CROP INSURANCE IN ACTION: Andy Bell, Climax, Georgia

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On the first Saturday after Thanksgiving, you can chase a greased pig in the southwestern Georgia town of Climax as it celebrates its Swine Time Festival, which normally draws up to 30,000 people in an area where only 300 people live.

There is also corn shucking and a squeal-off.  Climax is the highest point on the railroad line between Savannah and the Chattahoochee River.  After its founding in the 1880s, the town served as a rail junction and an agricultural community. It was incorporated in 1905.

The weather for a farmer in Climax can be tricky. The town is located only a few dozen miles from the Gulf of Mexico which can bring in hurricanes as powerful as Katrina, which struck New Orleans with devastating fury in 2005.  But this corner of southern Georgia has also been hit by a drought that rivals the one which hit this year in the U.S. Midwest, shriveling the cotton and peanuts that farmers grow in the area.

“We’re 90 miles from the Gulf of Mexico. We had a tropical storm come through in [20]09.  We’re so close to the coast that we have to have some type of insurance,” said Andy Bell, who farms about 2,000 acres outside town.  On the other hand, “2007 was a terrible, dry year.”

“We buy crop insurance every year,” said Bell. “We typically buy 70 percent [of coverage]. You’re not going to make any money but it will prevent you from losing the farm.”

His main crops are peanuts, cotton and corn. Some 700 acres are sown to peanuts, about 1,100 acres to cotton and about 200 acres to corn.  There is also a small herd of about 200 beef cattle.

Bell said there were some anxious moments before Hurricane Isaac veered away from their area a few months ago and headed for New Orleans. The storm season, which does not end until November 30, remains a threat, but the end to hurricane season is not far off.

For once, Bell is looking forward to harvest season as it looks like the weather is going to cooperate.  “I think the peanut crop is going to be good this year. We dodged a bullet when the storm went the other way,” said Bell, who began farming in 1982.

The average yield for peanut farms would run around 1 to 3 tons per acre. But just as Bell suspected, this year yields will be at record highs. USDA forecasts it at a record 3,714 pounds per acre, which would be 400 + pounds higher than last year.

Bell’s cotton crop is also in pretty good shape, with the Georgia farmer saying they may approach the yields of a few years ago when the harvest stood at 1,300 to 1,400 lbs an acre. That is pretty good considering the national average is about 800 pounds an acre.

His main problem though is the price of cotton. Since scaling a record high at $2.27 a pound in March 2011, cotton prices have shriveled and are now trading around $.75  a pound.  “We have (had) a price collapse,” he said.

In good years and bad, Bell said crop insurance is indispensable simply because the weather in his area is so unpredictable. “It can rain here and then five miles down the road, you get no rain,” he said. Bell noted that crop insurance is ”not a fix-all”, but it gives farmers a chance to come back after a bad year.

For him, removing crop insurance is unthinkable. Banks and other lending institutions would not extend any credit to farmers if there is no safety net like crop insurance to give them some assurance that they will get part of their money back.

“I think it would be catastrophic,” Bell declared. “He [the American farmer] would be out of business. We’ve got to have some form of insurance.”

This Drought Is Awful, But with the Right Tools, Farmers Will Bounce Back

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In many parts of Oklahoma, it seems like wheat farmers just can’t catch a break.

A late spring freeze, combined with excessively dry or extreme drought conditions throughout the winter and into spring have left many of the state’s wheat fields badly stressed or a complete bust.  I’d say this is the worst I’ve ever seen, and I started farming in the mid 1950s.

With the wheat harvest set to begin in about a month, farmers are expected to harvest about 40 percent less wheat this year than they did in 2013.   The low soil moisture has left many farmers wondering what they are about to go through.

For the state’s farmers who purchased crop insurance – and nowadays that’s nearly all of them – that will be their only saving grace.   I don’t know of a farmer anywhere in Oklahoma who doesn’t buy crop insurance.  It’s just like buying diesel fuel today…you don’t farm without it.

With the passage of the new Farm Bill, largely gone are the days of the Federal government stepping after a calamity.  Today, when a farm crisis hits, farmers turn to their crop insurance policy, not the Federal government, for help.  The public-private partnership that is today’s crop insurance ensures that farmers get the financial help they need in weeks, not years.

As a crop insurance agent, I can tell you firsthand that crop insurance is no small expense for most of the state’s farmers, who spend north of $20,000 a year purchasing policies that they pray they will not need.

Farmers buy crop insurance today just like they buy homeowners insurance.  And when a good year turns into a bust, the only thing standing between some farmers and bankruptcy is their crop insurance policies.

Last year, Oklahoma farmers spent more than $93 million to purchase the peace of mind of crop insurance.  Crop insurance allows individual farmers to purchase the coverage they need, tailored to their farms, financial standing and tolerance to risk.

For farmers who rely on loans to operate – and that’s a lot of farmers – crop insurance has become a bank’s best friend.  In fact, the best collateral you can take to a bank when you are seeking a loan is your crop insurance policy.

Crop insurance is not only smart farm policy, but smart consumer policy as well.  American consumers have come to see our affordable, abundant food supply as a birthright.  In fact, most of us alive today have never seen wide-scale hunger in this country.  But much of what we take for granted could quickly disappear if we allow our farmers to fail and were forced to import our food, fiber and fuel.

While this might be the worst drought I’ve ever seen, I have to say that my faith in the resilience and work ethic of Oklahoma’s farmers is undying, and I know that with their crop insurance policies as a backstop, our farmers will bounce back from this.

Max Claybaker is a farmer and a crop insurance insurance agent from Blackwell, Oklahoma.  This op-ed appeared in The Oklahoman on June 1, 2014.

