Farmers Grow Florida Jobs, Crop Insurance Protects Them

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Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?

The answer isn’t healthcare, transportation, technology or even government.  Agriculture is Florida’s second biggest job supplier, according to the University of Florida.

“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms.  Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.

Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.

A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.

And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.

So how do farmers gain some control over the uncontrollable and add stability to the region’s economy?

Crop insurance is key.

Farmers purchase protection from weather disasters and price volatility, while private-sector insurers underwrite policies, verify claims and speed assistance to farmers when it is needed most.

The government, in turn, helps discount premiums to promote farmer participation and shield taxpayers from unbudgeted disaster aid that would be necessary without the private-sector insurance structure.

Crop insurance was long viewed as a tool primarily used by corn, soybean and wheat farmers in the nation’s midsection.  But lately, specialty crop participation along the coasts is growing and insurance protection is available on more than 100 different crops nationwide.

More than $1.3 billion in annual insurance protection is being purchased for Florida orange trees alone with another half a billion for nursery crops.  And thank goodness farmers are purchasing these policies.

In the back-to-back disaster years of 2004 and 2005, for example, more than $400 million in indemnity checks flowed to farmers in the state to help them pick up the pieces following hurricanes.

More can be done, too, to make insurance even more attractive to Florida’s farming community and help growers buy higher coverage levels to shield against tomorrow’s disasters.

The 2014 Farm Bill took initial steps by strengthening insurance for organic growers and making it more accessible for beginning farmers.  Other provisions boosted protection for livestock producers and will help bring new insurance products to the marketplace.

From Feb. 8-11, leaders from the crop insurance industry, American agriculture and the federal government will be at the Hyatt Regency Coconut Point Resort in Bonita Springs to discuss risk protection in the 21st century and what can be done to continually improve the system.

Among the key discussion points: Keeping crop insurance affordable for all farmers regardless of their size or planting choices; ensuring widespread availability of insurance across all states and numerous crops; and maintaining the viability of private-sector delivery, which is far more efficient and effective than a government-managed alternative.

It is a packed agenda, and as the cornerstone of today’s farm policy, crop insurers have a lot to discuss.  However, I fully expect us to do our part in supporting the other major Florida employer – tourism – while we are in town.

Tom Zacharias is president of National Crop Insurance Services, based in Overland Park, Kan.  The guest column appeared on February 6, 2015 in the Fort Meyers News-Press and is available

New Congressional Ag Leaders Pledge to Protect & Strengthen Crop Insurance, Encourage Teamwork to Address Challenges Ahead

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The new leaders of the agriculture committees in Congress addressed crop insurers during the annual meeting in Bonita Springs, Fla., of the American Association of Crop Insurers and the National Crop Insurance Services and pledged to protect and strengthen this public-private partnership.

In separate taped videos, Sen. Pat Roberts, the chairman of the Senate Committee on Agriculture, Nutrition and Forestry, and Rep. K. Michael Conaway, the chairman of the House Committee on Agriculture, delivered parallel messages explaining how the 2014 Farm Bill made crop insurance the key risk management tool available to farmers.

“Crop insurance is the cornerstone of the farm safety net,” said Roberts.  “You have my word to continue to protect, preserve, and improve the number one risk management tool in every farmer’s toolbox.”

They also warned about the challenges ahead and stressed the need to work as a team to stave off attacks.

“The critics of farm policy and crop insurance are not going to go away,” explained Conaway. “Despite some $17 billion in cuts to crop insurance, some are pushing for even more.  They bill it as reform, but we all know their real end game is to kill crop insurance.”

Roberts added, “Together we must be ready and willing to tell stories of the great successes” of crop insurance.

Crop Insurance in Action: Bill Christ, Metamora, Illinois

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For those who have ever visited America’s Corn Belt, they know that the region has soil and climatic conditions for growing corn and soybeans.   “And our farmers are hardworking, committed and driven to produce record crops every year,” notes farmer and crop insurance agent Bill Christ.

In the past, when drought would occasionally come, “many hardworking farmers watched their crops wither and their dreams blow away with the dust, because they didn’t have a backup plan in place in case something like this happened,” said Christ.

Today, most farmers purchase crop insurance, which ensures that when drought or flood or early freeze visits our region, farmers have some level of protection to recoup the tens of thousands of dollars they’ve spent trying to raise a crop.

“The droughts in the 1980s taught the area farmers that if they relied on disaster payments and subsidized federal loans to bounce back from natural disasters, they were going to eventually fall on their faces,” he said.   On the other hand, crop insurance, which today protects 94 percent of planted cropland in the U.S, combines the resources of the federal government with the ingenuity and entrepreneurship of the private sector.

Crop insurance allows individual farmers to purchase the coverage they need, tailored to their farms, their financial standing and their tolerance to risk.  “Crop insurance has become indispensable because farming is so expensive that banks are afraid to make production loans without a crop insurance policy as collateral,” said Christ.   “That way, if the crop fails, the bank, and the farmer, have something to fall back on.”

Christ says he’ll never forget the drought of 2012.   “Farmers calmly walked their fields, yet inside, we all knew we were heading for big trouble,” he said.  Well before the harvest, the corn was burning up and the plants themselves were stunted.   In some parts of the state, corn crops were condemned but the plants were so small they could hardly be chopped for silage.

But unlike previous droughts I had witnessed, there was a sense of optimism in the farmers I knew.  “They were more upbeat and positive because they had adequate protection and that they could bounce back,” he said.  “And guess what?  Everyone bounced back in 2013 and produced an enormous harvest for the nation.”

In 2014, Illinois farmers spent $302 million out to purchase 124,000 crop insurance policies protecting 19 million acres valued at nearly $11 billion.

Christ notes that we live in one of the richest nations in the world and virtually anything you want to eat is right at your fingertips.  “But that doesn’t occur by accident,” he says.  “It’s possible due to good farm policies and hardworking farmers, who together produce the cheapest and most reliable food in the world.”

Steve Baccus: Farmers need protection of crop insurance

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When the homesteaders came to Kansas, they were looking for land to farm and a chance at the American dream. If they were like my family, they arrived here in a covered wagon, and many of us still live on the land where they began to build their dreams.

But Kansas can be a cruel place to farm. On the turn of a dime, a lifetime’s worth of work and every penny you have can be wiped out by a single hailstorm, a heat wave or drought, a springtime flood or frost, or a market crash that erases any chance of profit regardless of how well your crops do that year.

And that, in a nutshell, is why the vast majority of Kansas farmers purchase crop insurance every year, and why it must remain available, affordable and viable. In fact, with the passage of the 2014 farm bill, crop insurance is the primary risk management tool available to commodity farmers and the only risk management tool available to many specialty crop farmers.

One thing that has dramatically changed in agriculture since my family homesteaded in Minneapolis, Kan., is that farming has now become an incredibly capital-intensive venture. It takes so much money just to put a crop in the ground and harvest it at the end of the season that anyone farming without crop insurance might as well be playing Russian roulette.

I’ve had lots of friends tell me over the past several years that if it weren’t for crop insurance, they would not have been able to put a crop in the ground the next year. Crop insurance is a public-private partnership whereby farmers purchase private policies from participating companies that sell and service the policies. One of the government’s main roles is to discount the policies to a degree that they are widely affordable to most farmers.

In 2014, about 90 percent of planted cropland was protected by crop insurance, paid for out of the back pockets of farmers to the tune of $3.8 billion. Nationally, more than 1.2 million policies were purchased, protecting almost 294 million acres of food, feed, fiber and fuel crops that accounted for more than $110 billion in liabilities.

With the cost of farming so high, most farmers have to actually show proof of having purchased crop insurance in order to secure a production loan from a bank. The farmers get to sleep better at night because they have purchased the protection of crop insurance, and banks are able to make production loans to folks who might otherwise be judged too risky.

Some think that crop insurance is a freebie. Let me set the record straight right now: It’s not. Farmers have skin in the game when they pay their premiums, which is not pocket change. I bet the farmers I know spend $35,000 to $40,000 every year to purchase their policies. And in many years, they don’t collect a dime.

The reason why food supply in the U.S. remains abundant is that we have tools in place to make sure that when farmers are knocked to their knees by the whims of Mother Nature, they have a policy tool in hand to pick themselves back up and plant again. Let’s make sure that crop insurance remains affordable, viable and available for generations to come, to ensure a continued legacy of abundance in America.

Steve Baccus of Minneapolis, Kan., is the immediate past president of the Kansas Farm Bureau.  This op-ed appeared in the Wichita Eagle on February 5, 2015.

