Congress Supports Crop Insurance

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With a one-year extension of the Farm Bill signed into law, Congress is turning its attention to drafting a five-year Farm Bill that strengthens the farm safety net. As the cornerstone of this safety net, crop insurance has received a lot of attention lately. We’re proud of this public-private partnership that keeps family farmers on the farm and saves taxpayer money by quickly delivering aid for verified crop losses.

Let’s hear it from the Hill:

“Federal crop insurance…is one of the most successful examples of a public-private partnership in existence. Farmers willingly pay significant premiums for crop insurance coverage because it provides reliable assistance when disaster strikes. This timely indemnification doesn’t just benefit farmers, it bolsters rural economies by ensuring that producers can pay back their lenders, retain their employees, and get back on their feet to farm again the following season.” – Rep. Glenn “GT” Thompson (PA-15-R), Chairman of the House Committee on Agriculture

“Leave crop insurance alone. Just keep it going the way it is… that’s what I’ve been hearing from farmers.” – Sen. Chuck Grassley (IA-R)

“[Crop insurance] works pretty darn good right now.” – Sen. Jon Tester (MT-D)

“Crop insurance has proven to be a bedrock risk management tool… I firmly believe an opportunity exists to build on the program’s success by making higher coverage levels more affordable to producers across the country. This will help alleviate the need for ad hoc assistance programs, saving money while strengthening this important risk management tool.” – Rep. Michelle Fischbach (MN-7-R)

“Crop insurance and other programs… are very important in my region to help to ensure that our farmers are continuing to feed America.” – Rep. Lloyd Smucker (PA-11-R)

It’s no surprise that Congress is sharing its support for this critical risk management tool. That’s because crop insurance:

  • Protects 540 million acres of American farmland
  • Supports all farmers: large and small, conventional and organic, and specialty-crop growers and livestock ranchers
  • Delivers aid to farmers and ranchers in just days or weeks, thanks to the more than 20,000 private-sector insurance agents, adjusters, and other personnel who support crop insurance
  • Earns the trust of America’s farmers and ranchers through consistent service and risk protection
  • Keeps America Growing

Congress should work to improve crop insurance so it covers more acres, more crops, and more farmers in the next Farm Bill.

Interested in hearing real-life farmers talk about crop insurance? Watch their stories here, or follow us on Instagram.

Farmers Testify: Crop Insurance Works

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President Dwight D. Eisenhower once famously said, “farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.”

That’s why farmers, crop insurers, and other agriculture stakeholders from across the country recently brought the corn fields to Congress. Farm leaders representing a diverse range of crops traveled to Washington, DC, and stressed to the House and Senate Agriculture Committees the critical importance of a strong crop insurance program in the next Farm Bill.

Crop insurance is the cornerstone of the farm safety net, protecting more than 490 million acres of farmland and $170 billion of agriculture production. Farmers testified that, due to the immense risks that come with agriculture, their family farms depend on the protection offered by crop insurance.

“If it wasn’t for Federal crop insurance, I wouldn’t be the sixth generation to farm my family’s farm in Sumner County, and there’s probably no chance of the seventh generation… being able to take over.” – Craig Meeker, Chairman, National Sorghum Producers

Crop insurance is built on a unique public-private partnership between the U.S. Department of Agriculture (USDA) and the private sector. Farmers must share in the risk by purchasing crop insurance, spending more than $6.8 billion to purchase crop insurance in 2022. Farmers continue to invest in crop insurance, and Americans support the program, because it works.

“Federal crop insurance has a proven track record for helping producers quickly respond to natural disaster. Corn growers consistently rank crop insurance as the most important program and title of the Farm Bill,” Tom Haag, president of the Corn Board of the National Corn Growers Association, told the House Agriculture Committee.

At the House hearing, farmers also spoke to their personal experiences with crop insurance. Aaron Flansburg, Chairman, USA Dry Pea and Lentil Council, noted that crop insurance helps farmers secure credit, and it contributes to the financial stability of his own farm. Andrew Moore, President, U.S. Canola Association, recently relied on crop insurance when a cold snap killed his canola crop.