CROP INSURANCE IN ACTION: Andrew Bowman, Oneida, Illinois

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Andrew Bowman is a fifth-generation farmer from Oneida, Illinois, in the western part of the state. Bowman, who is in the family business with his father, farms 1,100 acres of corn and soybeans, although they are also looking into new crops. “But corn and soybeans are definitely our bread and butter,” says Bowman.

The drought of 2012 was especially hard on the state of Illinois, with farmers there seeing some of the highest losses in the country. But there were a few counties in the western part of the state that escaped the worst of it. “In 2012, when everyone in Illinois was suffering under an incredible drought, we were in a garden spot,” said Bowman, who noted that while their yields were slightly down, the high commodity prices made up for it.

Bowman says that the worst year his farm has experienced in recent history was in 2005, which saw a very regionalized, yet extreme drought in western Illinois, with the rest of the Corn Belt being relatively unaffected. It was the first year since the drought of 1988 when farmers saw Spider Mites in their soybeans. Bowman notes that the low yields combined with the low prices that year was a double whammy for farmers in the drought area.

Read Andrew’s entire story here.

CROP INSURANCE IN ACTION: Tom March, Bethlehem, Connecticut

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In 1915, Thomas and Rose Marchukaitis, two Lithuanian immigrants who had been in the country for only a few years, purchased a farm in Bethlehem, Connecticut, which consisted of 114 acres and supported 15 cows and two horses. There, they raised their nine children and worked hard for their American dream.

Three generations later, their grandson, Tom March, is still farming that parcel of land, which has grown to 150 acres, along with his brother-in-law and their two sons. “We’re a diversified farm, because you have to be,” said March, whose farm consists of about 75 acres of sweet corn, 30 acres of apples, 4 acres of peaches, along with some strawberries and blueberries.

March took over the farm from his father in 1976 and has been at it ever since. Most farmers are quick to recount their “really bad year,” but Mother Nature has been unusually cruel to the March Farms with a long string of natural disasters.

Read Tom March’s entire story here.

Crop Insurance Helps NC Farmers Weather the Ups and Downs

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From rags to riches. From feast to famine. From pauper to prince. We’ve all heard the phrases to describe going from one extreme condition to the opposite. But farmers in North Carolina understand this concept first hand. Unfortunately.

In 2011, just about every imaginable weather disaster hit the state. It started with frigid cold, moved on to a sweltering heat wave, interspersed with a historic tornado outbreak and then hurricane flooding.

In 2012, started out with much of the state experiencing a severe drought, but thankfully Mother Nature eventually dealt a kinder hand to farmers in the Tar Heel state than most of the rest of the county, who experienced the worst drought since the Dust Bowl.

This unending rollercoaster of weather extremes underscores the reason why year after year, farmers across the country happily purchase crop insurance to help mitigate the unknowns that are never far from hand. In the past, disasters like these would have triggered large disaster relief bills, much like what was passed after Hurricane Sandy.

Those bills were costly – 42 such bills have cost taxpayers roughly $70 billion since 1989 – and slow in delivery, and dealt with disasters after they happened. Crop insurance policies, by comparison, force farmers to think about their risk management plans before planting. Policies are purchased at the beginning season, and if disaster strikes, it takes a month or less, not a year, for assistance to arrive.

The passage of the Farm Bill in both the House and Senate will mark a new chapter in U.S. farm policy. The days of direct payments to farmers will be gone as well as many of the large commodity support programs. Left in their place is crop insurance, a public-private partnership whereby farmers purchase individual policies that are tailored to their specific needs, and are sold, serviced and delivered by participating companies. As Senate Agriculture Chairwoman Debbie Stabenow pointed out, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.”

The key to the success of crop insurance is its affordability, thanks to a premium discount from the federal government, combined with its ubiquity, meaning that any farmer who wishes to purchase a policy must be sold one at a price set by the federal government, regardless of that farmer’s risk profile. And unlike the past, taxpayers aren’t stuck footing the bill alone.

Farmers wishing to be protected by crop insurance must purchase it with money out of their own pockets. Since 2000, farmers have spent $38 billion doing just that, protecting crops ranging from corn and soybeans to apples, pears, blueberries and tomatoes.

The reason why crop insurance is so successful is that it is widely purchased, with roughly 90 percent of all planted cropland protected in 2013. And since so many farmers had bountiful harvests in 2013, more than half a million of the farmers who purchased crop insurance never collected an indemnity.

But some crop insurance critics are calling for a major policy change, called means testing. Means testing is a bad idea because it would force many large or highly successful farmers to pay more for their federal crop insurance coverage, which could reduce the amount of insurance they purchase, leaving many acres with inadequate coverage. Fewer acres covered mean more expensive premiums for everyone else, including small and mid-size farmers.

Why? Because if the biggest farmers, who tend to be the least risky, are driven out, the pool of insureds shrinks and thus the risk for those remaining gets larger. For example, if a company selling car insurance excludes the best drivers from their pool of insureds, the only drivers left would be those who are the riskiest, and thus the costliest to insure. This fact would drive up the premiums for all remaining drivers, or in this case, farmers.

Facing extreme conditions is part of farming that will always be with us. But for the sake of the rural economy and the many rural Americans who depend on it, keeping crop insurance robust and widely available is the best thing we can do for both farmers and consumers alike.

William “Midge” Tankard farms corn, wheat, soybeans, sorghum and tobacco and lives in Bath, NC. This op-ed appeared in the Fayetteville Observer on December 4, 2013.