New NCIS Video: Private-Sector Delivery Essential to Crop Insurance’s Future and Viability

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Private companies are integral to crop insurance’s future because they shoulder risk that would otherwise be borne by taxpayers and because they maintain the system used to efficiently provide assistance to farm families following disasters.  However if the business does not remain viable, private-sector participation could wane, which would weaken America’s farm policy, according to a new NCIS video.

“Key to this viability is a reasonable rate of return for insurers on the infrastructure they built to deliver farmers’ most important risk management tool,” the video explained.  “An adequate return on investment enables insurance providers to routinely reinvest in technology, infrastructure efficiency, and service improvements for farmers and ranchers.  Unfortunately, adequate returns don’t always happen.”

Among the factors that have made crop insurance less viable in recent years:

  • Weather disasters and crop price volatility since 2011 have resulted in record loss payments from crop insurance providers;
  • $1.2 billion a year in federal funding was cut in 2008 and 2011; and
  • Farm policy opponents are targeting crop insurance for further funding reductions.

The 2014 Farm Bill took steps toward improving crop insurance by expanding coverage, by bringing new customers into the system, and by providing new tools to continually minimize waste, fraud and abuse.

Tom Zacharias, president of NCIS, applauded Congress’ actions and said it will be important to continue making improvements by reducing regulatory burdens, avoiding further funding cuts and keeping crop insurance actuarially sound.  And he believes that all Americans have a stake in the future of crop insurance.

“After all, not everyone farms, but everyone eats.  So everyone depends on a strong farm policy,” the video concluded.

The video is the most recent in a three-part series dedicated to the key policy attributes essential to crop insurance’s continued success.  Previous pieces examined the importance of making crop insurance widely available and affordable to farmers.

NCIS President Tom Zacharias Talks Crop Insurance on Agri-Talk

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The increasingly important role of crop insurance to farmers, ranchers and producers across the country – and its place of prominence in the 2014 Farm Bill – were among the many topics of conversation during Mike Adams’ recent interview with NCIS President Tom Zacharias on Agri-Talk.

“We think this is a very positive Farm Bill for farmers and ranchers in the U.S. and for the crop insurance industry in general,” said Zacharias.

Zacharias pointed out that crop insurance has changed dramatically over the last 10 to 15 years, now protecting 294 million acres with crop insurance premiums running at about $10 billion.  “That’s a liability of $110 billion of coverage for America’s farmers and ranchers,” noted Zacharias.  “This is a private/public partnership and on both sides of the equation, the companies involved have a fiduciary responsibility to their shareholders and with the public sector,” he added.

Zacharias pointed out that the last few years have posed some real challenges to both farmers and crop insurance companies.  “If you look over the last couple of years, we have faced some headwinds,” he said.  “Take the situation in 2012 with the extensive drought we had in the Midwest.  Last year, when we had the swing in prices and a lot of other revenue policies kicked in, so there were indemnities paid there.”

Zacharias also explained that in order for crop insurance to remain strong, it must remain viable to the private sector.  “It is important for the private sector to remain viable.  If you look at where this Farm Bill has taken us, the availability for farmers to have different risk management options, affordability of that part of the program remains very much intact.  We need both farmers and insurers to see reasonable returns in this business to help manage the risk.”

Zacharias said the 2014 Farm Bill has maximized choices for the farmer.  “With that choice, comes great responsibility,” he added.  He noted that there are many Title I provisions that farmers needs to be aware of so they can purchase the protection they need.  That, of course, is where the industry’s 12,000 agents come into play.  “They will need to go out and seek the expertise of both the crop insurance agency force as well as those folks in extension and farm managers who are grinding through the Title I Component,” he added.

Read the full transcript of the interview here.

Crop Insurance Is Important to Kansas Farmers

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For farmers, a lifetime’s work and every penny they have can be wiped out by a single hail storm, a drought or a market crash that erases any chance of profit regardless of how well crops do. That is why the vast majority of Kansas farmers purchase crop insurance every year and why it must remain available, affordable and viable.

With the cost of farming so high, most farmers must show proof of crop insurance to secure production loans from banks. This allows banks to make production loans to folks who might otherwise be judged too risky.

One of those groups is young farmers. They are the key to the future of American agriculture. For them, if they haven’t purchased crop insurance, one bad year and they are done.

Some think crop insurance is a freebie. It’s not. Farmers have skin in the game when they pay their premiums, which is not pocket change.

In fact, the farmers I know spend $35,000 to $40,000 every year to purchase their policies. And in many years, they don’t collect a dime.

Crop insurance helps ensure a legacy of abundance in America.

Steve Baccus

Immediate past president, Kansas Farm Bureau

Minneapolis, Kan.

This letter to the editor appeared in the Kansas City Star on December 20, 2014.

Affordability of Crop insurance Policies Focus of New Video

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Crop insurance policies must remain affordable for farmers and ranchers or the entire farm safety net will fail, crop insurance providers said today in a new educational video.

Farmers help fund current farm policy by spending approximately $4 billion a year out of their own pockets on crop insurance policies and by shouldering a portion of losses in the form of deductibles before receiving assistance.

“But if insurance bills get too big, or deductible losses get too high, fewer farmers will sign up for policies, and the whole system will collapse,” noted the video.  “If that happens, not only will it be harder for farm families to bounce back after disaster, but costs that are currently being borne by farmers and private insurance providers will shift back to taxpayers.”

Congress took steps in the 2014 Farm Bill to keep crop insurance affordable.  Among the steps spotlighted in the video:

  • Farmers receive discounts on the premiums they pay for coverage, including discounts for new and beginning farmers looking to start a career in agriculture.
  • Some of the typical insurance delivery expenses that would otherwise be built into a policy’s cost are offset.
  • Supplemental coverage is made available to help counterbalance a portion of deductible losses.
  • Congress defeated attempts by some opponents of agriculture to cap crop insurance benefits and make policies more expensive for everyone.

This is the second in a series of educational videos meant to highlight three policy attributes that are essential to maintaining a strong crop insurance system.  The first three-minute segment examined the importance of making crop insurance, widely available, and a future piece will look at maintaining the viability of private-sector delivery.

“Congress cemented crop insurance’s role as the centerpiece of the farm safety net during the 2014 Farm Bill,” explained Tom Zacharias, president of National Crop Insurance Services (NCIS).  “However, that safety net will breakdown if crop insurance policies aren’t widely available, aren’t affordable to producers, and aren’t economically viable to be administered by efficient private insurance providers.”

View other videos on NCIS’s YouTube channel here.

Specialty Crop Growers, Organic Farmers, Ranchers Can Now Purchase the Protection of Crop Insurance

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Growers of fruits and vegetables, as well as organic farmers and ranchers, will now be able to purchase the protection of crop insurance with Whole-Farm Revenue Protection crop insurance policies, announced recently by USDA.

The new policy is available for the 2015 crop year.

“USDA is committed to making crop insurance available and affordable to as many producers as possible,” said RMA Administrator Brandon Willis.  “Whole Farm Revenue Protection is another example of how we’re working with and listening to producers to create a safety net that meets their specific needs,” he said.

Whole-Farm Revenue Protection allows producers to insure a variety of crops instead of one commodity at a time, giving them the ability to increase their crop diversity and produce a wider range of foods for consumers.   The policy, created by the 2014 Farm Bill, allows producers to insure 50 to 85 percent of their whole farm revenue.

“This levels the playing field for producers who felt that crop insurance didn’t work for them,” Willis said.

The new policy is available in most states and will also provide a whole farm premium discount to farms with two or more commodities as long as minimum diversification requirements are met.   Whole-Farm Revenue Protection can be purchased in conjunction with individual policies if those policies are at buy-up coverage levels.

Previous Droughts Taught Illinois Farmers How To Manage Risk

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Some have said that there is no better place on earth to farm corn than in America’s Corn Belt.  Our soil and climatic conditions for growing corn and soybeans are among the best on earth, and our farmers are hardworking, committed and driven to produce record crops every year.   And in some years, they do.

But drought does occasionally visit the Land of Lincoln, such as the drought of 1983 and the drought of 1988.   And in those years, many hardworking farmers watched their crops wither and their dreams blow away with the dust, because they didn’t have a backup plan in place in case something like this happened.

Today, most farmers purchase crop insurance, which ensures that when drought or flood or early freeze visits our region, farmers have some level of protection to recoup the tens of thousands of dollars they’ve spent trying to raise a crop.

