

• The crop insurance industry has already paid out $1.2 billion in indemnity checks.

 

Drought Update – August 27, 2012

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The continental United States is parched, with 63% of the lower 48 states experiencing moderate to exceptional drought, according to the August 21 U.S. Drought Monitor. Crop insurance is helping farmers pick up the pieces. So far in 2012:

Farmers have invested more than $4 billion to purchase more than 1.1 million crop insurance policies.

The policies provide $114 billion in liability protection.

15,000 private crop insurance agents and 5,000 loss adjusters are already helping farmers with claims.

The crop insurance industry has already paid out $1.1 billion in indemnity checks.

Drought Update – August 27, 2012

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The continental United States is parched, with 63% of the lower 48 states experiencing moderate to exceptional drought, according to the August 21 U.S. Drought Monitor. Crop insurance is helping farmers pick up the pieces. So far in 2012:

Farmers have invested more than $4 billion to purchase more than 1.1 million crop insurance policies.

The policies provide $114 billion in liability protection.

15,000 private crop insurance agents and 5,000 loss adjusters are already helping farmers with claims.

The crop insurance industry has already paid out $1.1 billion in indemnity checks.

Iowa Corn Farmers Face Two Straight Years of Disaster

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Oklahoma is wheat country. Iowa is corn country. What farmers in the two states have in common is weather-related disasters — consecutive years of cropland devastation.

Recent rains and cooler temperatures notwithstanding, farm belt states are suffering. The 2012 winter wheat harvest in Oklahoma came before the summer meltdown; corn farmers in Iowa aren’t so fortunate.

Their plight is well-known. What isn’t as obvious is that farmers had planted the largest corn crop since 1937, according to the National Crop Insurance Services (NCIS). Despite that, corn production is forecast to be the lowest since 2006. Average yields are forecast at 123.4 bushels per acre, the lowest since 1995. Soybeans have also been hit hard.

 

Iowa Corn Farmers Face Two Straight Years of Disaster

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Oklahoma is wheat country. Iowa is corn country. What farmers in the two states have in common is weather-related disasters — consecutive years of cropland devastation.

Recent rains and cooler temperatures notwithstanding, farm belt states are suffering. The 2012 winter wheat harvest in Oklahoma came before the summer meltdown; corn farmers in Iowa aren’t so fortunate.

Their plight is well-known. What isn’t as obvious is that farmers had planted the largest corn crop since 1937, according to the National Crop Insurance Services (NCIS). Despite that, corn production is forecast to be the lowest since 2006. Average yields are forecast at 123.4 bushels per acre, the lowest since 1995. Soybeans have also been hit hard.

 

Drought Update – August 20, 2012

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The continental United States is parched,with 62% of the lower 48 states experiencing moderate to exceptional drought, according to the August 14 U.S. Drought Monitor. Crop insurance is helping farmers pick up the pieces. So far in 2012:

Farmers have invested $3.9 billion to purchase more than 1.1 million crop insurance policies.

The policies provide $110 billion in liability protection.

15,000 private crop insurance agents and 5,000 loss adjusters are already helping farmers with claims.

The crop insurance industry has already paid out $948 million in indemnity checks.

Drought Update – August 20, 2012

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The continental United States is parched,with 62% of the lower 48 states experiencing moderate to exceptional drought, according to the August 14 U.S. Drought Monitor. Crop insurance is helping farmers pick up the pieces. So far in 2012:

Farmers have invested $3.9 billion to purchase more than 1.1 million crop insurance policies.

The policies provide $110 billion in liability protection.

15,000 private crop insurance agents and 5,000 loss adjusters are already helping farmers with claims.

The crop insurance industry has already paid out $948 million in indemnity checks.

Convo 18

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Crop insurance has become the chief risk management tool for farmers for one simple reason: It works. Farmers purchase policies and can receive claims only for documented losses. As you noted, most of the United States is locked in a severe drought this year. Crop losses may be deep, and no crop insurance indemnity will be enough to make any of these farmers whole again. The indemnity will allow those who purchased policies to get back on their feet and farm yet another day.