The stories continued on the Senate side: Last year, Kody Carson, Past Chairman of the National Sorghum Producers, planted hundreds of acres of sorghum. He harvested just one field. “Crop insurance is vital for sorghum producers and the tool has been critical in helping us manage the ongoing drought conditions,” Carson said.

“Wheat farmers rely on the certainty of the crop insurance program. In turn, the American people can depend on American farmers who are able to…withstand natural disasters.” – Brent Cheyne, President, National Association of Wheat Growers

 

Testimony and congressional questioning across both committees touched on several of crop insurance’s key strengths:

  1. It’s available to farmers in all 50 states and to more than 130 crops
  2. It delivers aid quickly, allowing farmers to plant again the next season
  3. It’s adaptable, with new products continually under development
  4. It helps farmers, especially new and beginning farmers, secure credit
  5. It contributes to the health and stability of rural communities

In addition to listening to farmer perspectives, the Senate Agriculture Committee also heard from two of the 13 companies approved to sell and service crop insurance.

From America’s corn fields to Capitol Hill, farmers are speaking out loud and clear: Crop insurance keeps America growing. The next Farm Bill must preserve and strengthen this vital risk management tool.

Farmers, Crop Insurance Earn Voter Support

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Farmers put food on our tables, clothes on our backs, and keep our economy moving forward.

It’s no wonder then that nearly 80% of Americans have a favorable view of farmers.

Moreover, 91% of voters agree Federal spending on support for farms and farmers is very or somewhat important. In other words, more than nine in 10 Americans support the farm policies that protect the men and women who produce our food and grow our economy — that includes crop insurance.

National Crop Insurance Services (NCIS) has released a new video highlighting its findings from a national survey of registered voters.

Family farmers and family farms depend on crop insurance. They trust crop insurance to help them manage the unique risks of farming.

Voters, too, trust crop insurance’s public-private partnership.

Three-quarters of voters support the government giving farmers a discount on the crop insurance policy they purchase from a private company, which pays claims only in the event of bad weather or low prices.

Although the government provides a discount to farmers to ensure crop insurance remains affordable, farmers are still required to share in the risk and must pay about 40% of the crop insurance premium. Last year, farmers paid $6.8 billion out of their own pockets for crop insurance.

Watch the new video here and learn more about how crop insurance protects farmers and our food supply by visiting CropInsurance101.org.

Congressional Ag Leaders Praise Crop Insurance

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Congressional agriculture committee leaders praised the Federal crop insurance program in recorded remarks played yesterday at the crop insurance industry’s 75th annual convention.

Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) and Ranking Member John Boozman (R-AR, and House Agriculture Chairman Glenn “GT” Thompson (R-PA-15) and Ranking Member David Scott (D-GA-13) will be the chief architects of the 2023 Farm Bill.

“Farming is one of the riskiest businesses out there. Our farmers need risk management tools they can count on to protect their crops and way of life,” Sen. Stabenow said. “Crop insurance is the number one risk management tool for producers.”

Sen. Stabenow cited the timely and responsive nature of crop insurance as a critical component of the program, especially as farmers stand on the front lines of climate change.

“As farmers increasingly face threats from the climate crisis, we need to think about how to expand the crop insurance safety net, so farmers don’t have to rely on ad hoc programs. We need to return to the principles of risk management as we work to protect and to expand crop insurance and pass this Farm Bill,” she said.

Sen. Boozman also spoke to the indispensable role of crop insurance in the farm safety net, calling cuts to crop insurance in the Farm Bill a “bad idea.”

“As much as the Farm Bill is a safety net for our farmers, it’s also a safety net for rural America. At its core, so is crop insurance,” he said.

Crop insurance protects more than 490 million acres of American farmland and keeps America growing when disaster strikes.

“I’m interested in looking at ways to improve crop insurance. If we can get more folks participating in higher levels of coverage, we can break the cycle of ad hoc aid,” Rep. Thompson told the gathered crop insurers and industry stakeholders. “Crop insurance coverage is reliable, timely, and predictable.”

“Our crop insurers are so important,” Rep. Scott said. “[Crop insurers] make sure that we maintain the United States having the greatest and the best agriculture system in the world.”