The droughts in the 1980s taught the area farmers that if they relied on disaster payments and subsidized federal loans to bounce back from natural disasters, they were going to eventually fall on their faces.   On the other hand, crop insurance, which today protects almost 90 percent of planted cropland in the U.S, combines the resources of the Federal government with the ingenuity and entrepreneurship of the private sector.

Crop insurance allows individual farmers to purchase the coverage they need, tailored to their farms, their financial standing and their tolerance to risk.   Unlike government programs of the past, crop insurance is a public-private partnership, whereby farmers purchase policies from participating crop insurance companies that are approved by the government, which discounts a portion of those policies to ensure their affordability to all farmers.  In 2012, farmers spent $4.5 billion out of their own back pockets purchasing crop insurance.

Crop insurance has become indispensible because farming is so expensive that banks are afraid to make production loans without a crop insurance policy as collateral.   That way, if the crop fails, the bank, and the farmer, have something to fall back on.

I’ll never forget the drought of 2012.   Farmers calmly walked their fields, yet inside, we all knew we were heading for big trouble.  Well before the harvest, the corn was burning up and the plants themselves were stunted.   In some parts of the state, corn crops were condemned but the plants were so small they could hardly be chopped for silage.

But unlike previous droughts I had witnessed, there was a sense of optimism in the farmers I knew.  They were more upbeat and positive because they had adequate protection and they could bounce back.  And guess what?  Everyone bounced back in 2013 and produced an enormous harvest for the nation.

In 2014, Illinois farmers spent $302 million to purchase 124,000 crop insurance policies protecting 19 million acres valued at nearly $11 billion.

We live in one of the richest nations in the world and virtually anything you want to eat is right at your fingertips.  But that doesn’t occur by accident.  It’s possible due to good farm policies and hardworking farmers, who together produce the cheapest and most reliable food in the world.

Nowhere else has been able to compare to the efficiency we’ve achieved in this country.   And I’ll be forever proud of that fact.

Bill Christ farms about 1,400 acres and lives in Metamora, Illinois.  This op-ed appeared in the Peoria Journal Star on November 8, 2014.

New NCIS Video: Availability A Key to Crop Insurance’s Future

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Crop insurance providers recently released the first in a series of educational videos meant to highlight three policy attributes that are essential to maintaining a strong crop insurance system in the face of future market and weather challenges.

The first three-minute segment examines the widespread availability of crop insurance, whereas future videos will look at the affordability of policies and the viability of private-sector delivery.

“Congress cemented crop insurance’s role as the centerpiece of the farm safety net during the 2014 Farm Bill,” explained Tom Zacharias, National Crop Insurance Services president. “However, that safety net will collapse if crop insurance policies aren’t widely available, aren’t affordable to producers, and aren’t economically viable to be administered by efficient private insurance providers.”

According to the first video, “Crop insurance is similar to other kinds of insurance. The more people who purchase policies, the more people who help share risk.  And when risk can be spread out along a broader base, it helps lower the cost for everyone.”

That is why it is it is so important for insurance to be available for all kinds of crops and to farmers of all sizes and backgrounds, NCIS noted.

“The more the merrier.  From corn and cotton to cherries and canola, every single acre enrolled helps strengthen the whole system,” the video explained.

The recently passed 2014 Farm Bill took big steps to make crop insurance more available to beginning farmers, organic producers, and fruit and vegetable growers.  Lawmakers also stopped legislative attempts to reduce insurance benefits available to larger farms – a plan that would have raised costs on all farmers and increased taxpayers’ risk exposure.

“Congress got it right by making crop insurance more widely available and stronger than ever.  Now, we just need to keep it that way,” the video concluded.  “After all, not everyone farms, but everyone eats.  So everyone depends on a strong farm policy.”

The NCIS video can be viewed here.  Segments on affordability and viability will be released in the coming weeks.

CROP INSURANCE IN ACTION: Shawn Holladay, Lamesa, Texas

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Shawn Holladay, a fourth-generation cotton farmer from Dawson County, Texas, looks to agriculture as his sole source of income. It’s not a bad argument for wanting the status quo to continue.

Ask one who’s been in farming for decades for his proverbial ‘staying power’ and he will likely tell you farming is a beloved legacy, he has a passion for growing crops that ensure the well-being of Americans, and throw in a bit of spiel about how crop insurance has made it possible for him to  survive against nature’s odds.

For 25 years, Holladay has used crop insurance to protect his 6,500-acre farmland in Lamesa — devoted to cotton, some grains and peanuts — and ensure its stability in the face of prolonged drought.  Especially vulnerable are farms like his that have been in families for three or four generations.

“My operation could not begin to stand the losses associated with drought and the severe weather without it,” said Holladay, an industry leader and cotton grower who has won the Farm Press/Cotton Foundation High Cotton Award for his conservation and sustainable farming practices. “The current drought would have taken out most, if not all, farms in the area where my operation is located.”

Read Shawn’s story here.

Columbus Dispatch Guest Opinion: In Tough Years, Crop Insurance is Vital

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Farming in central Ohio tends to be very even-keel, largely due to the great soil we sit on and the favorable climatic conditions in most years. Local crops, including corn, soybeans and wheat, tend to come in at fairly predictable yields, offering local farmers some peace of mind in a business known for its risk.

That whole equation was turned on its head in 2012, which will be forever seared in the minds of those of us who work the land as the Great Drought of 2012. Thankfully, most farmers here in central Ohio, like me, purchase crop insurance every year.

Crop insurance is a public-private partnership whereby farmers purchase individual policies with their own money and tailored to their own risk tolerance.

Folks who are not involved directly in farming don’t understand the enormous costs — for fertilizer, seed, machinery, labor and herbicide — that must be shouldered by farmers in order to get a crop in the ground. Farmers spend tens of thousands of dollars, then pray for good weather. If it all comes together, you’ve got a bountiful harvest and you’re set for the next year. If it doesn’t, hopefully you have crop insurance.

Now, crop insurance is also no small expense. In 2013, our farming operation’s crop-insurance premium totaled more than my wife’s annual salary as a local teacher. And in most years, we don’t make a claim. It’s just like homeowner’s insurance — you hope you never need to make a claim.

During the 2012 drought, farmers talked about how awful things were, but, curiously, none mentioned the possibility of losing their farms. That’s because they had all purchased crop insurance, knowing that if the bottom fell out, they had a backup plan.

And thankfully, for consumers in the U.S. and abroad, those farmers were back again in 2013, producing the healthiest, best and most affordable food in the world.

Matthew King is a farmer from Radnor, Ohio.   This op-ed appeared in the Columbus Dispatch on October 18, 2014.

USDA Unveils New Crop Insurance Product: Whole-Farm Protection Insurance

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Specialty crop farmers, organic farmers and diversified producers will now be able to purchase the protection of crop insurance as part of a Whole-Farm Revenue Protection insurance policy.  “Crop insurance options continue to adapt to meet the farm safety net needs of today’s farmers,” said Risk Management Agency (RMA) Administrator Brandon Willis.

Whole-Farm Revenue Protection, passed as part of the 2014 Farm Bill, will offer fruit and vegetable growers and producers with diversified farms selling commodities to wholesale markets, local and regional markets, farm identity preserved markets, or direct markets, more flexible, affordable risk management coverage options.  “Whole-Farm Protection insurance will expand options for specialty crop, organic and diversified crop producers, allowing them to insure all the crops at once instead of one commodity at a time,” noted Willis.

The new policy will offer a whole-farm premium discount to farms with two or more commodities as long as minimum diversification requirements are met.  This will provide diversified farms a higher premium discount that previously available.  The policies will also allow farmers to insure all crops and livestock under one insurance policy in lieu of insuring each commodity separately.

Willis noted that the new policy, as part of the overall 2014 Farm Bill, will build on historic economic gains in rural America over the next five years while also achieving billions of dollars of savings for taxpayers.

California Drought Causing Weather Extremes in Central Valley

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Weather extremes triggered by the prolonged drought have caused much of the damage to crops in California’s Central Valley in addition to lack of waters, says Doug Benik, a farmer and crop insurance agent from Fresno County.

While most assume that the absence of rainfall is largely behind much of the crop damage and losses in California, much of it has actually been caused by the absence of any moisture in the air – due to a lack of rainfall – that has produced weather extremes the area rarely sees. “The lack of moisture in the air allows air temperatures to get much colder in the winter and much hotter in the summer,” said Benik.  “And it prevents the cooling fogs from forming when many of the area’s trees need those conditions during the winter,” he said.

“For many farmers, the incredibly dry air is causing more damage than lack of water,” he said.   The drought, which is now in its third year, has forced many of the areas farmers, who grow all types of crops, to dig deeper wells in hopes of hitting more reliable water tables.