Convo 18

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Crop insurance has become the chief risk management tool for farmers for one simple reason: It works. Farmers purchase policies and can receive claims only for documented losses. As you noted, most of the United States is locked in a severe drought this year. Crop losses may be deep, and no crop insurance indemnity will be enough to make any of these farmers whole again. The indemnity will allow those who purchased policies to get back on their feet and farm yet another day.

Crop insurance will cover massive losses

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In spite of the depth and far-reaching impact of the drought that has gripped more than half of the nation’s agricultural production area this summer, farmers should have no worries regarding their crop insurance policy’s ability to pay.

“The crop insurance industry is on the ground in the drought-stricken areas, mobilizing loss-adjuster teams,” says Thomas P. Zacharias, president, National Crop Insurance Services in a statement released today.

“Farmers can be assured their claims will be paid, and that the companies will move as quickly and as efficiently as possible, given the expected volume of claims, to assess damages and get indemnity checks into the hands of farmers,” Zacharias says.

Claim volume will be huge. Recent USDA crop report estimates indicated significant losses for corn and soybeans, result of the heat stress and extreme drought that covers much of the Corn Belt.

“Although this was the largest corn crop planted since 1937, production is projected to be down 13 percent, the lowest output since 2006,” Zacharias says. “Corn yields are expected to average 123.4 bushels per acre, down nearly 24 bushels from last year, which would be the lowest average yield since 1995. Soybean production is forecast to be down by 12 percent from last year, and if realized, would have the lowest average yield since 2003.”

Zacharias says most farmers in drought-stressed areas are covered by crop insurance.

“Some farmers in these affected areas have purchased crop insurance policies for years and have never collected an indemnity. This year, their decision to purchase crop insurance confirms their practice of sound risk management.”

Crop insurance will cover massive losses

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In spite of the depth and far-reaching impact of the drought that has gripped more than half of the nation’s agricultural production area this summer, farmers should have no worries regarding their crop insurance policy’s ability to pay.

“The crop insurance industry is on the ground in the drought-stricken areas, mobilizing loss-adjuster teams,” says Thomas P. Zacharias, president, National Crop Insurance Services in a statement released today.

“Farmers can be assured their claims will be paid, and that the companies will move as quickly and as efficiently as possible, given the expected volume of claims, to assess damages and get indemnity checks into the hands of farmers,” Zacharias says.

Claim volume will be huge. Recent USDA crop report estimates indicated significant losses for corn and soybeans, result of the heat stress and extreme drought that covers much of the Corn Belt.

“Although this was the largest corn crop planted since 1937, production is projected to be down 13 percent, the lowest output since 2006,” Zacharias says. “Corn yields are expected to average 123.4 bushels per acre, down nearly 24 bushels from last year, which would be the lowest average yield since 1995. Soybean production is forecast to be down by 12 percent from last year, and if realized, would have the lowest average yield since 2003.”

Zacharias says most farmers in drought-stressed areas are covered by crop insurance.

“Some farmers in these affected areas have purchased crop insurance policies for years and have never collected an indemnity. This year, their decision to purchase crop insurance confirms their practice of sound risk management.”

Crop insurance adjusters making rounds before fall harvest

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In this drought, crop insurance has turned into a lifeline for many farmers in the Tri-States.

The U.S. Department of Ag says it expects corn growers to average 123 bushels per acre, which is down 24 bushels from last year. The federal government says corn growers could end up with their lowest average yield in 17 years as the drought continues to take its toll.

The USDA has started sending letters to farmers, explaining what things farmers need to know before having an insurance adjuster on site to evaluate their crops.

“There would be an awful lot of people out here today that would be extremely concerned with this drought if we didn’t have crop insurance,” farmer Dan Hugenberg said.

Hugenberg says insurance is his life line this year as he watches the drought destroy his corn crop.

“I’ve got $400,000-500,000 invested in this crop and if I come out with a 30 bushel yield or 20 bushel yield, and if I only come out with $160,000, it takes a long time to recover,” Hugenberg said.

NCIS Responds to August 10, 2012, USDA Crop Progress Report

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The following statement is in response to the August 10 USDA Crop Report. The statement should be attributed to Thomas P. Zacharias, president, National Crop Insurance Services.

“As expected, the Agriculture Department lowered the corn and soybean production forecast in its August 10 crop production report released today, due to heat stress and extreme drought throughout much of the Corn Belt.