Crop insurance is the cornerstone of the farm safety net. Learn more about the importance of crop insurance by visiting CropInsuranceInAmerica.org.

Principles for an Effective Farm Safety Net

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Crop insurance is the cornerstone of the farm safety net. But why is crop insurance such an effective tool for farmers to manage their risks and recover from crop losses?

Modern crop insurance brings together the efficiencies of a private-sector delivery system with the regulatory oversight and financial support of the government.

Following the farm crisis of the 1980s, a government report prepared for the House Agriculture Committee outlined several principles for an effective farm safety net. Since this report was published, the crop insurance industry and Congress have worked together to strengthen crop insurance and ensure the program meets these principles.

  • Crop insurance provides timely financial assistance to help farmers withstand and recover from crop loss weather events. The public-private partnership between the Federal government and private crop insurers increases efficiency and ensures that aid is delivered quickly. Farmers receive help in just days or weeks.
  • Crop insurance is consistently available to give farmers certainty for long-range planning. When farmers purchase a crop insurance policy, they and their bankers know that they can count on timely assistance should they need it. The U.S. Department of Agriculture (USDA) sets rates and rules for the plans that can be sold by private insurance agents, and farmers purchase the appropriate crop insurance policy for their individual risk.
  • Crop insurance provides assistance as determined by an individual farmer’s actual loss, not by the severity of the overall disaster event. Following a weather disaster, private-sector claims adjusters quickly and accurately assess damages and calculate losses. Delivering aid based on actual losses protects farmers, ranchers, and taxpayers alike.
  • Crop insurance requires that farmers invest in their own protection, ensuring farmers are receiving assistance commensurate with the verified amount of their losses. The Federal crop insurance program requires farmers to invest in their own protection and share in the risk. Last year, America’s farmers collectively paid $5 billion to purchase crop insurance premiums and shouldered losses through deductibles.
  • Crop insurance does not create incentives to encourage farming practices that increase the likelihood and extent of losses. In fact, just the opposite. Following Good Farming Practices is a requirement of each crop insurance policy. These practices are based on sound data, science, and are constantly evolving to keep pace with new technologies and changes in the market, weather, and land management.
  • Crop insurance has predictable costs and is required to be actuarily sound. By law, the amount of money in the crop insurance system over time must be sufficient to meet the cost of paying claims when disasters strike. In other words, the math must work.
  • Crop insurance works efficiently to meet its purpose of improving the economic stability of agriculture while maintaining high levels of program integrity. Working closely with USDA, America’s crop insurers have made program integrity a top priority. Crop insurers have invested millions in data collection, education and training, and new research and technology to better serve America’s farmers.

By consistently fulfilling these principles of an effective farm safety net, crop insurance has given our farmers stability. They overwhelmingly trust crop insurance to help them manage their risks.

Let’s fulfill our promises to America’s farmers by ensuring that crop insurance remains available and affordable. Do no harm to the farm safety net.

Members of Congress Share Support for Crop Insurance

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Congress recently heard loud and clear from America’s farmers that they must do no harm to crop insurance as they consider programs to support rural America.

Farmers representing a diverse range of commodities testified last week before a House Agriculture Subcommittee hearing called by Subcommittee Chairwoman Cheri Bustos (D-Ill.) to share their experience with the farm safety net.

“We’ve heard time and again how critical crop insurance is as a risk management tool for farmers,” Chairwoman Bustos said in her opening remarks.

Growers spoke to the effectiveness of the crop insurance program and its irreplaceable role in the farm safety net. Each of the farmers had been personally affected by either weather disasters, market volatility, or the pandemic. Sometimes even all three.

No matter the challenge, crop insurance was there to help them manage their risks and keep growing another season.

Their messages of support for crop insurance were quickly echoed by several of the members of Congress in attendance, including Congressman GT Thompson (R-Pa.), Ranking Member of the full committee:

“Rather than wait for an act of Congress, farmers need reliable assistance that only a standing program can provide and there is no better example of a program that responds quickly when needed than crop insurance. Above all else, we must first do no harm to the existing safety net.”

Several farmers underscored Congressman Thompson’s message on the timeliness of crop insurance assistance. The crop insurance program utilizes a unique public-private partnership to deliver indemnity checks in just days or weeks – not months, or even years, as can be the case when relying on ad hoc disaster assistance.