Farmer Testimonials: “Peace of Mind” from Purchasing Crop Insurance

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Beginning farmer Cody Bornholdt returned to the family farm in 2011 in Inman, Kansas, after finishing college to find himself in the middle of what would be a multi-year drought in the southern plains. Bornholdt said that given the amount of risk that farmers face to put a crop in the ground, crop insurance is an invaluable risk management tool. “As a beginning farmer, it is essential for me to cover my investment as I take on a big risk with a lot of capital investment into these crops,” he said.

Bornholdt noted that his decision to purchase crop insurance yearly gives him peace of mind, even in the worst of times. “It’s nice to know and it makes it easy to sleep at night when you are in a year like this year when it’s a catastrophe or a drought,” he said. “Not knowing if you’re going to have a crop in the fall … knowing that you have your crops covered and you’ll be able to make ends meet at the end of the year and get that note paid off is a huge relief,” he said.

Lindsborg, Kansas, farmer Tom Toll explained that given increased expenses, the constant volatility of the market, the uncertainty in the world and the chance that his entire investment in crops and livestock could disappear overnight, purchasing crop insurance was the only thing that let him sleep at night.

Toll noted that those who choose to not purchase crop insurance are taking an enormous risk that could cost them everything. “One hail storm, an early frost, one of those things, could put your farm in jeopardy this year,” he said.

Pala, California, citrus producer Raymond Lodge said that farmers purchase crop insurance for the same reason car owners and home owners purchase insurance: the cost of complete loss is too high. “One cannot eliminate totally the risk of life but having crop insurance has been a godsend for us,” he said.

CROP INSURANCE IN ACTION: Tim Totheroh, Wellington, Illinois

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Although Tim Totheroh says that his last name is “Pennsylvania Dutch,” he’s 100 percent Illinois farm boy, having spent his entire life on a farm near Wellington, Illinois.

Totheroh, who farms 850 acres of corn and soybeans, is also a crop insurance adjuster, which gave him unique insight into the historic drought of 2012. Totheroh says that in all of his years of farming, he’s never seen anything quite like last summer. “I entered a corn field and walked half a mile, turned and walked a half a mile in the other direction,” he said. “And I didn’t see a single ear of corn. Not one single ear.”

Totheroh said that sometimes he’d walk through a field and happen upon a small portion of corn that fared a little better. “Every here and there, you’d find a part of the field that got lucky and had a shower or two more than the rest, and you’d have 180 bushels in that one little spot. But then the rest of the field was just awful,” he said.

Totheroh said that thankfully, not all farmers suffered such extreme losses. “Some of the new hybrid varieties helped farmers a bit because the plants were more efficient at using what little moisture fell,” he said. But for most farmers, who are accustomed to getting about 180 bushels of corn per acre, the losses were substantial. “Last year, I walked a lot of fields that had 80 to 100 bushels per acre,” he said. “We just had half a corn crop around here, basically.”

Totheroh noted that losses of that magnitude are hard to handle, particularly for the younger and new farmers, who are just getting started and are thus more vulnerable. “There aren’t a lot of new farmers, unfortunately, but the ones who were coming into the business last year were shocked by how bad it was,” he said. “Even if they had spent their whole lives growing up on a farm, they had never experienced anything like that,” he said.

“Thankfully, most of those young farmers had purchased crop insurance, which allowed them to put their worries on the back burner a little and focus on what they could do to make the most of the hand they had been dealt,” he said. Totheroh noted that while crop insurance premiums are not cheap, it is often money well spent. “Most farmers around here purchase crop insurance, and most rarely collect on their policies,” he added.

Totheroh explained that while Illinois generally has consistently good corn crops, there is an area not far from his farm that has had three really bad years in a row. “Without crop insurance, those guys would be out of business,” he said. And that is due to no fault of their own, just three bad years where Mother Nature had thrown them a curve ball,” he said.

Totheroh noted that this year, despite a cold wet start, the corn crop looks much better and farmers are feeling far more optimistic, with some forecasts predicting the largest corn crop in U.S. history. “The young farmers are very upbeat too,” he noted. “They weathered a bad year, saw how well their insurance worked, and they know that if they purchase crop insurance, they have a backstop if the floor drops out from under them,” he said. “They’re not going to necessarily lose everything just because of a bad year.”

Crop Insurance Is Critical for this Nation’s Fresh Produce Industry

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Sometimes, timing is everything. And for fresh fruits and vegetables, there has been a recent convergence of trends and preferences that bode well for the industry.

The first is the federal government’s decision to ensure that more fresh fruits and vegetables are consumed as part of the school meal programs, which will expose children who would otherwise have limited access to these important foods. The other trend is the locavore – or eating local – movement, that underscores the importance of buying local and eating fresh produce.

But to ensure that fresh fruits and vegetables are available for a population that is increasingly asking for them, we need to have wise public policies in place that help the farmers who grow these important foods to manage the many risks they face brought on by Mother Nature.

And for specialty crop growers – farmers who grow this nation’s fresh fruits and vegetables, nuts and berries – the quintessential risk management tool is crop insurance.

Many of the public policies that underpin food production – typically known as farm programs – chiefly support the major food and feed commodities like corn, wheat and soybeans. Those crops and the programs that support them are critical and have been a major factor behind why the United States is a global player in food production.

But for those raising specialty crops, crop insurance is the only public policy tool available to deal with extreme weather patterns. Crop insurance is a public-private partnership whereby farmers purchase their own policies to cover the risks they choose to pay for. And farmers are quite happy to purchase it, having spent $4.1 billion out of their own pockets in 2012.

There has been a lot of media attention about the historic drought of 2012, and deservedly so. But that drought was preceded by a very devastating late spring freeze here in New England that nearly wiped out a year’s worth of income for many of the growers who raise this nation’s fresh apples.