“Although this was the largest corn crop planted since 1937, production is projected to be down 13 percent, the lowest output since 2006. Corn yields are expected to average 123.4 bushels per acre, down nearly 24 bushels from last year, which would be the lowest average yield since 1995. Soybeans tell a similar story. Soybean production is forecast to be down by 12 percent from last year, and if realized, would have the lowest average yield since 2003.

“Thankfully, the vast majority of the farms in these drought-ravaged areas are protected by crop insurance. Farmers purchase crop insurance polices to protect themselves against situations just like this. Some of the farmers in these affected areas have purchased crop insurance policies for years and have never collected an indemnity. This year, their decision to purchase crop insurance confirms their practice of sound risk management.

“Obviously, there will be continued speculation about the ultimate cost of the 2012 drought. Even with today’s report, it is still too early to provide precise estimates of the losses. We are analyzing the August 10 report and will compare that with reports from the field along with the crop insurance policy data that is still being processed and reported to RMA. Again, we do not yet have a complete picture of the situation and final outcomes will vary by state, crop and types of policies purchased.

“What is certain is that the crop insurance industry is on the ground in the drought-stricken areas, mobilizing loss-adjuster teams. Farmers can be assured their claims will be paid, and that the companies will move as quickly and as efficiently as possible, given the expected volume of claims, to assess damages and get indemnity checks into the hands of farmers.

“In order to be approved to sell federal crop insurance, companies must have adequate surplus and reinsurance at their disposal so that even if a catastrophe of this magnitude strikes, and then one strikes again the next year, the company is still capable of paying indemnities on the policies they sell.

“In addition to company surplus and reinsurance, the federal government, serves as the backstop reinsurer for all companies that sell crop insurance. As such, the federal government shares in the gains and the losses of the program. Gains in prior years can and will be used to offset losses in years like this one.

“In terms of the industry’s ability to handle the claims load that will be generated over the next several months, the industry has 5,000 claims adjusters and 15,000 agents working tirelessly right now to help growers cope. These adjusters are working hard to get money to farmers who have suffered losses, already paying out $822 million in indemnities to date. Companies are also mobilizing adjusters away from other parts of the country that have not been affected by drought and sending those adjusters to the hard-hit states.

“With their crop insurance policies in hand, farmers will not only survive this drought but plant again next year, ensuring a continuity of the food, feed, fiber and fuel supply for this nation and an increasingly hungry world.”

 

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Crop Failed? There’s Insurance for That

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Tess Vigeland: Congress left for its summer vacation without coming up with a drought relief package for farmers and ranchers.

But that doesn’t mean they’re all left high and dry. A lot of farmers are going to get help from crop insurance. And that could put a crimp in the bottom line of insurance companies — and taxpayers. Marketplace’s Adriene Hill explains.

Adriene Hill: Corn is supposed to be green and tall this time of year.

It’s not.

Doug Yoder: It’s brown.

Doug Yoder is with the Illinois Farm Bureau. He says it’s brown and/or short, depending on where you are.

But scrawny plants don’t always add up to scrawny paychecks. Most corn and soybean farmers — and we’re talking big-scale farmers here — have crop insurance. The feds pick up a big part of the tab, farmers pay the rest.

Yoder: Anybody that drops a seed in the ground and hopes to make a living on that, you’re accustomed to taking risks. But there are also limits to those risks that you can take, and we’ll be testing those limits this year. There’s no doubt about it.

Crop Failed? There’s Insurance for That

/in , /by

Tess Vigeland: Congress left for its summer vacation without coming up with a drought relief package for farmers and ranchers.

But that doesn’t mean they’re all left high and dry. A lot of farmers are going to get help from crop insurance. And that could put a crimp in the bottom line of insurance companies — and taxpayers. Marketplace’s Adriene Hill explains.

Adriene Hill: Corn is supposed to be green and tall this time of year.

It’s not.

Doug Yoder: It’s brown.

Doug Yoder is with the Illinois Farm Bureau. He says it’s brown and/or short, depending on where you are.

But scrawny plants don’t always add up to scrawny paychecks. Most corn and soybean farmers — and we’re talking big-scale farmers here — have crop insurance. The feds pick up a big part of the tab, farmers pay the rest.