Congresswoman Angie Craig (D-Minn.) noted that the testimony before the subcommittee and conversations with her constituents had made it clear that “risk management tools like crop insurance are more important than ever. Federal crop insurance has been a success story because it’s actuarially sound and consistently works for farmers.”

Crop insurance is popular and trusted by farmers because it is affordable, widely available, and economically viable. It gives farmers the tools they need to tackle the challenges of today – and tomorrow.

Wheat Growers Count on Crop Insurance

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This year, America’s farmers and ranchers have faced one challenge after another. For wheat farmers in the west and Midwest, their crop is now threatened by severe drought conditions that could contribute to yield reductions or total crop loss.

Thankfully, more than 90 percent of insurable planted acres are protected by crop insurance, including many of America’s more than 47 million acres of wheat.

Without crop insurance, “producers in these drought-stricken areas could lose their crops without any risk protection, which could drive those farming operations out of business,” wrote Dave Milligan, president of the National Association of Wheat Growers, in a recent op-ed for the High Plains Journal.

One wheat farmer in Kansas reported less than one and a half inches of rain in the last year. Others worry about the increased threat from wildfires.

Milligan is a Michigan wheat farmer himself and very familiar with the inherent dangers of farming and the nature of disasters like drought. He wrote that producers need to have reliable access to crop insurance to effectively manage their risks.

Farming is a risky business, and crop insurance is one of the most important policy tools that is relied on to mitigate risk…

As a crucial component for protecting producers and the feasibility of farming, crop insurance provides a risk management tool for unpredictable weather and assists producers in qualifying for the necessary operating loans to produce a crop. With this in consideration, any cuts or reduced access to crop insurance programs could be detrimental to farmers who rely on it to stay in business when disaster strikes.

Crop insurance has been so successful because it relies on a unique partnership between the federal government and the private crop insurance industry. This allows crop insurance to utilize private-sector efficiency to process claims and deliver payments quickly.

As Milligan makes a point of noting, farmers invest their own money into crop insurance:

Crop insurance is such an important policy tool for farmers that they invest their own money to purchase this protection. Farmers spend $3.5 to $4 billion per year to purchase crop insurance and bearing a significant portion of losses through deductibles. The federal government spends less than a quarter of 1% of its budget on farm safety net programs, making this a worthwhile investment to protect the world’s most affordable and safe food supply. Adequate funding of crop insurance should be a high priority for policymakers as agriculture is being hit with low prices, the effects of COVID-19, and other unpredictable disasters.

Milligan also cites the critical role that crop insurance plays in supporting the rural economies that depend on the income generated by farmers and ranchers. Because if America’s farms fail, their communities will be likely to crumble.

We hope that America’s wheat growers experiencing drought will soon see the rain they need. But no matter the storm – or the drought – crop insurance is here for America’s farmers and ranchers.

Crop Insurers: Proposed OMB Budget Undermines Farm Safety Net

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The Office of Management and Budget (OMB) today released a proposed Fiscal Year 2021 budget that includes steep cuts to the Department of Agriculture and federal crop insurance.

The American Association of Crop Insurers, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Independent Insurance Agents and Brokers of America, National Association of Professional Insurance Agents, and National Crop Insurance Services released the following joint statement in response:

“Last year brought unprecedented challenges for rural America. Even now, farmers and ranchers across the country are dealing with the lingering consequences of weather events that destroyed fields and ruined crops. And there looks to be no reprieve from the ongoing rural recession: The USDA estimates that farm cash flow will tighten this year, dropping more than $10 billion, or 9 percent, from 2019.

“The federal crop insurance program reacted quickly and efficiently to keep many farmers afloat during this difficult time. It’s no wonder then that the nation’s farm organizations teamed up in late 2019 to ask Congress to reject any attempts to cut crop insurance and weaken the farm safety net when it’s needed most.

“It’s inexplicable as to why OMB would target such a critical risk-management tool for budget cuts. The proposed cuts will make crop insurance unaffordable and unavailable for farmers, seriously undermining the farm safety net.

