The 2012 growing season has ended for most of the nation’s farmers, but the drought that dogged many of them appears here to stay. According to the December 11, U.S. Drought Monitor, nearly 62 percent of the continental United States remains in some stage of drought. Forty-three percent of that area is considered to be in severe, extreme or exceptional drought.

Should this weather pattern continue, many farmers would start off the growing season with lower soil moisture contents than they had in 2012. According to the U.S. Seasonal Drought Outlook, which forecasts through the end of February 2013, “persistence of drought is deemed the best bet across central and southern portions of the Intermountain Region, the Rockies and the Plains. Persistence of existing drought, or the development of new drought areas are expected in Texas.”

The long dry spell is already taking its toll on the winter wheat crop. USDA says that this year’s wheat crop is the poorest at this stage in development since the agency started tracking crop condition ratings 25 years ago, according to Feedstuffs Online.

In its November 26 “Crop Progress” report, USDA pointed out that only 33% of the wheat crop was rated in good to excellent condition, while twenty-six percent of the crop was rated poor to very poor. Fifty-two percent of last year’s crop, by comparison, earned the top two condition ratings, while only thirteen percent scored in the bottom two tiers.

The persistent lack of rain is not only hurting the Heartland’s farmers, but also other agribusinesses and commerce in general. The ongoing drought is pushing water levels in the Mississippi so low that portions of the river south of St. Louis might have to be closed to shipping soon.

Tom Allegretti, president of American Waterways Operators, says that more than 20,000 jobs are at risk, as well as $130 million in wages and benefits if the river is closed for two months. Allegretti estimates that more than $2.3 billion of agricultural products, $1.8 billion in chemicals and $1.3 billion worth of petroleum products normally ship on the river in December and January.

On land where wheat stalks heavy with grain would normally wave on a breeze in the late summer, the searing drought of 2012 zapped nearly every inch of land across the Kansas plains, leaving it burnt and lifeless.

There was no way to hide from the drought in the Grain Belt. Just one year after the worst dry spell in a century devastated farmers in Texas, it spread like a virulent disease into the Midwest — the breadbasket for much of the world’s corn, soybeans and, of course, wheat.

The United States is a major wheat-producing country, with output typically exceeded only by China, the European Union and India, according to the U.S. Department of Agriculture (USDA) Economic Research Service.

The drought struck especially hard in Kansas, one of the biggest wheat producing states in the country. Jerry McReynolds, a well-known wheat producer in the northern part of the state, said the dry spell is “one of the most serious droughts we have ever encountered in my farming career.”

Each year, McReynolds plants 2,300 acres of winter wheat, 400 acres of corn, 250 acres of soybeans, 800 to 1,000 acres of grain sorghum and 150 acres of forage sorghum. He also runs his own cattle operation. His farm is located outside Woodston, Kansas, a place just 136 people call home; where “Main Street” is all of eight corners tucked away near Highway 24.

Like many American farms, it is a joint operation by the McReynolds family. He said his three children have always helped him and his wife, Diane, in running the farm.

“Our son is a part of the operation. Our married daughters return whenever possible for harvest or other times. One daughter owns some of the land we operate. Another daughter and [her] husband would like to return to the farm, if possible,” McReynolds said.

McReynolds has taken an active role in two decades of farming. He has held several leadership positions at the Kansas Association of Wheat Growers (KAWG) and, as its president, he helped start the Kansas Farm Bill Coalition. He was also involved in the process that culminated in Kansas Wheat, the cooperative agreement between KAWG and the Kansas Wheat Commission.

In 1998, he was elected to the Kansas Farm Bureau Board of Directors representing the sixth district in the area.

But for all his years in the business, McReynolds says he has never encountered a litany of problems quite like those in 2012.

“All spring planted crops really suffered. Germination was a problem. The weather was extremely hot for a very long period of time, without moisture. We encountered temps to 115 degrees,” he said.

“We cut half of our corn acres for silage. I chose not to plant soybeans this spring because of the extreme dryness. Our grain sorghum and forage sorghum really suffered. Yields will be less than half of last year,” he said, adding however, that “wheat yields were surprisingly good, considering the hot, dry weather.”

Crop insurance has been vital for the continued operation of the farm, especially in the midst of the worst drought this nation has seen in a quarter century.

“Crop insurance is critical to our operation. I had a 70 percent level of coverage. However, that only provides around 60 to 65 percent coverage,” he explained.

McReynolds said he has already turned in the papers for “losses on the corn that was cut for silage,” a process of fodder being compacted and stored without being dried so it can be used as animal feed in the winter.

Other losses will be determined after the fall harvest by the insurance companies, but there’s no doubt the impact of the drought on his farm has been severe.

The fallout will extend into 2013 as farmers approach the fall planting season for winter wheat.