Yoder: Anybody that drops a seed in the ground and hopes to make a living on that, you’re accustomed to taking risks. But there are also limits to those risks that you can take, and we’ll be testing those limits this year. There’s no doubt about it.

Drought May Cost $20 Billion in Crop Insurance

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WASHINGTON (CNNMoney) — As the drought continues to ravage the nation’s corn, wheat and soybean fields, crop insurance losses are expected to break records.

With nearly half of the continental United States under severe drought conditions, crop insurance losses are mounting daily, according to a report from the National Drought Mitigation Center at the University of Nebraska-Lincoln released on Thursday.

“It will be a major loss situation,” said Thomas Zacharias, president of the National Crop Insurance Services, a lobbying group representing private crop insurers. “The companies are in the field adjusting claims as we speak.”

An economist with the group roughly estimated that losses could top $20 billion.

And taxpayers will ultimately shoulder most of the cost the nation’s scorched fields.

While there are no official estimates available yet, National Crop Insurance Services Economist Keith Collins said crop losses this year look as bad or worse than other terrible drought years.

 

Drought May Cost $20 Billion in Crop Insurance

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WASHINGTON (CNNMoney) — As the drought continues to ravage the nation’s corn, wheat and soybean fields, crop insurance losses are expected to break records.

With nearly half of the continental United States under severe drought conditions, crop insurance losses are mounting daily, according to a report from the National Drought Mitigation Center at the University of Nebraska-Lincoln released on Thursday.

“It will be a major loss situation,” said Thomas Zacharias, president of the National Crop Insurance Services, a lobbying group representing private crop insurers. “The companies are in the field adjusting claims as we speak.”

An economist with the group roughly estimated that losses could top $20 billion.

And taxpayers will ultimately shoulder most of the cost the nation’s scorched fields.

While there are no official estimates available yet, National Crop Insurance Services Economist Keith Collins said crop losses this year look as bad or worse than other terrible drought years.

 

Plowed Under ‐ Redux

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By Thomas P. Zacharias, President, National Crop Insurance Services

The Environmental Working Group’s (EWG) most recent report entitled Plowed Under (August 6, 2012) deserves a few candid observations. By all outward appearances, the document appears to be a standalone “research effort.”

As such, the report has no real analytical or science‐based foundation. The report attributes recent crop land use conversion rates to the existence of crop insurance. How is this substantiated? By way of a series of mapping overlays, EWG associates loss of wildlife habitat solely due to farmers’ use of crop insurance. There is no demonstration of any formal analysis, such as statistical or economic considerations. It is not obvious that the reportunderwent any form of peer‐review, nor is there is any reference in the report to any similar analysis that has been published in peerreviewed journals.

This is quite unfortunate and irresponsible. Fortunately, one does not have to search too far to find a series of peer‐reviewed studies on this very topic. I have provided such a review of the subject here.

So, what do we know…

In a paper presented at the 2011 Annual Meeting of the Agricultural and Applied Economics Association, authors Miao, Feng, and Hennessy (Iowa State University) find crop land use effects attributable to crop insurance to be quite small. Conversely, the authors find product price to be the more dominant factor in farmer’s land use decision. This is consistent with most published literature.

More recently in the August 2012 Journal of Agricultural and Resource Economics, authors Walters, Shumway, Chouinard, and Wandschneider find “…. small, but not universal, tendency for increased crop insurance participation to create “noticeable” environmental effects …evidence shows both positive and negative effects as cropping patterns change. On average, the contribution of crop insurance to adverse environmental effects is slightly less than 1%…” A careful reading of their paper also indicates that product price is the dominant factor in farmers’ acreage decisions, again consistent with the existing literature.

These are peer‐reviewed studies that are based on formal analytical and statistical techniques; not for the faintof heart. This should be the essence of the policy debate. The assertion by EWG that farmers are planting on less‐productive land simply and solely to collect insurance indemnities is unfounded.

Partial and incomplete analysis of important agricultural and environmental policy issues does not serve the public well, particularly in the midst of the Farm Bill debate and the current drought situation in the Midwest. Maybe farmers are praying for rain instead of drought, and maybe policy makers are praying for intellectual honesty instead of glib, one‐line headline seekers.Farmers are probably not laughing at ill‐informed critics,nor are they laughing at burned‐out corn and soybean fields.

Who can know the heart?