Benik, a second-generation farmer, said that for most of his life, farming in this area was much less stressful.  “This area of the Central Valley is an agricultural center because it is blessed with adequate water from a dependable rainy season in most years,” he said.   “And while we don’t receive adequate rainfall during the summer to sustain crops and trees, much of the water we need comes from the snowpack in the mountains,” he said.   “Unfortunately, this year, that snowpack never materialized, and moisture over the previous two years was subpar as well.”

Benik says that luckily, most of the area’s farmers have been purchasing crop insurance for years.  “Crop insurance has provided some peace of mind for many of our growers,” he said.  “Some growers will collect due to drought this year and that will save them.”

The drought is now in its third year, and the area farmers are keeping their fingers crossed that normal rainfall patterns return soon.  “This past year, some of the irrigation systems were denied water at the last minute, and that’s something we’ve never faced,” he said.

But if rainfall doesn’t return, Benik expects to see more deep wells go in this year to deal with it.   Either way, he says farmers will likely continue to purchase crop insurance to protect them from some, or part, of what Mother Nature has in store for them.

CROP INSURANCE IN ACTION: Matt Huie, Beeville, Texas

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Bee County in the coastal bend of Texas near the Gulf of Mexico was not spared the crippling drought which struck the state with the worst dry spell in almost a century in 2011 and continued for several years.

Matt Huie works on 5,000 acres of row crops plus runs a cow-calf operation, and lives near Beeville, Texas. He has been farming the last 15 years since graduating from college.

For him, crop insurance has been invaluable. Huie calls it “the most vital risk management tool” in his quiver.  “We always buy it, and have since we started,” said Huie.

“It’s required to secure loans in our area. Because of the severe drought in Texas, we have used it two of the last three years. Without it we would be out of business, along with two-thirds of the farmers in our area,” he said.

Read Matt’s entire story here.

CROP INSURANCE IN ACTION: Klodette and Rick Stroh, Powell, Wyoming

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Klodette Stroh isn’t your typical Wyoming farm girl.

Klodette is an Assyrian, born in Teheran, Iran, who came to the U.S. to attend college with the goal of becoming a physician and instead wound up falling in love with Wyoming farmer, Rick Stroh.

The couple began farming together in 1989, first purchasing some equipment and leasing land, all while hoping to one day own a farm of their own.    After years of hard work, the couple finally achieved a hard-fought dream and purchased their own farmland.  Today, the couple, and their two sons Rick and Paul, farm nearly 1,800 acres of malt barley, wheat, varieties of dry edible beans, corn and hay, near Powell, Wyoming.   They also tend to more than 50 head of cattle.

While things on their farm and in their lives have changed, one thing has always stayed the same:  The Strohs have always purchased crop insurance.   “We buy crop insurance mainly to safeguard from bad weather,” said Klodette Stroh.   “Last year we had four major hail storms in a row,” said Stroh.

Read Klodette and Rich Stroh’s story here.

“Eating Local” Made Possible With Strong Crop Insurance Policies

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One side benefit of the popular “eating local” movement is a growing recognition by urbanites and suburbanites of the importance of agriculture and the need to ensure that farmers are able to withstand the many challenges presented by Mother Nature. While farmers manage their many risks using a wide variety of tactics, there is one tool in most farmers’ risk management portfolio, which they consider indispensable: crop insurance.

The value of crop insurance to New England’s farmers was made crystal clear in 2012 by Tropical Storm Irene, which brought heavy winds and even heavier rains just as crops were nearing harvest. While 2011 saw record losses across the U.S. with freezes in Florida, drought in the Southwest and floods in the Midwest, it was farmers in Vermont who sustained the highest loss ratios in the country. As a crop insurance agent, I can attest that many of our farmers saw their entire crops devoured in one day as floodwaters, sometimes six feet high, swallowed their fields.

After the waters finally receded and the extent of the damage to their farms was assessed, it quickly became clear that Irene’s wallop had the potential of being a “game changer” for many New England farmers. And crop insurance was the only thing that saved many of them from losing their farms to bankruptcy and instead allowed them to return to their fields this spring and plant.

View the entire story here.

Crop Insurance Primer Available Online

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The 2014 Farm Bill was clearly a turning point in federal policy towards agriculture, pivoting away from the traditional support mechanism paradigm of the past and into a risk management model that features crop insurance as farmers’ primary—or only—risk management tool.  But with that new emphasis comes an increased need for basic information about crop insurance, what it is, how it works and why it has become the risk management tool of choice for America’s farmers.

These basics of crop insurance are available in an NCIS video titled “Crop Insurance 101.” The video is very helpful for Americans who have very little to do with agriculture, or for those who now find themselves needing to know more about this important risk management tool.

The video explains the public-private partnership of the crop insurance, the way crop insurance has removed some of the risk burden from taxpayers, and the role adjusters, and the companies they work for, play in the crop insurance program.  It also explains that in order to be protected by crop insurance, farmers must first purchase it with their own money.   Already this year, farmers have spent nearly $4 billion purchasing crop insurance.

CROP INSURANCE IN ACTION: Art Wiebelhaus, Fordyce, Nebraska

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People hear a lot about crop insurance and the fact that U.S. farmers spend $4 billion out of their own pockets to purchase it every year.   One of the greatest praises of our modern crop insurance system is the customer service that farmers receive before, but perhaps more importantly after, they have a loss.   For some farmers, the hours after a major farm disaster can seem like the lowest point in their lives, when their careers seem to be upended and their hopes for a big harvest dashed.

But quickly after a major loss occurs, crop insurance adjusters are on the scene to meet with the farmers assess the damage.  The crop insurance adjusters are one of the unsung heroes of the farm safety net, since they help ensure that when disaster strikes that help – in the form of a crop insurance indemnity check – is on the way.

Before ever climbing in the truck, crop adjusters are already on the phone making business calls, watching the weather forecast, reading the rain gauge, and checking in with their clients. They spend long days in the office and even longer days out on the road. Right beside the farmer as they walk through their fields, these men and women are at the very heart of why crop insurance is successful.

Art Wiebelhaus is one person in particular who exemplifies just what it takes to be a crop adjuster. He recognizes the commitment crop production takes, the need crop insurance fulfills, and the lifestyle agriculture holds. From his understandings, Art utilizes a dynamic relationship between crop insurance, farming, community, and family.

While he has been a crop adjuster for just six years, Art has been a farmer his whole life. As a third generation farmer, “I know what they are going through and what their worries are. I’m a farmer too,” commiserates Art. Imagine waking up one day to your life’s work destroyed by events beyond your control–producers must carry around this possibility (and lump in their throat) every day. It is an adjuster’s job to provide farmers with the aid they seek from crop insurance.

As producers dread the day when they must make a claim, Art is still able to make light of the situation. He laughs, “It seems that when it rains, it just keeps raining, and when it’s dry, it just stays dry.”

Growing up on the same place he now farms, Art has seen crop insurance grow around his own sleepy little town of Fordyce, Nebraska, “A while back I remember meeting one gentleman who didn’t have crop insurance, and that’s because there wasn’t a policy that really worked for his operation. Of course now, with improvements and changes to crop insurance, he has coverage. And today, I can’t name one person who doesn’t have crop insurance.”

“With current prices, farmers have to have crop insurance to stay in business,” points out Art. The loss of just one year can be so catastrophic that an operation cannot financially come back from it. Keeping a farmer’s “head above water” means another year that he is able to meet the demands of food production.

This is where the importance of an adjuster comes into play. They make the loss calculations for every insured field based upon scientific procedures. From these adjustments, it is determined how crop insurance policies can pay.  Creating a tie to the producer, adjusters work with their clients to provide assessments that will have a positive impact on the operation’s future.

Along with this, crop adjusters must be conscientious of their actions in order for this process to be successful. For the best results Art says that, “Every time I visit a field, I have two goals in mind: make the most accurate adjustment; and make sure the farmer feels that he can rely on my judgment.”

To reach this goal, “It’s very important that you clearly explain the procedures and how you came up with the loss adjustment total,” describes Art. Presenting these steps provides the farmer with an understanding as to how the loss was determined. Art’s appreciation for the producer is repaid with equal gratitude when he takes the extra time to help his clients.

From each visit, Art is one-step closer to a stronger relationship with the farmer. This is important to Art, because it is the reason he started adjusting in the first place.

“I always enjoyed visiting with my crop adjuster when he came out to my farm. He kept bringing up how he thought I would make a great adjuster,” tells Art, “I knew how much he had helped my farm operation, and I wanted to be able to do the same for others. I finally made the call and have loved my job ever since.”