“The crop insurance program works for farmers and taxpayers alike:

  • Crop insurance protects more than 90 percent of America’s planted crop land acres.
  • Farmers invest in their own protection by spending $3.5 to $4 billion per year to purchase crop insurance and bearing a significant portion of losses through deductibles.
  • Crop insurance policies provide critical collateral to farm bank and credit lenders who assist farmers through operating loans, especially during a time of low commodity prices.
  • The federal government spends less than a quarter of 1% of its budget on the farm safety net, including crop insurance, making this a worthwhile investment to protect the world’s most affordable and safe food and fiber supply.

“Thankfully, for the sake of America’s struggling farmers and ranchers, OMB’s budget is sure to be rejected by Congress. We urge the White House and Congress to support America’s farmers and ranchers by protecting and strengthening crop insurance.”

Farm Bill Expands Crop Insurance for Young, Veteran Farmers

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The future of farming depends on the next generation taking up the plow, so to speak. But the barriers to entry can be prohibitive – and prohibitively expensive.

Costs for necessary items such as machinery, seeds, or land are high and add up quickly. Not to mention it can be difficult to obtain lines of credit in the first place without access to substantial capital or insurance giving banks the peace of mind that farmers will be able to repay loans.

And all of that sweat and equity could be wiped out in the time it takes a tornado to touch down or floodwaters to rise.

Thankfully, federal crop insurance provides a valuable safety net.

Farming can be an especially daunting task for those that are a part of traditionally underserved communities, such as beginning farmers or veterans.

Many of these farmers tend to lack the equity and liquid assets necessary to begin farming, and therefore rely on loans. And most lenders require crop insurance coverage to act as a backstop should disaster strike.

Congress recognized the importance of supporting these farmers and took steps to increase their access to crop insurance with the 2018 Farm Bill.

Legislators expanded premium discounts for Whole Farm Revenue Protection (WFRP) policies to those with ten years or less farming experience. Twenty-seven percent of American farmers fell into this category during the 2017 Census of Agriculture.

In addition, the Farm Bill reduced regulatory burdens for those with WFRP policies by allowing waivers for expanding operations, especially for small and beginning farmers, reducing record keeping requirements for small farmers and minimizing paperwork.

USDA data indicates that the rural population of post-9/11 veterans is growing quickly and provisions in the 2018 Farm Bill seek to increase access for those veterans who wish to enter farming. Congress included veteran farmers and ranchers as part of a new definition of underserved producers, allowing them to take advantage of improved crop insurance benefits such as additional premium discounts.

And the Farm Bill mandated that the Risk Management Agency produce an Underserved Producer Report every three years in order to continue identifying ways the federal government can reform and improve these programs in order to increase participation and better serve these communities.

In total, these reforms will help give new and veteran farmers the tools they need to effectively manage their risks.

National Crop Insurance Services recently spoke with young Iowa farmer Colin Johnson who emphasized the important role crop insurance plays in ensuring he can continue farming, saying that he “probably wouldn’t have lasted two years without… crop insurance support.”

Farming can be difficult. But access to affordable and dependable crop insurance will help pave the way for future generations of American farmers.

Lawmakers Stress Importance of Crop Insurance as Farm Bill Moves Forward

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As the Farm Bill moves from passage to a conference committee between the House and Senate chambers to reconcile differences, lawmakers have been vocal in their support of crop insurance to our nation’s farmers.

Here is just a small sampling of press statements by several U.S. Senators and Congressmen since the vote:

“I’m proud to advocate for Hoosier farmers through efforts to protect crop insurance, to make sure they have access to credit, and to do all I can to help farmers navigate significant challenges – from depressed commodity prices to chaotic trade markets and unforeseen weather events.” – Sen. Joe Donnelly (D-IN)

“Agriculture and farming are vital to the fabric of our nation, and are an enduring legacy of the great state of Texas. Resources like crop insurance provide farmers with an economic safety net for their efforts to feed and supply their fellow Americans, in good times and bad, and ensure food security for our nation.”  – Sen. Ted Cruz (R-TX)