Without the protection of crop insurance, these growers might have been completely knocked out of business from such a devastating freeze. And the ones who hadn’t purchased crop insurance might have been. But the majority of the region’s farmers who purchase crop insurance every year, were able to bounce back from the freeze, continue to care for their orchards and prepare for the 2013 crop.

But having just one bad year would have actually been good news for me. Six out the last seven years, I’ve had hail damage on my apple crop. Last year, I lost 90 percent of my apple crop on that late frost and then the other ten percent was demolished by hail. For my peaches, another big crop on my farm, I’ve also had major losses 6 out of the last 7 years. Needless to say, if I hadn’t purchased crop insurance, I would have had many lean years in a row.

Since crop insurance is sold, managed and delivered by the private sector, when disaster strikes, indemnity checks usually arrive less than a month after the paperwork is completed. In the past, when farmers would rely on disaster assistance from the federal government, it took months, or more than a year in some cases, for those funds to finally reach the hands of the growers who had lost everything. And for a grower whose entire apple crop has just been frozen, a year can be about 11 months too long.

Crop insurance is available for 128 different crops, and that list is expanding. In some ways, the abundance of America’s farm sector seems like a miracle, but it’s not. If it weren’t for hard work, investment, infrastructure and crop insurance to manage some of the major risks, there might be a lot fewer consumers enjoying America’s fresh fruits and vegetables.

Tom March grows fruits and vegetables on his farm, which has been in the family since 1915, in Bethlehem, Connecticut.

This op-ed appeared in the Hartford Courant on July 29, 2013.

Farmers Belong on a Tractor, Not Under the Bus

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By Mark Gerdes

One of the beauties of life in our great democracy is that spirited debate about important public policies is not only expected, it’s encouraged. One of the intrinsic rules of these discussions, if they are to be productive and fair, is that the policy itself should be scrutinized from every angle without demonizing or castigating the various groups affected by these policies.

In other words, we should be able to discuss education policy without demonizing teachers or impugning the integrity of students. Likewise, we should be able to debate defense policy without bashing soldiers or peace activists. Unfortunately, when it comes to discussions about farm policy — in particular the decision by many farmers to purchase crop insurance — critics have chosen to throw farmers under the bus time and time again instead of debating the policies on their merits.

Last year, we had one of the worst droughts our nation has seen in decades. And while America’s farm families watched their crops shrivel in the fields, some critics said “farmers are praying for drought, not praying for rain.” Another critic said that farmers who purchased crop insurance last summer “were laughing all the way to the bank.” In short, they argued farmers make more money from collecting a crop insurance check than harvesting a crop, and in fact they would prefer to watch their crops wither or livestock die and collect a crop insurance check than to take the fruits of their labors to market.

As a farmer, I must point out that statements about the integrity and motivation of farmers and their decision to purchase crop insurance demonstrates both incredibly poor math skills as well as a complete lack of understanding about the core values and beliefs of America’s farmers.

Take, for example, the charge that farmers hope their crops will fail so that they can collect a crop insurance check. Critics are quick to point out that more than $17 billion will be paid out to farmers and ranchers who purchased crop insurance for their losses in 2012. The implication here is that the $17 billion is some sort of windfall being bestowed upon farmers by the federal government.

But the math tells a very different story. Insurance policies must first be purchased, and then policy holders must absorb the policy’s deductible after suffering a verifiable loss, before they can collect a single dime. In 2012, farmers paid $4.1 billion out of their own pockets to purchase crop insurance policies. Then, farmers shouldered $12.7 billion…

Mark Gerdes, a fourth-generation farmer, raises corn, soybeans and cattle on 2,800 acres in Aredale, Iowa. This op-ed appeared in the Ames Tribune on June 7, 2013.

CROP INSURANCE IN ACTION: Tom & Mike Audet, Orwell, Vermont

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Ledge Haven Farm might be one of those Vermont farms that would be most likely to end up on a postcard. The place is just about everything you would think of when you put the words Vermont and agriculture together. The 550-acre farm, owned by brothers Tom and Mike Audet, is a family-run dairy and maple sugaring operation located near the idyllic shores of Lake Champlain, just down the road from historic Mount Independence in Orwell, Vermont.

The Audet brothers have been in business together since 1972, having been raised on a farm just down the road that is still operated by yet another Audet brother. “We have been making pure Vermont Maple Syrup for over 40 years right here on our farm,” says Tom Audet. “It is an Audet family tradition with three generations of our family pitching in to make the final product,” he says.

The brothers manage their risk using one of the gold medal standard rules of modern agriculture: Diversify. The brothers milk 270 dairy cows, attend to another 280 young stock and breeding stock, manage 450 acres of corn, hay and alfalfa, as well as tapping hundreds of maple trees on the 50 wooded acres of the property. “Diversifying is our first line of defense in managing risk, and crop insurance is the second,” said Audet.

Read Tom and Mike Audet’s story here.

CROP INSURANCE IN ACTION: Jimmy Miller, Interlachen, Florida

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For centuries, blueberries were gathered from the dense forests and bogs by northeastern U.S. Native Americans, and they are one of the only fruits we consume that are native to North America. So when most of us hear about blueberry farms, we conjure up images of cool, damp climates and cold winters.

Jimmy Miller’s blueberry farm, which is well south of the Mason-Dixon line in Interlachen, Florida, in an exception. Miller has operated the farm, which is the oldest existing blueberry farm in the state, since 1979. Miller, along with his two daughters and son-in-law, operates the 124-acre operation using a variety of blueberries developed by the University of Florida that tolerate the summer heat and mild winters.