It is not uncommon to find an adjuster like Art—one who has a passion for helping his community. But what is exceptional about him is that despite the fact that he must cover at least three different states at a time, being able to serve and contribute to agriculture is all Art asks for in return.

“Just like any job, there are trying times. But overall I enjoy my job, because I know that I am able to help the farmer,” explains Art.

Adjusters are the face of crop insurance, and make a direct impact on the perception of the industry. Besides their agent, a client will spend most of their time working with an adjuster when unfortunate weather strikes. It is important to remember that, “This is not only a business, but a livelihood; they [farmers] need to be reassured that they won’t lose what is very close and personal to them,” notes Art. How an adjuster interacts with a client will not go unnoticed or forgotten; a crucial point as to why crop insurance will always need adjusters like Art.

From developing a dedicated relationship, to mentoring farmers about procedures, Art brings a positive impact on crop insurance every day.

12 Essential Strengths of Crop Insurance

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With the passage of the 2014 Farm Bill, crop insurance became the single most important risk management tool for America’s farmers and ranchers.  Crop insurance helps make America’s farmers and ranchers world leaders in agriculture, allowing producers to stay competitive and be more innovative.  It also helps them sleep better at night knowing that, should the unexpected happen, they will have the financial security to stay in business and go on to plant the next season.

As Nebraska farmer Quentin Bowen noted in an op-ed that appeared Lincoln Journal, “The speed of delivery of crop insurance — because it’s administered by private-sector companies — makes it a different kind of animal. In fact, if a natural disaster strikes and I’m covered by a crop insurance policy, typically the payment comes to me in one or two weeks, not in one or two years. Because of that speed of delivery, I can quickly recover from the loss and replant the field, garnering myself some needed income for the year and putting some food on the tables for consumers.

An available, affordable and viable Federal crop insurance program is a key component to the tremendous success of our country’s agricultural economy.  There are twelve reasons why crop insurance is an essential business tool for America’s agricultural producers.  Essential strength number one is “Producers Receive Individualized Risk Management Solutions.” Most farm programs are, in general, similar across all crops and producers, despite variations in an individual farmer’s operations. However, crop insurance allows farmers to customize their plans and coverage to accurately reflect individual losses and their unique yields or risk.  To review the twelve essential strengths and watch real testimonials as to why they are important in the real world, click here.

USDA Announces Progress In Implementing Crop Insurance Provisions

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The U.S. Department of Agriculture (USDA) announced recently that it continues to make progress in implementing provisions of the 2014 Farm Bill that will strengthen and expand insurance coverage options for farmers and ranchers. The new Supplemental Coverage Option (SCO), available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility.

USDA Secretary Tom Vilsack pointed out that this nation’s producers work hard to produce a sufficient amount of safe and nutritious food for the country.   “It’s critical that they have crop insurance options to effectively manage risks and ensure that they do not lose everything due to events beyond their control,” he said.   Vilsack added that USDA has made it a priority to ensure the Supplemental Coverage Option was available to help farmers in this upcoming crop year.

The 2014 Farm Bill strengthens and expands crop insurance by providing more risk management options for farmers and ranchers and by making crop insurance more affordable for beginning farmers. SCO, which is administered by the Risk Management Agency (RMA), further strengthens the farm safety net.

SCO will be available for corn, cotton, grain sorghum, rice, soybeans, spring barley, spring wheat, and winter wheat in selected counties for the 2015 crop year. Producers should contact their crop insurance agents to discuss eligibility in time to sign up for winter wheat coverage. RMA plans to make SCO more widely available by adding more counties and crops. Information on SCO for 2015 winter and spring wheat is available on the RMA website.

SCO is a county-level policy endorsement that is in addition to an underlying crop insurance policy, and covers a portion of losses not covered by the same crop’s underlying policy. Producers who elect to participate in Agricultural Risk Coverage (ARC), which is offered by the Farm Service Agency (FSA), are not eligible for SCO for the crop and farm participating in ARC.

Vilsack noted today’s announcement was made possible by the 2014 Farm Bill. The Farm Bill builds on historic economic gains in rural America over the past five years, while achieving meaningful reform and billions of dollars in savings for taxpayers. For more information, visit www.usda.gov/farmbill.

Crop Insurance Adjuster Schools Off to a Great Start!

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Crop insurance loss supervisors and loss adjusters attended classes that provided them with updated field instruction, basic procedures, recent loss adjustment policy changes and hands-on training for dealing with crops damaged by hail.  The classes, part an ongoing adjuster educational series sponsored by National Crop Insurance Services (NCIS), were held in Columbia, Missouri in early June.

Nationally, more than 1,200 adjusters – new and experienced – attend these classes each year to learn valuable information, hone their skills, or teach new adjusters the ins and outs of loss adjustment.  When asked what the goal of this school was, Missouri’s NCIS Regional/State Chairman, Jeff Dexter, Rain and Hail, explained:  “To create an environment where new and seasoned adjusters can learn and follow procedures in loss adjustments.”  He went on to say, “…I think it is a responsibility of companies and seasoned adjusters to pass on knowledge to the future leaders of our trade. In the end, we all have one common goal – to follow the procedures provided to us from the many years of (NCIS) research.”

As one of the 13 NCIS schools being held in 2014, the Missouri Crop-Hail Wheat and Corn School was the second of the season.  Kathy Holmes, a Claims Adjuster for ARMtech Insurance Services said, “I really enjoyed the hail school this year. I have been numerous times and each year it gets better.”

The improvement and continuation Holmes speaks of is necessary for this industry to survive, as adjusters must be able to distinguish a range of possible causes of loss in combination with current issues or changes to procedure. Along with NCIS-sponsored schools, Approved Insurance Providers (AIPs) also conduct their own training sessions across the United States on a variety of crops. It is through the hands-on training at these schools that farmers can rest assured knowing the loss adjuster who comes to his/her farm is adequately trained and the loss will be evaluated based on sound, scientifically-proven procedures.

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.”

Wyoming Farmers Can Depend on Crop Insurance

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I have a unique perspective among American farm wives since I was born and raised as an Assyrian living in Teheran, Iran. I came to Wyoming as a student but fell in love with a farmer and have spent my life making a living from and raising my family on the land that we love.

Farming can be a risky business, which my husband and I have learned first hand since we began farming together in 1989. The risks that we face generally come from Mother Nature – drought, floods, pests or hail – so there’s only so much you can do to manage your risk. And that is why we have purchased crop insurance every year since we first bought our farm.

Crop insurance is no small expense for us or other Wyoming farmers, but it’s the best risk management tool in town. Last year, Wyoming farmers purchased over 2,500 crop insurance policies costing farmers more than $8 million out of their own back pockets. Nationally, farmers have spent more than $38 billion of their own money purchasing crop insurance policies since 2000.

Crop insurance not only helps you sleep better at night, but it’s a smart business decision, even though on most years we don’t collect a dime. But on those years when disaster strikes, farmers who haven’t purchased the protection of crop insurance could be facing a very gloomy future.

Last year, for example, we were hit with not one but four major hailstorms, which struck right when the plants were the most vulnerable. The leaves of area dry edible bean and sugarbeet plants were torn and tattered, which staunches their development.

In the past, before crop insurance became widely affordable, Wyoming farmers would have turned to the federal government for disaster assistance. But since roughly 90 percent of planted cropland was protected by crop insurance in 2013, farmers turned to their crop insurance agents, not the federal government, for help.

And unlike assistance from the federal government that can be agonizingly slow in arriving, crop insurance checks usually come within weeks or a month of completing the paperwork. That is one reason why it is so popular among farmers who have faced disaster, like us.

The passage of the 2014 Farm Bill placed crop insurance as the centerpiece of the new farm risk management strategy. Crop insurance is a public/private partnership whereby the federal government discounts a portion of a farmer’s crop insurance premium to ensure that it is widely purchased, and 19 participating crop insurance companies sell and service the claims.

Banks do not always require crop insurance, but they certainly feel better making loans to farmers who have purchased it. Why? Because bankers like to know that if disaster strikes, that some of the money they loaned will be coming back to them.

Crop insurance, like other public policies, has its detractors. Among them are those who say that farmers would rather collect a crop insurance check than raise a crop. That’s simply not true. With the high cost of farm inputs, including seed, fertilizer, fuel, labor and overhead, there is no way that you could collect enough insurance every year to cover your expenses, much less live on.

A farm simply could not float by collecting on crop insurance claims, and anyone who has any understanding of agriculture should know that.