“We worked to ensure that the Senate Farm Bill provides strong crop insurance, improves the countercyclical safety net and provides producers with greater access to capital because good farm policy benefits every American, every day with the highest quality, lowest cost food supply in the world.” – Sen. John Hoeven (R-ND)

“I’m proud of the bipartisan policies the Senate advanced … which protect crop insurance, improve critical trade promotion programs, and expand broadband deployment capabilities in rural America.” – Sen. Deb Fischer (R-NE)

“The bipartisan Senate Farm Bill is a strong bill for North Dakota, and I fought to include many of the priorities I’ve been hearing from North Dakota farmers and ranchers like protecting and strengthening crop insurance.” – Sen. Heidi Heitkamp (D-ND)

“What our farmers do is crucial to our economy and feeding the world. I’m proud to support their hard work in Congress by fighting to pass another Farm Bill that protects crop insurance and other policies critical to agriculture.” –  Rep. Rodney Davis (R-IL)

“I spent my life around agriculture policy…It is imperative that we have a strong Farm Bill that provides a credible federal crop insurance program.” – Rep. James Comer (R-UT)

America’s crop insurers appreciate the support of these lawmakers and the many others who stood up for farmers during the Farm Bill debate.

Rural America to U.S. Senate: Do No Harm to Crop Insurance

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More than 600 trade organizations and companies throughout rural America sent U.S. Senators a clear message today about crop insurance as they prepare to debate the 2018 Farm Bill.

“As you consider the 2018 Farm Bill on the Senate floor, we urge you to oppose harmful amendments to crop insurance, including those that would 1) reduce or limit participation in crop insurance, 2) make insurance more expensive for farmers during a time of economic downturn in agriculture, or 3) harm private-sector delivery,” the groups wrote in a joint letter.

The signers, which range from farm groups to financial lenders, rural businesses and conservation organizations, explained their strong support for farmers’ primary risk management tool:

Without crop insurance most producers simply could not qualify for the operating loans they need to put a crop in the ground.  Due to extremely tight margins in agriculture, regulators examining agriculture lending portfolios typically insist borrowers have crop insurance.

Crop insurance is available to all types and sizes of producers in all regions.

Crop insurance provides for environmental benefits.  Crop insurance requires producers to meet wetlands protections and highly erodible lands protections to be eligible for a premium discount.

Crop insurance is a rapid response solution to disasters.  Private-sector delivery typically allows farmers who have losses and have met their deductible to receive indemnity payments in less than thirty days, while ad hoc disaster can take months or even years.

Crop insurance protects jobs, both on and off the farm.  Crop insurance enables farmers to rebound quickly after a disaster and allows producers to pay credit obligations and other input expenses, such as fertilizer and farm equipment. 

And, they noted that consumers and taxpayers benefit as well since crop insurance reduces the need for expensive, unbudgeted disaster aid packages.

“Crop insurance is food and fiber security insurance, and food and fiber security is national security,” the letter concluded.  “Given the importance of crop insurance, the undersigned organizations urge you to support America’s farmers, ranchers, rural economies and national security by opposing amendments that would harm crop insurance.”

The letter can be read in its entirety here.

Attacks on Revenue Insurance Harm America’s Farmers

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Farm families across America are struggling.  Crop prices are down.  Farm incomes have fallen drastically in the past several years and weather disasters have hit farms in most parts of the country.  And the pain is trickling down to small businesses and communities throughout rural America.  Yet, some lawmakers are pushing proposals that will make it nearly impossible for farmers to rebound.

Senators Jeff Flake (R-AZ) and Jean Shaheen (D-NH) and Rep. John Duncan (R-TN) recently introduced bills to eliminate premium support for the harvest price protection component of the Revenue Protection (RP) crop insurance policy.  Revenue Protection protects against a loss of revenue caused by low prices or low yields or a combination of both.  Revenue Protection has become a valuable risk management tool for farmers across the United States and accounts for more than 75 percent of the Federal crop insurance policies sold today.

One of the key components of the revenue policy is the utilization of the fall harvest price, which allows a farmer to receive the greater of the fall harvest price or the projected harvest price to insure against revenue declines. The loss due to an increase in the harvest price occurs when a farmer suffers a yield loss.  Those lost bushels are worth more when the harvest price increases and therefore the loss of revenue is greater because the insured could not sell the bushels lost at the higher price. The farmer automatically has harvest price protection when buying an RP policy, but can choose to exclude it by selecting the Harvest Price Exclusion (HPE).  If the farmer opts to do so, he or she will pay a lower premium rate.