“Moisture is critical to get wheat up this fall, as well as germination of any volunteer wheat that must be destroyed before wheat planting,” he said. “Recovery after a drought is very slow. It takes years to get things back to normal. Drought causes revenue losses, emotional issues, cowherd reductions and a lot of uncertainty.”

Without crop insurance it would have been tough to stay in business, the long-time Kansas wheat farmer said. The way the system works, crop insurance payments are paid close to the time frame when loss occurs — before harvest time in case of prevented planting and replant payments, or shortly after harvest in case of yield or revenue shortfall. Most crop insurance claims are paid within 30 days after settlement – a vast improvement from the days of big, ad hoc disaster bills.

Crop insurance is not a government handout that depends on the taxpayers to pay when disaster strikes. Farmers must contribute financially in order to receive crop insurance and will invest more than $4 billion in 1.2 million crop insurance policies this year. These contributions help hold down the cost to the taxpayer and encourage people taking part to exercise financial discipline going forward.

Still another outstanding feature of the U.S. crop insurance program is that it allows farmers to customize their plans and coverage to accurately reflect individual losses and unique yields or risk.

“The input costs are so great, and our margins are so close, that without crop insurance many growers would be out of business,” McReynolds said.

Like everyone else, he is hopeful 2013 will bring better conditions. “Hardship causes us to improve our management practices, but it is a lot more fun when we get rain,” he added.

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

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

Thankfully, I purchase crop insurance for situations just like this. Crop insurance is a public-private partnership that limits taxpayer exposure to risk – and saving them billions of dollars – and helps farmers get back on our feet when disaster strikes. A crop insurance check does not make a farmer “whole” anymore than an insurance check replaces the home you lost in a fire, but it at least puts us on first base.

Crop insurance has become the key risk management tool for farmers, and the only risk management for some, that last year protected 84 percent of eligible farmland, or roughly 266 million acres. In years past, natural disasters like the drought we are enduring right now, regularly triggered very costly, un-budgeted ad hoc disaster bill from Congress, costing taxpayers $45 billion from FY1989 to FY2001. By comparison, the fact that most farmers purchase crop insurance has negated the need for large disaster bills for crops. Because of the way crop insurance works, when disaster does strike, the cost is partially shouldered by private sector insurance companies. This is a good, fiscally responsible move for farm policy. That’s because the move from ad hoc disaster bills to private crop insurance policies has saved billions of taxpayer dollars. In fact, taxpayer spending for farm safety net programs as a whole has dropped from $19.2 billion in 2002 to an estimated $12.3 billion in 2011, a 36 percent decline.

Many Ohio farmers who are collecting crop insurance checks this year have never filed a claim. Those profits, in addition to the $3.5 billion the federal government has made in underwriting gains, will help pay for these and similar big losses. Last year, there was a string of natural disasters, including drought, wildfires, floods, freezes, hurricanes and tropical storms, which allowed crop insurance to show its steel.

Despite farm disasters from coast to coast, there wasn’t a single call for a disaster bill from Washington. Why? Because farmers had spent $4.5 billion of their own money to purchase crop insurance. Insurance dollars are already flowing into the state to help farmers meet their cash flow demands. In fact, more than $16 million in indemnities have already landed in the hands of Ohio farmers, which will help them make it through an otherwise lean year. It took months, or years, for cash from government programs of the past to find their way to farmers.

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. And for the record, none of those looks have been smiles of greed about a check for an insurance policy they bought. Nor have I heard much laughter. Tears of frustration, maybe. Laughter, not so much.

The rains have returned to the Buckeye state but for the most part, it’s too little, too late for the corn crop. Thankfully most of us have purchased crop insurance policies, and will bounce back and be planting again next year.

This op-ed, written by Custar, Ohio farmer, Mark Drewes, appeared in the Bowling Green Sentinel-Tribune on September 18, 2012.

The arrival of heavy rains from Hurricane Isaac made some farmers happy and others worried to death, depending on where they were located and what they were growing.

In Louisiana and Mississippi, most of the cotton crop was two to four weeks from harvest when Isaac made landfall. That was the same situation as 2008 when Hurricane Gustav ruined that crop. Louisiana corn harvest had been delayed as well, leaving much of that crop in the field and farmers scrambling when the winds and torrential rains came.

Kyle McCann with the Louisiana Farm Bureau said that some of the state’s soybeans were damaged by the heavy wind and rain but were still salvageable. “We hope to see the damage in some of the later soybean varieties dissipate overtime as they recover.” The cotton crop suffered some losses as well, particularly the varieties that had opened early and were ready to pick. “Unfortunately, the heavy winds did some of the picking for us and it’s scattered across the ground,” he said. “But luckily, I haven’t heard of any dramatic losses to far.”