Miller explains that one of the main issues for blueberry growers in Florida is that the plants require at least 200 hours every winter where the temperature dips below 45. If that doesn’t happen, fruit production can tumble quickly.

But the primary risk is a freeze or hail. “We never had a real loss until this year,” said Miller. “It was an early spring, and then all of the sudden, we had a front blow through that dropped our temperature to 24 degrees,” he explained.

The next day, the Miller clan was hopeful that the crop would be okay, “but we also knew that it could be catastrophic,” he said. Thankfully for Miller, he always purchases crop insurance, so if the blueberries didn’t look better in a few weeks, he knew he’d be filing his first-ever claim.

Read Jimmy Miller’s story.

Crop Insurance: An Approach That Better Fits This Nation’s Fiscal Reality

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The historic drought that wilted the corn and soybean fields of Illinois and other Midwest states was one of the costliest events to hit rural America in decades. As the nightly news reported, losses on farms in large swaths of the Midwest were staggering, with some farmers having such low yields that harvesting was a waste of time.

Patrick editedI feel like I live in an oasis. The drought and heat wave that crippled farmers in neighboring counties and nearby states somehow spared my farm and a few others here in north central Illinois. I don’t know if it’s where the farm is located, the soil it sits on or just the luck of the draw in getting a few rain showers here and there, but somehow, I was spared. This makes me feel lucky, on one hand, since I did not face the dread of losing my crops, but guilty on the other hand because so many other farmers did.

In past years, a disaster on this level would have triggered a massive, ad hoc disaster bill in Congress, which would have given every farmer in Illinois and most other Midwest states – including farmers like me who had a good crop –federal disaster assistance. This approach to farm disasters is not only expensive for taxpayers but wastes money by offering a “one-size-fits-all” remedy.

Forty-two such emergency disaster bills in agriculture have cost taxpayers $70 billion since 1989. That’s a very expensive, cumbersome and untargeted approach to managing natural disasters. Realizing that fact, Congress, in the mid 1990s, decided to encourage farmers to purchase crop insurance by offering them a discount on their premiums if they did so. The idea was that if crop insurance was affordable and widely available, farmers would already have insurance in place when a natural disaster strikes.

And guess what? It worked. The year 2011 saw an unprecedented string of natural disasters, ranging from an early freeze, to floods, droughts, wildfires and hurricanes. The year 2012 saw the worst drought in decades. But despite these calamities, Congress wasn’t pressured for a major farm disaster bill, because more than 86 percent of planted farmland was protected by crop insurance in 2012.

That’s why I buy crop insurance every year to protect my farm, my family and my investment. Crop insurance is a public-private partnership that has become this nation’s new hybrid approach to risk management, and taxpayers don’t pay out all of the losses when disaster strikes. Private insurance companies take a hit, and farmers fund much of the payments through premiums paid out of their own pockets.

And farmers are happy to fork over more than $4 billion annually because they love crop insurance. First, farmers sit down with their crop insurance agents and design and purchase their own plans, tailored specifically to their farms, their crops and their comfort with risk. This gives farmers some peace of mind when the things go awry.

When disaster strikes and there is a verifiable loss, crop insurance indemnities are managed and delivered by private sector companies, usually arriving within 30 days of a claim being finalized. Large disaster bills – like the Hurricane Sandy relief bill – took three months just to pass Congress and will take months more to get help into the hands of the victims.

I started buying crop insurance about 11 years ago, because in farming, the costs of the inputs are so high, that you have to have some kind of backup plan in place. In addition, most of the farmers I know have to borrow operating loans every year from banks, which often require crop insurance as collateral for the loan.

Consumers should like crop insurance, too. The availability of a safe, affordable and healthy food supply requires the presence of some form of disaster protection for farmers, who increasingly face wild weather patterns that challenge the food production system. In the U.S., the ability for farmers to purchase crop insurance is actually this nation’s “insurance policy” against widespread food shortages or sharp price hikes in food products.

I sleep a heck of a lot better at night because I know I have crop insurance coverage. If I have a major loss, I know I have a backup plan. I certainly won’t make any money off of my insurance indemnity, but I also won’t lose the farm. And if I’m lucky enough to not have a loss, I collect nothing other than the proceeds from selling my crop — which is the way the market is supposed to work.

Patrick Solon is a corn and soybean farmer and lives in Streator, Illinois. This op-ed appeared in the Ottawa-Streator Times on March 15, 2013

New NCIS Video: Criticisms Against Farmers Who Purchase Crop Insurance Naïve, Untrue

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Critics who said that farmers who purchased crop insurance were “praying for drought, not praying for rain” or were “laughing all the way to the bank” during last summer’s historic drought were strongly rebuked by farmers, crop insurance agents and claims adjusters in a new video released by National Crop Insurance Services (NCIS).

Marvin Andris, a farmer from Milford, Illinois, responded to Environmental Working Group’s accusations, noting that their comments underscored how little they know about farmers. “They obviously haven’t brushed shoulders with any farmer,” he said. Andris said he didn’t know a single farmer who farmed for an insurance check. “We’re into this because we want to raise crops, and the more bountiful, the more excited we become,” he said.

“I certainly don’t see anybody, as far as I know, that is seriously farming looking for a drought, and looking for a crop insurance check,” said Ben Hanawa, a field claims adjuster from San Benito, Texas. He explained that crop insurance can help you make it through a bad year, “but it certainly is no way to make a living.”

David Finch, a claims adjuster from Tulia, Texas, noted that charges that farmers are happy to incur losses demonstrated both a misunderstanding of the nature of farmers and how crop insurance works. “I’ve never heard of anybody or talked or visited with any farmer who would rather have an insurance check than he would have a good crop that he could bank on his own,” he said. “It’s a matter of pride.”