“This legislation specifically targets crop insurance policies that farmers pay more for out of their own pockets to provide some revenue stability amid price declines and low yields,” said Tom Zacharias, president of National Crop Insurance Services (NCIS).  “For example, corn farmers in the Midwest can pay more than 40 percent more in premiums for RP, depending on coverage level, than if they choose to exclude the harvest price protection. And because this is still an insurance policy, farmers face upwards of a 30 percent deductible before an indemnity is even paid.”

He continued: “Amazingly, supporters of this anti-farmer proposal tout taxpayer benefits as the justification for weakening the farm policies that are so important today. This is disingenuous considering farmers help pay for their own insurance protection and crop insurance represents less than one-third of one percent of federal spending.  It is also worth noting that crop insurance is operating below budget projections.”

Zacharias also noted that, despite critics’ accusations, revenue polices are not paying out frequently.  In its current form, RP has only been available since 2011.  However, according to an NCIS analysis of soybean and corn price movements, had RP been in effect since 1990, the price component would only have triggered in 11 out of 28 years for soybean farmers and even less for corn farmers – only eight out of the last 28 years.

NCIS analysis also shows a drastic increase in insurance costs for farmers if this proposal is enacted. A corn farmer in Illinois who selects the highest level of coverage for an RP policy – 85 percent – would see premiums climb by almost 30 percent.  Meanwhile, premiums at the 75 percent coverage level would increase by a staggering 98 percent.

Such increases in premium would likely result in dramatic declines in overall crop insurance participation.  Farmers would lose an essential risk management tool and be more inclined to turn to Congress to pass expensive, taxpayer-funded disaster packages when revenues plummet.

Farmers all across America have repeatedly asked Congress to protect crop insurance – to keep it available and affordable for all farmers.  Unfortunately, this proposal would do exactly the opposite, leaving many without the means to weather these tough economic times.

USDA Announces Details on New Crop Insurance Option

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Details of a new risk management option– known as Whole Farm Revenue Protection – designed to offer flexible coverage options for specialty crop, organic and diversified crop producers were recently released by USDA.

“Crop insurance has been the linchpin of the farm safety net for years and continues to grow as the single most important factor in protecting producers of all sizes from the effects of unpredictable weather,” said USDA Secretary Tom Vilsack. “Providing farmers the option to insure their whole farm at once gives farmers more flexibility, promotes crop diversity, and helps support the production of healthy fruits and vegetables. More flexibility also empowers farmers and ranchers to make a broader range of decisions with their land, helping them succeed and strengthening our agriculture economy.”

Whole-Farm insurance allows farmers to insure all crops on their farm at once, rather than insuring commodity by commodity.   In the past, many fruit and vegetable crops have not had crop insurance programs designed for them —making it less attractive for a farmer that primarily planted a commodity crop like wheat or corn to use another part of his or her land for growing fruits and vegetables or other specialty crops.

The 2014 Farm Bill requires a whole-farm crop insurance policy option, and paves the way for the Risk Management Agency (RMA) to make it broadly available to specialty crop, organic, and diversified growers. The Federal Crop Insurance Corporation Board of Directors (FCIC Board) approved the Whole-Farm Revenue Protection pilot policy for RMA to offer it through the federal crop insurance program in 2015.

USDA has been strengthening crop insurance by providing more risk management options for farmers and ranchers. The policy offers coverage levels from 50 to 85 percent; recognizing farm diversification through qualification for the highest coverage levels along with premium rate discounts for multiple crop diversification.

Congressional Leaders, Academics, Government Leaders, Farm Leaders and Farmers Underscore Value of Crop Insurance

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Over the last several years as the future face of U.S. farm policy has been debated, crop insurance has emerged as the best and most cost-effective risk management tool for farmers, ranchers and taxpayers. The debate over crop insurance, however, has not been confined to the halls of Congress. It has happened on the airwaves, in the newspapers, in academia and on tractors in the fields.