Coming from a different nation, I also see a value of crop insurance that might not be readily apparent to some Americans. Farmers are a major economic force in rural America, pumping billions of dollars into the rural economy – purchasing fuel, equipment, storage building and paying farmhands – while producing the food, fiber and fuel this nation needs. Believe me, Americans really would not want to be reliant on other nations for our food security.

When we lose our food security, next will come our independence. And none of us want to lose that.

Klodette and Rick Stroh farm 1,800 acres near Powell, Wyo. Klodette is also a member of Women Involved in Farm Economics (WIFE).

This op-ed appeared in the Prairie Star on July 17, 2014.

2013 Year in Review: New Policy and Coverage

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Crop insurance reached significant and historic milestones in 2013 — both in its formal recognition by Congress as the primary risk management tool for farmers and the volume of protection it offered — according to an article released in the May 2014 edition of Crop Insurance TODAY.

“Again in 2013, crop insurance helped farmers deal with the year’s weather and market risks,” noted authors Keith Collins and Harun Bulut. “Crop insurance was singled out by legislators during the development of the new Farm Bill as the primary program supporting production agriculture and was heralded as indispensable for successful farming today,” they added.

The ability of farmers to rely on the crop insurance policies they had purchased gave them confidence to plant yet another year of near record total production, the authors explain. “Farmers were able to plant 325 million acres in the spring of 2013, down slightly from a year earlier but four million [acres] above the previous five year average.”

The article points out that looking to the future, the public can rest assured that crop insurance will be in place to provide financial stability for the many small, family farms that comprise the core of U.S. farm production. “Crop insurance will ensure that when the repeated disasters of recent years strike again, as they most assuredly will, U.S. farmers will be able to bounce back to produce again at high levels the food, feed, fiber and energy crops which the U.S. and world populations have come to expect and depend [upon],” they said.

 

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.

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.

California Drought Worsens as Rainy Season Ends, Growers Fret

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“California’s reservoirs obviously will not be significantly replenished by a melting snowpack this spring and summer,” concluded the year-end snow survey by the California Department of Water Resources.

The mountain snowpack is critical to the state’s water needs and provides roughly one-third of the water for California’s farms and cities. “Today’s final snow survey of the year found more bare ground than snow as California faces another long, hot summer after a near-record dry winter,” the report said.

The May 1 survey found the state’s snowpack at a mere 18 percent of average for the date. “With most of the wet season behind us, it is highly unlikely late-season storms will significantly dampen the effects of the three-year drought on parched farms or communities…” the report noted.

According to the May 13, 2014 U.S. Drought Monitor the entire state of California is experiencing severe drought conditions. More than three-quarters of the state is suffering a state of “extreme drought,” a seventeen percent increase from three months earlier this year, with nearly 25 percent of the state experiencing “exceptional” drought, a fifteen percent increase from three months earlier.

The ongoing drought is hitting the state’s farmers and growers hard. California is the nation’s top agricultural state, with farming generating approximately $37.5 billion a year, growing roughly half of the nation’s fruits, nuts and vegetables.

California farmers purchased more than 25,000 crop insurance policies in 2013, protecting more than 5 million acres. Those policies protect crops ranging from almonds, apples and avacadoes to sugarbeets, Valenicia oranges and walnuts. To purchase those policies, California farmers paid more than $95 million out of their pockets and protected more than $6 billion in liability.

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.

Read Tim Totheroh’s story here.

U.S. Agriculture at Historic, Pivotal Point

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When the 2014 Farm Bill became law, it marked a pivotal moment in the history of U.S. farm policy. The new Farm Bill eliminated direct payments and replaced them with Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) that farmers must choose between. The Farm Bill also stressed the importance of Federal Crop Insurance by strengthening it and expanding it.

ARC compliments crop insurance by providing an additional 10 percent revenue coverage band at the farm or county level whereas PLC provides protection from consecutive years of lower prices by providing a much higher target price than in years past. Congress has made it clear that ad-hoc disaster bills are a thing of the past and the components of the Farm Bill, in conjunction with a strong crop insurance program, provide a valuable safety net for the producers in times of natural disasters.

Crop insurance ensures farmers have a risk management plan in mind early in the year. In addition to that plan, they must put their money toward purchasing a crop insurance policy. This is no small amount of money for farmers, who in 2013 spent roughly $4.5 billion on crop insurance premiums. Much has been said about the government’s subsidy for crop insurance, but similar to flood insurance, crop insurance wouldn’t be possible without the government’s contribution. Producers get a bill, not a check, at the end of the year for their share of the premium on crop insurance.

Crop insurance has been a work in progress since 1938. In 2013, 90 percent of planted cropland was protected by crop insurance. And when disaster struck – as it did in the historic drought of 2012 – farmers turned to their crop insurance policy, not their Member of Congress, for help.

Crop insurance has been widely praised by farmers, the financial community, and farm leaders from every major commodity organization. But before the ink was even dry after the President signed the bill, crop insurance was already under attack by those who don’t understand the complexities and importance of it to farmers with all sizes of farming operations.

For that crowd, crop insurance has become a new favorite target, and they will stop at nothing in an attempt to both discredit this praiseworthy public-private partnership and the farmers who purchase it. The first assault – on the premium discount – is aimed at trying to increase how much farmers pay for their insurance premiums. We must be very careful to not change the parameters of a system that is fragile and like a house of cards can fall apart if the premium pool is changed.

The critics of crop insurance claim that it benefits the large producer at the expense of the small producer, when in reality every farmer, with the same APH and same coverage plan, receives the same premium subsidy per acre, regardless of the size of their operation. The key words are “per acre.” A farmer with 10 times more farmland will receive 10 times the subsidy but he also incurs 10 times the risk and 10 times the premium he pays.

Means testing raises the premium costs for those affected and will cause reduced participation. If crop insurance opponents are successful, insurance would become more costly per acre to larger growers and force them out of purchasing crop insurance. The effectiveness of crop insurance depends on total enrolled acres.

Just as with any kind of insurance product, crop insurance needs a large, diverse risk pool to remain affordable for all. Anything that removes acres from the program, particularly lower risk acres, erodes the stability of the program and ultimately harms the remaining participants by driving up their costs.

These same growers have the most acres in the program and provide a critical balance in the risk pool to smaller, higher risk producers. This would result in a weaker, more unstable crop insurance system and higher premiums for smaller, socially disadvantaged, or newer farmers who also need this critical risk management tool.

Crop insurance is not a social program, it is a risk management program designed to attract high participation and protect as many farms and acres as possible from disaster and thereby enable steady and stable production of food, biofuel and fiber for the U.S. economy.

As we move forward and critics of agriculture line up to attack, we must ensure that crop insurance remains affordable for growers, available to all regardless of size, and that the public-private partnership remains viable so that it can service those who buy insurance.

Bing Von Bergen is the past president of the National Association of Wheat Growers, and lives in Moccasin, Montana. This op-ed appeared in the Helena Independent-Record on May 1, 2014.

Crop Insurance: From Little Known Law to Cornerstone of Farm Policy

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Although federal crop insurance has been around since 1938, for more than half a century it was largely unknown and underused. Because of this, natural disaster management was mostly done after the fact, in the form of large, costly disasters bills. These bills were not only slow in delivering much needed help to farmers, but also fell full on the laps of taxpayers to fund.

Repeated weather disasters in the 1980s, accompanied by an equally painful farm debt crisis, was causing hardship in rural America and anxiety in Congress about how these expenses would be covered and who would foot the bill.

Concerned that the federal government’s responses to natural disasters had typically been “generally reactive and ad hoc,” House Agriculture Committee Chairman E. “Kika” de la Garza asked the General Accounting Office (GAO) for guidance on how to better manage expensive, recurring disasters.

The resulting 1989 GAO examination and report would help pave the way for a new approach to agricultural policy – one that would ultimately protect 90 percent of planted cropland in 2013 and would help farmers manage back-to-back years of natural disasters in 2011 and 2012.

Specifically, the GAO studied USDA’s three main disaster programs – ad hoc direct disaster payments, disaster emergency loans and crop insurance – and compared their effectiveness using eight different criteria. And while none of the programs satisfied all the criteria laid out, the GAO report pointed out “crop insurance is a more equitable and efficient way to provide disaster assistance” than both direct disaster payments and emergency loans.

The report noted “crop insurance treats disaster victims more equitably” and also “provides farmers disaster assistance more efficiently because farmers generally have more incentive to reduce risk under the program than they do under loan and direct payment programs.”

And so, crop insurance began its journey of improving and evolving as the centerpiece for U.S. farm policy. That included more private-sector involvement, making the program actuarially sound, and encouraging participation.