Robert Geddes, a farmer from Hoopeston, Illinois, explained that crop insurance is not any different than other forms of insurance that consumers buy on a daily basis, like homeowner’s insurance or car insurance. “You don’t buy insurance on your car with idea of going out and having a wreck,” he said. “It’s to take care of [you], when things truly go against you.”

Todd Harris, an insurance agent from Rossville, Illinois, explained that most of the farmers in that part of the state have never had a claim of this nature. “All you got to do is be a mathematician, really, to figure out if you’d be better with a claim, or a crop,” he said. Harris noted “if you ask that question of a farmer, they’ll laugh at you.” That’s because farmers make far more from a good crop than an insurance claim, he explained.

These were not the only misrepresentations farm policy critics made during last year’s historic drought. Claims were made that indemnity payments for the drought would range from $30 billion to $40 billion. The Congressional Budget Office noted earlier this month that 2012 indemnity payments will be closer to $16 billion.

Those same critics also led people to believe that taxpayers would be responsible for nearly all crop insurance payments to farmers, which is another fallacy. Final program costs will reflect the $4.1 billion in premiums farmers paid to purchase insurance policies, losses by private crop insurance companies, as well as government investment.

 

CROP INSURANCE IN ACTION: Trent Patterson, Lake County, Tennessee

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For Trent Patterson, 2012 was a very dry year.

Drought parched much of Tennessee, where he farms about 4,500 acres planted to cotton, corn, soybeans and wheat. The drought forced farmers like Patterson to switch crops from the flagship cotton to soybeans, which requires less agricultural inputs. With crop insurance as part of most farmers’ backup plans, many of them were able to get by.

“The drought of 2012 caused hardship from planting to harvest,” said Patterson of Lake County in northwest Tennessee. “We planted, replanted, spot planted and in some fields abandoned the cotton crop and planted beans only to plant and replant those and get half a stand.”

Corn yields took the biggest hit during the year-long drought. “We were unable to fill our contracts,” he said.

Tennessee is a major producer of cattle and is a key grower of crops like cotton and soybeans. The farm sector alone is responsible for nearly $3 billion in farm gate receipts, according to the Tennessee Department of Agriculture. About half of the state’s land area, or some 11 million acres, is comprised of farms. The western portion where Patterson farms is prime land fed by the flood plains of the Mississippi River. This area is largely devoted to soybeans, wheat, corn, cotton and sorghum.

Crop insurance has been a much-needed lifeline for Patterson and other farmers like him. Crop insurance has allowed them to survive drought, floods and other disasters that form part of the natural landscape farmers must contend with on a yearly basis in much of the U.S.

For farmers in Texas, 2011 was the worst drought in a century. For farmers in Louisiana, the program was critical in 2005 when they endured the double-barreled disaster brought on by hurricanes Katrina and Rita. For farmers in Tennessee and in much of the Midwest, the drought of 2012 was the worst in 25 years. And while crop insurance only covers a percentage of the loss in most cases, the money provides the much-needed infusion to help farmers survive until the next season.

Said Patterson, “Without crop insurance as a risk management tool, a disaster as we have had in 2012 is not survivable to many farming operations.”

Each year is a “make or break situation” for most farms, he explained. For his part, he has filed the paperwork to receive insurance claims for cotton crops that had to be switched to beans. The insurance adjuster has visited his farmlands and reviewed his paperwork, which includes a history of his yield production.

Patterson says that crop insurance is a key component of the farm safety net and a major feature in ongoing Farm Bill discussions. If the country’s goal is to keep U.S. food and fiber industries viable, then the farm bill must include crop insurance to help American farmers manage their risks. These comments reflect the sentiment of many farmers and lawmakers from across the country who have strenuously argued that a viable crop insurance program is essential for the future of U.S. farming.

Patterson says that crop insurance is either a subsidy or an investment, but either way, it’s especially critical to a chancy, “risky business” like farming. He underscored the “wisdom” of protecting the American farmer and the industry.

“I don’t want to have to go hungry and naked because I didn’t help my neighbor with his garden if I was eating out of it,” he said. “(So) is it a subsidy or an investment?”

 

CROP INSURANCE IN ACTION: Whitney Blodgett, Shoreham, Vermont

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Whitney Blodgett has been farming in the family’s Vermont apple orchard, commercially known as “Sentinel Pine Orchard,” his whole life. Blodgett says that the family purchased the orchard in 1964, and have since grown, adding the abandoned dairy farm next door.

Sentinel Pine Orchard, is comprised of 220 acres of apple trees, mostly planted in the Macintosh variety. When harvest time comes, Blodgett along with his wife and farm hands, store, pack and ship fresh fruit to market. “That is our niche market because we can grow those apples very well in this climate,” he says.

Blodgett explains that because of the nature of the business – there aren’t a lot of ways to protect an orchard from the whims of Mother Nature – his chief risk management tool is crop insurance. “We had crop insurance claims in 2004, 2007 and 2011,” he explains. “And all of them were because of hail.”

Hail has always been dreaded in the orchard industry because it hits later in the summer, with the coming of the severe summer thunderstorms, and can damage the apples to the point that they’re no longer marketable as fresh fruit. But 2011 was a very different story.

The hail hit in the early spring, just as the blossoms had fallen from the fruit and the small apples were beginning to form. “There’s nothing we can do against hail because we can’t build a roof over the whole orchard,” he said.