As Tropical Storm Isaac reached the parched earth of the Midwest and the cracked soils finally dampened, farmers growing soybeans breathed a sigh of relief while corn farmers lamented the fact that it had arrived too late to help many of them. Despite helpful rains over the eastern portion of the Corn Belt – which saw exceptional improvements for three hard-hit states:

– In Missouri, the area experiencing “severe” or “exceptional” drought was reduced from 97 percent to 32 percent.

– In Illinois, the reduction in these two categories dropped from roughly 70 percent to just under 7 percent.

– In Indiana, “severe” drought or worse is completely gone from the state for the first time since June 12.

Unfortunately, despite those localized gains, the overall drought numbers remained virtually unchanged from the previous week with 63 percent of the lower 48 states experiencing moderate to exceptional drought.

The September 4 crop progress reports bears that out. The portion of corn that is in poor or very poor condition remained at 52 percent, unchanged from the previous week. Soybean conditions remained roughly the same as well, with 58 percent of the crop in fair or good shape. Also, unfortunately for the livestock industry, nearly 60 percent of the country’s pastures remained in poor or very poor condition as well.

Without crop insurance in place, this unfolding natural calamity would surely have spurred a new ad hoc disaster bill in Congress. Thankfully, most farmers have crop insurance. They’ve invested more than $4 billion to purchase 1.2 million policies, thus far this year. For those who have suffered losses already, more than $1.3 billion in indemnity payments have been made.

The Risk Management Agency has provided a 2012 Drought “Frequently Asked Questions” factsheet for farmers or anyone else who has questions about crop insurance policies or how they should proceed if crops are damaged. Additionally, a statement was sent to the national media by National Crop Insurance Services detailing the steps farmers should take if crop damage is detected.

 

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. This year’s weather pattern, which settled into the Great Plains and the Southwest last year and has spread into the Corn Belt, resembles those of a quarter century ago, he noted.

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. For consumers, this drought could spell higher food prices as food and feed supplies tighten further and global demand continues to rise.

For farmers and ranchers ­ who in 2011 experienced one of the most disastrous weather years in history ­ this could mean yet another year of dismal harvests and dashed hopes. Thankfully, the vast majority of U.S. farmers purchase crop insurance policies, which last year covered 84 percent of eligible lands, protecting 266 million acres of crops.

But the agricultural destruction experienced in 2011 — which ranged from drought in the plains to flooding in the Midwest and Delta regions to freezes in Florida and Hurricane Irene on the East Cost — differed from previous years. In the past, large natural disasters would have triggered nearly immediate and always expensive ad hoc farm disaster bills in Congress. Last year, there were none.

Why? Because crop insurance, the public-private partnership designed to encourage the private sector to sell and service policies, was in place and working to help America¹s farmers pick themselves up when Mother Nature struck. Crop insurance is the most widely used and popular risk management tool available to farmers today.

This past year, as Congress began writing the 2012 Farm Bill, farmers and ranchers from each corner of the country and nearly every major commodity group came to Washington to testify about what that Farm Bill needed to do. There was one main theme that threaded through their testimony: “Do no harm to crop insurance.”

Unfortunately, an amendment in the recently passed Senate Farm Bill could harm the crop insurance system by mandating means testing to farmers who seek to purchase crop insurance. This might sound like a common-sense amendment at first glance, but what is important to remember is that crop insurance is purchased by the farmers themselves, so trying to make crop insurance sound like some government handout is very misleading.

Means testing could potentially disrupt the whole system because crop insurance, like other forms of insurance, relies on large pools of policy holders, who are all interconnected, meaning that less risky producers make policies more affordable for the riskier producers. In laymen¹s terms, that means that the well-financed, established farmers make policies more affordable for the less established, heavily-leveraged farmers or new farmers seeking to enter agriculture for the first time.

For those of you who don¹t farm, think of it this way. If a car insurance plan removed all of the most experienced and safest drivers from the pool of the insured, the cost for the remaining participants would increase because the low cost members were no longer there to balance out the high cost members. The same is true with crop insurance.

Without an adequate pool of insured participants, the whole system could collapse, making it much more difficult to secure insurance policies or to quickly collect indemnities when disaster strikes.

It’s important that this idea gets stopped in its tracks in the House Farm Bill, which will soon be written and then debated later this summer. An effective insurance program requires more acres in the program, not less. Means testing and arbitrary caps on crop insurance will reduce participation and hurt everyone in the system, including consumers.

The crop insurance system has helped American farmers survive the mishaps of Mother Nature last year, and it will do it again if it’s not undermined. Last year, farmers received nearly $11 billion in indemnities for the damages and losses they incurred over the course of the year. And hopefully, we can maintain crop insurance in its current form, because the current system works for both farmers and consumers.

 

Mike Pfantz is a crop insurance agent from Omaha, Nebraska. This op-ed appeared in the Lincoln Journal-Star on July 13, 2012.