Even as late as the early 1990s, crop insurance participation rates hovered in the 30 percent range and Congress was often spending considerably more each year in disaster relief expenditures than it was on crop insurance.

The Federal Crop Insurance Reform Act of 1994 restructured things to boost farmer participation, increase the private sector’s role and create the USDA’s Risk Management Agency (RMA). Other important reforms to crop insurance can also be found in the “Blueprint for Financial Soundness,” published in the Federal Register in 1994. Many of these recommendations have been implemented since its publication.

They include:

• Determination of more accurate yields;

• Better tracking of ineligible producers;

• Premium rate adjustments;

• Improved underwriting;

• Better program compliance;

• Introduction of new products to improve participation;

• Increased risk bearing by AIPs;

• Management actions to correct if changes not working.

By 1998, more than 180 million acres of farmland were insured under the program, representing a three-fold increase over 1988. But coverage levels on a per acre basis were still low, such that Congress had not been able to break the habit of yearly ad hoc disaster bills.

Then, in May of 2000, Congress approved the breakthrough piece of legislation: the Agricultural Risk Protection Act (ARPA). The provisions of ARPA made it easier for farmers to access different types of insurance products including revenue insurance and protection based on historical yields.

By the summer of 2012, more than 280 million acres were enrolled in crop insurance – just in time for historic drought that would have otherwise crippled rural America.

As a result of these continuous improvements to modern-day insurance program, there have been no calls for ad hoc disaster bailouts – even after the widespread floods of 2011 and Dust Bowl-like conditions of 2012.

In 2013, nearly 296 million acres were protected by federal crop insurance, which represented nearly $124 billion in liabilities, and offered policies covering 128 different crops. Farmers have shown their support for crop insurance with their pocketbooks, spending more than $38 billion out of their own back pockets purchasing premiums since 2000.

Just days after the 2014 Farm Bill was signed into law by President Obama, RMA Administrator Brandon Willis commented about the evolution of crop insurance and why it has become the centerpiece of risk management in farm policy. “There is one simple reason why crop insurance has lasted for over 75 years while other programs have come and gone. It’s because it makes sense … for consumers, for taxpayers and for farmers,” he said.

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.

North Dakota Farmers Know First Hand Why Crop Insurance is Money Well Spent

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I’ve spent the last 17 years of my life farming in North Dakota and I’ve loved every minute of it. But it can be a very risky business. There are many steps that farmers can take to manage risk, like growing a wide variety of crops, rotating crops and growing cover crops to prevent erosion. And we do all of that.

But let’s face it, when we get an early August freeze, or a spring flood, or a drought, just about all of the best farming practices in the world will fail to protect us. And that is why I, like most farmers across the state, always purchase crop insurance. In fact, last year North Dakota farmers spent more than $38 million out of their own pockets purchasing crop insurance policies.

It’s just a smart business decision. There has never been a year when we didn’t have crop insurance. Sure, it costs a lot of money, and that money could be spent elsewhere. But that would be a penny wise and pound foolish, since going through a natural disaster can cost you the farm.

This isn’t a hypothetical argument. In fact, last spring during planting, we had 18 inches of rain in 21 days. In between downpours we planted what we could, but by the time the rain was finished, we couldn’t get back into the fields to finish planting. In other words, we started off our growing season with only half a crop. Thankfully, our crop insurance policy covered that kind of loss. We certainly didn’t make a dime from the policy, but the indemnity check helped cover the rent on the land and the lost fertilizer that had been laid on a field that couldn’t be planted.

The passage of the new Farm Bill this year marks a pivotal stage in U.S. farm policy. Gone are the days of direct payments and large disaster bills aimed at helping farmers after natural disasters. In its place is crop insurance, which has been embraced by farmers, farm groups and lenders alike. Farmers who don’t purchase crop insurance need to realize that the federal government is no longer going to come along with an ad hoc disaster bill and bail us out.

The centerpiece of the new risk management strategy on the farm is crop insurance, which is sold and serviced by private insurance companies and partially discounted by the federal government. The government’s role – helping to ensure that crop insurance is affordable to farmers – has remade the face of crop insurance from a policy that for many years was largely unknown and underused to a risk management tool that last year protected 90 percent of planted cropland.

Crop insurance is not only popular with farmers, but with bankers as well. In fact, most farmers need to show proof of a crop insurance policy when they meet with bankers to secure production loans. The banks realize what a risky loan they are making, and are more likely to take that risk if they have the relative protection of crop insurance.

Crop insurance is good public policy for farmers, bankers, and taxpayers alike. In the past, extensive droughts like what much of the nation experienced in 2012 would have triggered an enormous ad hoc disaster bill in Congress. But since the vast majority of the cropland was protected by crop insurance during the worst drought to hit the nation since the Dust Bowl days, farmers sought assistance from their crop insurance policies, not the federal government.

Crop insurance, like all public policies, has its detractors, however. And before the ink is even dry on the new Farm Bill, these groups are plotting their assault on crop insurance. They have their sights set on the premium discount, the very thing that makes crop insurance affordable to farmers. Without the discount, farmers like me couldn’t afford to purchase crop insurance. And if a large-scale natural disaster hits and farms across the country fail, where is our food going to come from? I don’t think most Americans would want to be in a position of relying on other nations for our food in addition to our fuel.

Crop insurance is good public policy because it helps underpin farmers, who are enormous consumers and literally drive the rural economy. Americans spend about10 percent of their incomes on food, among the lowest of any country. With the proper risk management tools in hand for farmers, the promise of a safe and affordable food supply will not only be a legacy for our children, but for the world’s growing population as well.

Diane McDonald, from Inkster, North Dakota, is the national media chairperson for Women Involved in Farm Economics (WIFE).

This op-ed appeared in Agri-Pulse on April 8, 2014.

2014 Farm Bill Changes to Crop Insurance Detailed in Newly Released “Crop Insurance: Just the Facts”

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Since the new 2014 Farm Bill was signed into law, questions have arisen about how this new legislation affects crop insurance and the farmers who rely on it. Detailed answers to questions, ranging from major and minor policy changes, the introduction of new products including SCO and STAX and the link between the premium discount and conservation are all detailed in the newly released version of Crop Insurance: Just the Facts.

“The 2014 Farm Bill is a turning point in federal policy towards agriculture, pivoting away from the traditional support mechanism paradigm of the past and into a risk management model that features crop insurance as farmers’ primary — or only — risk management tool,” noted Tom Zacharias, president of National Crop Insurance Services.

Crop Insurance: Just the Facts, a popular online resource that provides the A to Z overview of Federal crop insurance resides here, on the Crop Insurance Keeps America Growing website page “About Crop Insurance” where it is continuously updated.

“This resource has proved invaluable to farmers, students and policy experts who need to better understand the nuts and bolts of crop insurance,” said Zacharias.

In addition to addressing the various aspects of the new Farm Bill, the online series covers important topics such as how crop insurance benefits the public, economics of the industry, risk management in global terms, how crop insurance benefits producers and many other important issues.

Zacharias noted that crop insurance discussions are replete with exaggerations and misrepresentations about this important risk management tool. “Crop Insurance: Just the Facts, provides the details in an easy to read, reasoned and balanced perspective,” he said.

Farm Bill Proves Crop Insurance Popularity At All-Time High, Says Industry Leader

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Weber,Tim FinalPassage of the 2014 Farm Bill, which cemented crop insurance as the cornerstone of farm policy, proved that crop insurance’s popularity among farmers has reached an all-time high, said Tim Weber, co-chairman of the American Association of Crop Insurers and National Crop Insurance Services.

“If I had to sum up the story of the crop insurance industry in one simple statement, I think it would have to be ‘We’ve made a lot progress but our best years remain ahead of us,’” Weber said today during his opening remarks at the annual conference sponsored by National Crop Insurance Services and the American Association of Crop Insurers in February.

Since its inception in 1938, crop insurance has steadily evolved and today protects 90 percent of planted cropland in America. The industry won widespread praise in agricultural circles and on Capitol Hill for helping rural America quickly rebound after the devastating droughts of 2012.

“There can be no question that when it comes to managing the risks posed by Mother Nature or volatile world markets, federal crop insurance has no equal,” he said, adding “it has reached its pinnacle, all while overall federal spending on farm programs has trended down.”

Weber explained that in order to continue to build on past successes, the industry should rely on the same three keys that helped its rise to prominence: Affordability, availability and viability.

In order for crop insurance to remain viable as farmers’ primary risk management tool, the crop insurance infrastructure must remain financially strong, he said. Additionally, customer service, program integrity, and widespread participation will be paramount. And unless crop insurance remains affordable and available to all, Weber believes the entire system could collapse.