“It was very odd in 2011, the hail hit early in the development of the apples and deformed them,” said Blodgett. “We had to wait and see how they developed and then decided if they would be able to be sold as fresh fruit,” he explains. The other option, if the fruit formed but wasn’t marketable as fresh, was to sell the apples for cider.

Blodgett says they held their breath and said their prayers for months as the apples slowly developed, keeping their fingers crossed that the hailstorm didn’t alter the apples beyond the point of marketability. But in the end, with the apples looking dented and battered, they were forced into the cider market.

“So we reluctantly decided to put the apples into cider,” he explained, which in financial terms, is a six-fold reduction in the value of the year’s harvest.

Luckily for Blodgett, he had purchased a “fresh apple” crop insurance policy that had a 50 percent coverage level. Blodgett explains that immediately after the hail incident, he had contacted his crop insurance agent who sent an adjuster out to the orchard within days. “The adjuster did a preliminary determination, but there would not be a final determination until final harvest,” he explained. “It’s a nail biter right to the very end, since you don’t know how bad things are going to be right away.”

But this wasn’t the first time he had looked to his crop insurance policy for a lifeline.

Blodgett explained that he took over the business from his father shortly after they had a large fire in their storage facility, which was full of apples. “The facility burned down, and that was the start of some very lean years,” he said. And although his father had always shied away from crop insurance, Blodgett decided that he needed the risk protection it afforded.

“I purchased a crop insurance policy in 2004, when things were pretty lean and we couldn’t withstand a lot of loss,” he said. “We were stretched very thin at that time.”

Coincidentally, that also happened to be the first year they experienced a large hailstorm, which stole their harvest and would have left them in very desperate times. “Without a doubt, when that first hail storm hit in 2004, we would have been knocked out of business for good,” he said.

“My father had never purchased crop insurance but thankfully I had decided to,” he said.

“Without crop insurance, I wouldn’t own an apple orchard right now,” he says. Blodgett explains that while crop insurance has kept his family in business, it has also had a positive “trickle down” effect on many of the areas businesses, where he buys his crop protectants, fertilizers and equipment. “If we went out of business, it would impact a lot of people,” he said.

Blodgett notes that crop insurance is essential for his business because even if you get a damaging storm at the beginning of a season – and your lose your entire crop – you still have to spend the money to take care of the trees and manage the orchard in preparation of next spring’s crop. “Even when we lose the crop early in the year, as we have done in the past, we still have to maintain the orchard for the rest of the year,” he said. “Otherwise, your orchard will be a mess the following year.”

And despite the disappointment of sending his whole 2011 crop into the cider market, Blodgett is still farming this year, hoping that what started off as an “iffy” year with a late freeze will still produce a respectable, and marketable, crop.

“Things are looking up, although we have some damage and loss, “ he says. “But this year, we will have a fresh crop of apples to sell.”

“It could be better, it could be worse.”

CROP INSURANCE IN ACTION: Cash Ruane, North Clarendon, Vermont

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It’s perhaps no great coincidence that Ben and Jerry’s Ice Cream was founded in Burlington, Vermont, given that dairy is the Green Mountain State’s largest agriculture industry. Cash Ruane, from North Clarendon, Vermont, is one of those Vermont dairy farmers.

Cash has been farming his whole life, starting his own farming business with his beloved wife and business partner Karen in 1992. Together, the Ruanes milk a herd of 75 dairy cows with an additional 90 calves and breeding stock. In addition, and primarily to keep the cattle fed, the Ruanes raise about 160 acres of corn, used mostly for silage, as well as hay, used for feed.

On a good year, the Ruanes can raise enough corn to make all of the silage they will need for the year, plus sell some to neighbors. Ruane says that 2011 was looking like a great year. “My corn crop was doing super, and I already had two cuttings of hay,” he explains, adding that he usually gets four. The promising corn crop and adequate hay supply would mean that the Ruanes would not only have enough feed for their farm for the year, but some to sell to the neighbors as well.

The Ruanes had never experienced any major natural disasters. The main source of adversity and risk on their farm was milk prices, which “fluctuated too much and too often” for most farmers’ taste.

But 2011 was going to prove to be quite the unusual year for the duo, when the arrival of Tropical Storm Irene, turned Otter Creek, which runs right through their farm, into a destructive and wild torrent.

When Hurricane Irene was downgraded to a tropical storm, many in New England thought they had dodged a bullet and would get by with some wind and a few showers. But Irene was big a storm that moved very slowly, dumping record amounts of rainfall in a very short period of time on a very rugged part of the country.

Hours after the rain began, Ruane looked out the window of his house to check his cornfields. “All I could see were the tassels of the corn,” he said, as a wall of water rushing down the mountains had swallowed the entire field.

Sometimes flashfloods do not spell doom for corn crops, if they are short in duration and not too deep. But in this case, water came, it came deep and then it refused to leave. “The water did not recede for four and ahalf days,” said Ruane. At one point, the rising water was approaching a barn full of cows, which required immediate rescue. “Luckily, we got the cows out in time,” he said.

When the water finally left, the couple realized that in addition to losing their entire corn crop for the year, they probably would not be able to cut hay for quite some time, due to the silt and debris left in their hayfields. “We lost about 35 to 40 percent of both our third and fourth cutting of hay,” said Ruane. “Which we knew was going to leave us short on feed for the dairy cows for the approaching winter.”

And while there was actually corn left standing despite the rapids that cut through the field, it was soaked to the point that it was ruined. “As time went on, some of the corn just molded and rotted right on the stalk,” he said. Adding, “surprisingly, some of the corn was so waterlogged that it actually sprouted, right on the cob, standing there in the field.” The crop was a complete loss.

