For more than a decade, National Crop Insurance Services (NCIS) has invested in fostering the next generation of America’s agricultural community through the NCIS 1890 Scholarship Program.

As George Washington Carver once reminded us, “Since new developments are the products of a creative mind, we must therefore stimulate and encourage that type of mind in every way possible.”

The 1890 Scholarship Program has worked to encourage creative minds by providing funding for four semesters to students with a professional interest in agriculture attending one of the 19 historically black land-grant institutions. It’s an investment in our nation’s farming future, and an investment in our commitment to increase the diversity in the crop insurance industry to reflect the diversity of the farmers it serves.

NCIS has awarded more than 25 scholarships to outstanding students since 2010. This year’s recipients are an exceptional group of young people who excel inside the classroom as well as through extracurricular activities on campus and are committed to giving back to their communities.

Scholarship recipient Samaya Brooks is studying agribusiness at North Carolina A&T State University.

“Agribusiness gives me the opportunity to learn about agriculture, which affects everyone, and help many people,” Samaya shares. “I’m very happy to have the opportunity to research and learn more about what I’m interested in. It has been my goal and dream since high school.”

After graduation, Samaya hopes to pursue a PhD to continue agribusiness research. Ultimately, she would like to use her career in agriculture to help to improve the lifestyle of farmers and protect them from exploitation.

Similarly, Tennessee State University student Tiffani Patterson also wants to use her agricultural career to help others.

“I plan to finish my degree in agricultural sciences and pursue a career in agriculture education. I plan to give back to students as my teachers did and hopefully show them that ag is not just for farm kids, but any kid who wants to learn about agriculture and [has] a passion to pursue it. I was not a farm kid by any means, but I was welcomed with open arms and learned many things I will use for the rest of my life,” Tiffani says.

This year, NCIS awarded a total of five scholarships to students from around the country. Our other deserving scholars are:

• Erikton Goodloe is an agricultural business management major at the University of Arkansas at Pine Bluff. He’ll be a first-generation college graduate and looks forward to using his degree to launch a successful career helping farmers.
• Paris Williams is an agricultural business major at Prairie View A&M University. Agriculture has been a lifelong interest for Paris, and she hopes to pursue a career in horticulture and agriculture research as well as start a small community farm.
• Aja’Naeia Workman is a biology major at Alabama A&M University. She has plans to become a physician’s assistant to help others live healthier lives and make wiser health decisions.

All five of the 1890 Scholarship recipients are featured in the latest edition of Crop Insurance TODAY.

As policymakers consider budget decisions for Fiscal Year 2023, rural America is once again asking that they “do no harm” to crop insurance.

Last week, a diverse coalition representing 55 farming, banking, and conservation organizations called on government officials to oppose cuts to crop insurance. The coalition delivered letters to the House and Senate budget and appropriations committees, as well as to the Secretary of Agriculture and Acting Director of the Office of Management and Budget, emphasizing the importance of crop insurance as a risk management tool.

America’s farmers and ranchers have been dealt a series of tough years, marked by extreme weather events. Despite the increasingly uncertain nature of farming, the certainty of crop insurance has provided an invaluable safety net for our farm producers, our food supply, and our rural communities.

“As the challenges for America’s farmers and ranchers continue to grow, we believe crop insurance as a safety net is only becoming more important to stability in rural America. During this tumultuous time, one of the few certainties that farmers could rely on was the protection provided by their Federal crop insurance policy,” the letters state.

Throughout each disaster, the crop insurance program has worked exactly as Congress intended, delivering aid in a timely manner to keep America growing. As the letters point out, the success of the crop insurance program is no accident.

Crop insurance is designed to provide individualized risk management to America’s farmers, no matter what they grow or where they grow it. Furthermore, its unique public-private partnership requires farmers and ranchers to share in the risk. Farmers and ranchers spent approximately $5 billion in 2021 to purchase crop insurance and then were required to shoulder deductibles before aid arrived.

Importantly, the letter highlighted the role crop insurance plays in helping farmers respond to climate change, increase resiliency, and invest in conservation efforts. This is strengthened by its nature of being a data-driven program.

“Crop insurance allows producers to customize their policies to their individual farm and financial needs and policies are based on fundamental market principles, which means higher risk areas and higher value crops pay higher premiums for insurance,” the letters state. “Crop insurance and its links to conservation further ensure that the program is a good investment for taxpayers.”

The letters close with a call to oppose any budget cuts to crop insurance.

One of crop insurance’s defining attributes is its self-correcting nature.

That is, farmers who exhibit more risk pay more than those who exhibit less – much in the same way that car insurers reward safe drivers.