As a public-private partnership, crop insurance is a new hybrid risk management tool whereby farmers purchase policies that are partially discounted by the federal government. As Senate Agriculture Chairwoman Debbie Stabenow pointed out during the recent Farm Bill debate, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.” And many, many others have voiced their opinions too:

  • “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.” — William Edwards, an agricultural economist at Iowa State University, Bloomberg News, January 15, 2013
  • “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.” — Congressman John Boehner, Agri-Pulse interview, March 4, 2013
  • “After two years without rain, Kansas producers are dealing with a severe drought. It is critical that risk management tools like crop insurance are in place to make certain the United States remains the most food-secure country in the world. Crop insurance is an example of a public-private partnership that uses taxpayers’ dollars wisely and benefits farmers and consumers alike.” — Kansas Senator Jerry Moran, Topeka Capital-Journal, March 26, 2013
  • “But farmers aren’t the only group that has come to love crop insurance. Bankers love it too. That’s because when farmers approach bankers for production loans, bankers regard a crop insurance policy as a form of collateral. Additionally, bankers know that a farmer who has paid his own money for a crop insurance policy is a farmer who has risk management in mind.” — Bill Bridgeforth, a farmer from Tanner, Alabama, in the Athens News Courier, April 27, 2013.
  • “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 payments to help farmers recover from natural disasters which can be costly.” — GAO Report on Crop Insurance, March, 2013
  • “To this day, I have yet to have a single producer call me with a complaint about crop insurance. That is a testament to just how well your agents, your adjusters, the companies, and Risk Management Agency (RMA) worked together in one of the worst droughts in the history of this nation.” — USDA Under Secretary Michael Scuse, February, 2013
  • “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. — Mark Drewes, a farmer from Custar Ohio, in the Bowling Green Sentinel Tribune on September 18, 2012.

Importance of Crop Insurance Highlighted as Drought Widens

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A drought specialist with the national weather service recently compared the drought and heat wave here in the Midwest with the catastrophic dry period of 1988 that at the time cost agriculture $78 billion. USDA Chief Economist Joe Glauber recently said that “49 percent of the corn crop, 50 percent of the soybean crop, and 45 percent of the hay crop are all in areas that are experiencing drought,” adding that a lot of that area is actually in the “severe drought” category.

“The farmers who suffer crop losses from this drought, or any other covered peril, can rest assured that crop insurance indemnities will be paid timely,” said Tom Zacharias, president of National Crop Insurance Services. The drought, which targeted the southern plains last year, appears to have the Midwest in its sights.

According to the July 10 U.S. Drought Monitor, all of the top ten corn-producing states are experiencing various stages of drought, with the situation worsening by the week. The entire state of Iowa, Illinois, Nebraska, Indiana, South Dakota, Kansas, Ohio and Missouri are in various stages of drought, as is roughly half of both Minnesota and Wisconsin. Nationally, nearly 80 percent of the contiguous U.S. is experiencing some level of drought, with nearly 40 percent of that considered severe to exceptional.

Zacharias instructed producers who think they have a loss on an insured crop to take the following steps:

1. Notify their crop insurance agent within 72 hours of the initial discovery of damage;

2. Continue to care for the crop and protect it against further damage if possible and,

3. Obtain consent from the insurance company prior to destroying any of the insured crop.

“There are other requirements that insureds need to follow that can be found in their specific policy,” said Zacharias. “But these three are key for right now.” Zacharias assured America’s farmers and ranchers that while it is far too early to predict loss estimates, the insurance industry is ready for any claims that are filed.

“2011 was a busy year for the insurance industry when we paid out more than $10.8 billion in indemnities,” said Zacharias. “The insurance companies handled those losses quickly and accurately and they will do the same this year.”

Crop insurance, the most popular risk management tool for farmers, is the key to their financial stability, enabling them to supply food and fiber to our country despite severe weather and other challenges that impact their business. Congress is currently writing the 2012 Farm Bill and farmers and ranchers from each corner of the country and nearly every major commodity group testified about what that Farm Bill needed to do. There was one main theme that threaded through their testimony: “Do no harm to crop insurance.”