Thankfully, Ruane had purchased crop insurance, as he always does, and immediately called his agent when the angry waters left his property. The crop insurance adjuster quickly assessed the damage and the payment soon followed. “I had my indemnity payment within 10 days to two weeks,” he said. “I was impressed, because I was expecting two to three months,” he said.

Unfortunately for the Ruanes, while a crop insurance indemnity can help a farmer get back on his or her feet, it doesn’t replace the income that you would have gained had you sold a bountiful harvest in a good market. “I lost so much feed, I had to borrow money and corn throughout the winter to feed the dairy cows,” he said.

“This was the first time I ever had a claim,” he said. Ruane used his crop insurance indemnity to pay off his 2011 lines of credit, which allowed him to borrow for his next year’s input costsand plant again in 2012. The indemnity, along with help from local charities for farmers and townsfolk who had lost so much in the flooding, helped the Ruanes weather the storm and come back again this year to farm.

“I was really impressed with the generosity of the public, even people I didn’t know and will likely never meet, who extended us a helping hand,” he said. “And my crop insurance indemnity, which allowed us to keep our dairy running for yet another year.”

 

Crop Insurance Helped Mississippi Farmers See Yet Another Spring

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The state of Mississippi and farming are so intertwined that it is hard to imagine one without the other.  Agriculture is not only our state’s number one industry; it employs roughly one-third of our population, contributing $5.8 billion to the state’s economy.  There are approximately 42,000 farms in the state covering 11 million acres, producing rice, cotton, soybeans and other commodities, and there is not a county in our state where farming doesn’t play a major role.

Agriculture in this state, and throughout the U.S., has been one of the bright spots that is helping the U.S. turn the economic corner.  But the productivity of the American farm and the consumer benefits of the American food supply did not just happen in a vacuum.  It all happened because of hard-working farmers, abundant natural resources and public policies that provided risk management tools for farmers when disasters struck.  And hands down, farmers across the country will tell you that their most important risk management tool is crop insurance.

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.  For farmers whose crops survived the storm, their fields were so waterlogged that they couldn’t get their crops out.  It was precisely in this kind of situation that crop insurance showed its value to Mississippi producers, and for those who had purchased crop insurance it was a godsend.

Crop insurance is privately written and delivered insurance that is purchased by individual farmers and tailored specifically for to the risks they face on their farms.  Because crop insurance is delivered by the private sector, indemnities are made to farmers who suffer losses quickly and efficiently.

After Katrina, crop insurance companies dispatched crews from other parts of the U.S. to the Gulf coast states to meet with the farmers and perform the appraisals.  And, believe it or not, despite the size of the disaster and the number of claims made, indemnities were paid in a matter of weeks.

For farmers, the speed with which they received their indemnities enabled them to pay off their production loans from the crop they had just lost and bounce-back to plant again the following spring.  Compare that to federally-administered disaster programs, such as SURE, that take as long as two years for a loss payment to finally reach a farmer in need.  Two years is often too late when you have just lost everything.

Mid Atlantic Lender Sold On Crop Insurance

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Kenny Bounds feels strongly about crop insurance.

“For ag lenders, crop insurance is portfolio insurance,” says Bounds (56), the Government Affairs Officer for Mid Atlantic Farm Credit, which serves five states. Bounds has been in ag lending for his entire career and lives on Maryland’s Eastern Shore.

“I tell our producers that anyone who self-insures is rolling the dice and may well end up losing the gamble. It can take years to regain the net worth lost in one bad year and years of additional debt service to amortize the loss. Crop insurance protects cash flow, as well as net worth and keeps you credit worthy.”

Bounds not only tells his crop insurance story to producers, he also shares his feeling with state and federal legislators.

He makes the case, that unlike other forms of casualty insurance, like auto or home, the risks in agriculture cannot be spread over many small, widely dispersed events. In agriculture droughts, storms, and other risks are spread over huge regions of the country.

“Crop insurance marries the private interest of the farmer, who has to pay his or her share of the premium, with the national interest in preserving the critical mass necessary to sustain the infrastructure that gives us our ample, and affordable, food supply.”

He also points out that our nation’s economy benefits from the huge positive impact agricultural exports have on our balance of trade. “Crop insurance is good for agriculture, and it is also a pretty good deal for the taxpayers,” says Bounds.

“Crop insurance not only holds a risk management umbrella over producers, but also over rural communities. Rural businesses are affected by the financial well-being, and profitability, of agricultural producers. Businesses such as feed and seed dealers, farm equipment dealers, and automobile dealers… they are all protected by the crop insurance umbrella.”

Matt Huie – A Personal Face On The Farming Crisis

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My grandparents’ children left the farm in pursuit of city jobs, but I loved everything about that life. So when I got the opportunity to move in with my grandparents at age 16, I didn’t hesitate.

After college, I made the decision to become a full-time farmer. Today, I live on a ranch about a mile from my grandfather—who is still operating part of his cattle ranch at 89—and hope to be able to one day pass on the skills that he passed on to me.

But many farm families are unable to compete with the lure of the city and are finding it harder to locate that member of the next generation willing and able to bear the torch. Without a new generation of farmers stepping forward, the world’s food supply, and Texas’ economy, will be challenged.

The average age of farmers in America is 58, the oldest at any time in our country’s history. Assuming most Americans retire at 65, that puts us about seven years away from real problems unless more young people shun lucrative desk jobs for riskier, and often lower paying, jobs on farms and ranches.

It sounds scary, and it is. But the idea of investing a future in farming is equally as scary for most young people. The expense of raising crops and cattle, the high risks faced every day, and the low returns on investment, is enough to make anyone run in the other, more secure direction.