This is done by collecting and analyzing a producer’s Actual Production History (APH), which takes into account a grower’s actual yields over a period of time. It also compares performance to other farms within the county and surrounding communities.

Growers with a higher APH are able to get lower insurance premiums, saving both themselves and taxpayers money.

In this way, the APH formula serves to reward farmers for adopting new technologies and techniques that enhance efficiency and productivity.

For example, some agronomists, conservationists, and policymakers are currently promoting conservation practices – e.g., reduced till and cover cropping – explaining that these practices not only help the environment but can boost a farm’s bottom line.

When these conservation practices show dividends through higher-than-average yields, then the producer will be financially rewarded for adoption through cheaper insurance premiums.

This structure is one reason why a new peer-reviewed study in the renowned Journal of Environmental Management recently credited crop insurance with encouraging the adoption of conservation practices.

Conversely, higher premiums under the APH system act as a deterrent to farmers taking on more risk – for example, by not adopting the latest tools and techniques like their neighbors, planting the wrong crop for the geographic region, or farming on marginal land.

Such deterrents are of particular importance as farmers and ranchers must optimize efficiency to deal with extreme weather and the effects of climate change.

With a clear APH history record, farmers can more accurately select insurance policies that help them manage their unique risks and benchmark their performance.

The APH system provides growers with a clear incentive to constantly improve.

Federal crop insurance is arguably the first farm policy in history that is financed, in part, by the farmers who benefit from it. Unlike farm policies of the past, which were 100 percent backed by taxpayers, modern-day farm policy requires growers to take an active role in sharing the financial costs of protecting America’s crops and livestock for a vibrant food supply.

The concept may be new to farm policy, but it’s not new to insurance. From the earliest shipping insurance at Lloyds of London in the late 1600s to the modern auto policy acquired instantly via a smartphone app, the principle is the same.

A customer pays a premium to an insurance company based on the value of property and predicted risks to insure its worth. If the property is damaged, the customer absorbs a portion of the loss, called a deductible, and the insurance company covers the remainder through an indemnity payment.

The deductible acts as a deterrent to risky behavior and keeps the insurance policy intact for true disasters. Meanwhile, premium dollars paid by customers fund the system that provides peace of mind.

The larger the pool of customers, the more risk can be spread, and the less expensive coverage becomes for all. The same applies to crop insurance, which is why arbitrarily excluding some farmers from participation or adjusting premiums without research-backed justification is not only a bad idea, but economically and actuarially unsound.

Today, famers collectively pay between $3.5 billion and $4 billion a year out of their own pockets in crop insurance premiums. And they absorb hefty deductibles (on average, 25 percent of loss) when disaster hits. In other words, they have a financial stake in the system, which ensures farmers are avoiding unnecessary risk and incentivized to embrace new technologies and techniques that drive efficiency and mitigate losses.

Famers utilize crop insurance because it offers predictability for marketing and for borrowing capital, and because it gives them the opportunity to tailor protection to their farms’ unique needs. Taxpayers reap the benefits, too.

That’s because in addition to farmers helping to offset costs, private-sector insurers are also investing dollars into the system. Crop insurance companies, for example, invest millions in new technologies, training, research, data collection, analytics, and customer service to keep things running smoothly.

And when Mother Nature strikes, companies often dig into their own reserves to keep farmers whole. For example, insurers experienced a $1.3 billion underwriting loss during the 2012 drought because indemnities paid outstripped premiums received.

Put simply, farmers, insurers, and the government must work together to fund crop insurance and ensure it can meet the challenges of tomorrow – from climate change to volatile markets.

U.S. crop insurance policies protected the country’s farmers and ranchers and ensured rural communities stayed strong in the face of the COVID-19 pandemic, tornadoes, hurricanes, and political unrest. In all, those policies protected 398 million acres of land in 2020.

In her opening remarks at the crop insurance industry’s annual meeting, Kendall Jones, chair of the National Crop Insurance Services (NCIS) and president and CEO of ProAg, told the group that 2020 had been a challenging year for our country. But crop insurers rose to the challenge and provided stability to rural communities.

“We are in the crisis business,” Jones said. “So, it is not surprising that we performed extremely well over the last year, helping America’s farmers and ranchers mitigate their risks, continue their essential work, and keep the world fed.

“From floods and wildfires to hurricanes and even ‘The Derecho,’” she continued, “we were there to help our customers pick up the pieces in an unprecedented time of hardships created by lost crops, lost customers, and lost markets in the U.S. and overseas.”

To date, the crop insurance industry has delivered $7.4 billion in indemnities to help farmers rebuild. This includes a brand-new insurance product that is tailored to hurricane protection – a product that was triggered by eight separate weather events during last year’s unprecedented string of hurricanes.

“Our industry works with our government partners and leverages the efficiency of the private sector to make sure farmers and ranchers get payments on time,” Jones said. “This keeps agriculture growing after disaster strikes and quickly stabilizes rural economies.”

During the annual meeting, which was held virtually this year, Jones told attendees that agriculture has the unique power to unite lawmakers on both sides of the aisle.

“Elected officials on the right of the political spectrum often emphasize the importance of vibrant rural businesses, reducing risk, keeping taxpayer costs low and expanding the economy,” Jones said. “On the left, lawmakers also tout a healthy economy and place an emphasis on sound science, sustainability, and giving those in need a helping hand. That sounds just like crop insurance to me.”

Jones concluded by taking time to applaud many of the behind-the-scenes industry initiatives that often go unrecognized.

This includes collecting and analyzing mountains of data and conducting new research to continually improve operations and customer service. She also highlighted industry investments over the past decade to provide free business training to socially disadvantaged farmers and award scholarships to minority students attending 1890 Land Grant Universities.

As America’s farmers and ranchers reflect back on this turbulent year, they’ll recall drought affecting much of America’s farmland, severe winds sweeping across Iowa, a record-breaking hurricane season and – oh yes – the COVID-19 crisis.

Throughout the difficulties farmers and ranchers faced in 2020, crop insurance was there to help them endure hardship and minimize risks so they can plant their crops again next year.

Tom Zacharias, president of National Crop Insurance Services (NCIS), spoke about the challenges of 2020 and the importance of the farm safety net with the National Association of Farm Broadcasting and RFD-TV.

“America’s farmers and ranchers never stopped their essential work of feeding America,” Zacharias said. “That’s why crop insurers, agents, adjusters and our partners at USDA have continually worked to support the farm community. It has been our priority to maintain our incredible record of service to the American farmer during this tough year.”

“It would be an understatement to say that farmers face an unpredictable future, but fortunately crop insurance is a predictable risk management tool,” Zacharias added.

Crop insurance is agriculture’s most effective and reliable risk management tool because it utilizes private-sector efficiencies and innovation to quickly deliver to the farm community.

And farmers and ranchers trust crop insurance. They purchased 1.1 million crop insurance policies in 2020 to protect nearly 400 million acres.

This proven record of success and the continued support of Congress has cemented crop insurance as the cornerstone of the farm safety net.

“No doubt, new uncertainties lie ahead, but we are stronger together,” Zacharias said. “America’s farmers and ranchers can rest easier knowing that their local crop insurance agents, adjusters, and crop insurance companies stand ready to quickly provide a helping hand when it is needed.”

2020 is a testament to the important role that crop insurance plays in not only protecting our food, fuel and fiber supply but also supporting millions of jobs along Main Streets throughout America. That is why it is critical that Congress keeps crop insurance affordable, widely available and economically viable.

Together, we navigated this difficult year and kept America growing. We’re looking forward to seeing what we can accomplish next year, and in the years to come.

Crop insurance’s already-low improper payment rate — a closely-watched standardized measure of waste and efficiency – improved again in 2018.

Martin Barbre, Administrator of the USDA’s Risk Management Agency (RMA), delivered the good news this week while addressing the crop insurance industry’s annual convention.

The FY2018 rate of 1.81 percent marked the fourth consecutive year it declined, falling from 2017’s 1.96 percent and 2.02 percent and 2.20 percent in 2016 and 2015. The USDA and private-sector insurers made program integrity improvement a top priority following an improper payment rate of more than 5 percent in 2014.

“RMA has continued to improve program integrity for federal crop insurance through an effective public-private partnership with our Approved Insurance Providers,” Barbre said.

Improper payments occur when funds go to the wrong recipient; when the correct recipient receives too little or too much; or when the recipient uses funds in an improper manner. Many errors are simply rooted in data entry and reporting mistakes.

The government closely monitors improper payments for all major federal spending programs, and the last time a government-wide figure was posted, it was twice as high as crop insurance’s rate.

Tom Zacharias, the president of National Crop Insurance Services, which sponsored this week’s meetings, said the news illustrates the power of the crop insurance system’s unique public-private partnership and is a testament to investments made in recent years.

“Crop insurers enjoy a tremendous partnership with the USDA, and we work closely together to ensure that we are good stewards of taxpayer dollars and are constantly improving efficiencies for America’s farmers and ranchers,” he said.

Zacharias noted that the partnership fosters investment in data collection, education and training, monitoring and new research and technology to continually improve.

“In addition to the USDA’s hard work, the private sector is spending millions every year to maximize program integrity,” he concluded. “This new data is proof that crop insurance is a highly efficient, well-run public-private partnership.”