Crop insurers faced attempts to reduce program participation during the Farm Bill, but proposals to cap crop insurance benefits and force some farmers to pay higher premiums failed.

“We applaud our congressional leaders for overwhelmingly passing a Farm Bill that strengthens, not weakens, our commitment to crop insurance even in the face of federal spending pressure,” Weber concluded. “I truly believe that 10 years down the road, when we look back at the 2014 Farm Bill, it will be elevated to one of the major legislative initiatives that established landmark developments for crop insurance and production agriculture.”

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.

Farm Bill Reduces the Deficit, Boosts Crop Insurance

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What started off two and half years ago as an attempt to craft a Farm Bill with bold deficit reductions in mind became the new North star of U.S. agriculture policy last week when President Obama signed The Agriculture Act of 2014 into law at Michigan State University.

The law marks a dramatic turning point in American farm policy, with the sun setting of the 18-year old system direct payments – which cost more than $4.5 billion annually – accompanied by a renewed emphasis and commitment to crop insurance.

“This is not your father’s Farm Bill,” said Senate Agriculture Committee Chairman Debbie Stabenow. “From now on, farmers will protect themselves from disaster with risk management programs like crop insurance,” she said. “Instead of getting a government check even in good times, farmers will pay an insurance bill every year and will only receive support from that insurance in years when they take a loss.”

The bill won immediate praise from national farm groups as soon as it emerged from the conference committee in late January. National Association of Wheat Growers President Bing Von Bergen said the bill “ strengthens crop insurance and allows growers the necessary safety net to keep a secure, affordable and healthy food supply.

The sorghum industry issued a statement underscoring their strong support for the bill and applauded the $24 billion it would save taxpayers. “This legislation meets [National Sorghum Producer’s] goals in providing farmers with a number of risk management tools, strengthening and protecting crop insurance, and including strong conservation and energy titles,” said Chairman J.B. Stewart.

The crop insurance industry applauded the years of hard work by both chambers and noted that it was looking forward to working with the Risk Management Agency on implementation of the law. “With one bold stroke of the pen, the President charted a new course for U.S. farm policy, sun-setting the policies of yesterday and putting greater emphasis on farmers’ use of crop insurance,” the industry noted in a nationally-released written statement.

Agriculture Secretary Tom Vilsack noted the bill “will allow the proud men and women who feed millions around the world to invest confidently in the future,” adding, “this legislation is important to the entire nation.”

2013 A Landmark Year for Farmers, Crop Insurance Industry

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On the heels of the 2012 drought, farmers turned to crop insurance in record numbers to protect their crops in 2013, according to data released recently at the convention hosted by the National Crop Insurance Services (NCIS) and American Association of Crop Insurers

The industry noted that 2013 had been a landmark year for both farmers and the crop insurance industry as a whole. The year clearly showed that farmers who purchase crop insurance can bounce back with a vengeance – producing bumper wheat and corn crops – without the need for costly disaster bills. Some of the more notable statistics for the year include:

  • Farmers spent $4.5 billion to purchase insurance policies. That is up from $4.1 billion in 2012 and brings farmers’ total investment in crop insurance to $38 billion since 2000;
  • 52,000 more policies were sold in 2013 than 2012;
  • Crop insurance protected $123 billion of potential liabilities last year, as compared to $117 billion in 2012 and $114 billion in 2011;
  • A record 296 million acres, or 90 percent of insurable cropland, was covered by crop insurance in 2013. U.S. farmers protected 86 percent of eligible acres in 2012 and 84 percent of acres in 2011;
  • To date, 423,000 policies have been indemnified in 2013, a sharp fall from the record of 495,000 in 2012. As a result, taxpayer costs dropped considerably.

“The fact that farmers were able to bounce back with a vengeance from the worst drought in decades and plant bumper crops, all without a call for disaster assistance to Congress underscores the value farmers place on crop insurance and why they are buying it up and protecting a record number of acres,” said Tom Zacharias, president of NCIS.

“Crop insurance is the risk management tool of choice for farmers, ranchers, farm leaders, bankers and members of Congress for one reason: it works,” he said.

2014: A New Year, A Fresh Outlook…Spotlight on Crop Insurance

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When Nebraska and Kansas farmers looked out their kitchen windows in the late summer of 2012, they saw withering fields that harkened back to the Dust Bowl years. The majority of both states were experiencing extreme or exceptional drought, a condition that would not change for most farmers through harvest in the High Plains.

And while many farmers cringed as they watched their hard work and investment wilt in the fields, the vast majority of them did not worry that this drought would put their farms on the auction block. That is because 86 percent of planted cropland was protected by crop insurance policies.

In the not-too-distant past, such agricultural calamities would have triggered widespread fear on the farms and in rural towns where bankruptcies and economic devastation was barreling down the tracks like an out of control train. With nowhere to turn, rural America had to plead with their congressional delegations for help, which would come in the form of an ad hoc disaster bill.

This is not a hypothetical scenario. Since 1989, the tab for 42 of these emergency disaster bills for agriculture cost U.S. taxpayers $70 billion. The financial aid from this legislation, while appreciated, often took years to reach the devastated farmers. After a string of these costly bills, Congress moved to incentivize farmers to purchase crop insurance. From that point on, when disaster struck, farmers would turn to their crop insurance agents, not taxpayers, for recovery.

Fast forward to the 2012 crop year. Nebraska and Kansas farmers together had spent over half a billion of their own dollars purchasing crop insurance premiums just in case disaster struck. And when it did, crop insurance indemnities were in the hands of the farmers who suffered losses in weeks, not months or years.

Nothing is quite as loud as success. And the decision to make crop insurance the primary risk management tool has been an unequivocal success for farmers, taxpayers and rural America.

For farmers, who will wave farewell to direct payments and other commodity support programs when this farm bill passes, it allows them to purchase a risk management policy tailored specifically for their needs and risk tolerance. Taxpayers benefit because they are no longer on the hook for the whole tab when disaster strikes.

In fact, since 2000, farmers have spent $38 billion nationally purchasing crop insurance policies, ensuring that they had “skin” in the risk management game. As Senate Agriculture Chairwoman Debbie Stabenow pointed out, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.”

As for the health of rural America, when farmers catch a cold, the rural economy catches pneumonia. That is because farmers are enormous consumers, investing huge amounts of capital directly into the communities where they live, purchasing fuel, machinery, feed, fertilizer and other durable goods, as well as hiring workers.

Anyone questioning the effectiveness of crop insurance need only look at how well farmers bounced back from the worst drought in decades. The 2013 growing season was one of the best ever, producing the largest corn crop the nation has ever seen. And all of this while total federal spending on farm programs has trended down.

Like other highly successful policies, crop insurance has its detractors. The very same groups who during the 2012 drought were saying that farmers were “praying for drought, not praying for rain,” are now calling for means testing.

Means testing would force many large or highly successful farmers – who also tend to be the least risky – out of the risk pool. And when the lower risk policyholders leave the risk pool, those left, the smaller, younger farmers who also tend to be the riskiest, will see their premiums go up. In short, means testing is the new poison pill being used by those wishing to kill any form of farm program or assistance to rural America.

While the popularity of crop insurance continues to grow, with 90 percent of planted cropland having the protection of crop insurance in 2013, this year is different. This summer when farmers looked over their crops and saw bountiful fields full of golden grains, they knew they would be selling an abundant harvest and not collecting an indemnity check, which brought a smile to many faces. The plentiful harvest and the satisfaction of feeding others is, after all, what farming is all about.

Tom ZachariasTom Zacharias, president of National Crop Insurance Services and is located in Overland Park, Kan.

This op-ed appeared in Midwest Producer Magazine on December 26, 2013.

Ten Considerations: The Role of Crop Insurance in the Farm Safety Net

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More than a half-century ago, acclaimed historian Murray Benedict noted, “There are indications … that crop insurance is gradually emerging as one of the more settled features of American farm policy.” That prediction, perhaps a bit premature at the time, has certainly been borne out, as over the last decade crop insurance has grown from a little-known and underused program into the primary risk management tool for farmers and ranchers that protected 90 percent of planted cropland in 2013.

A newly released article in the third-quarter issue of Choices magazine offers a “within the industry perspective” on the status of crop insurance and key issues it faces as farmers’ quintessential risk management tool. Authors Tom Zacharias, National Crop Insurance Services president, and Keith Collins, former USDA chief economist note, “U.S. farm policy appears to be transitioning from direct income support to a risk-management-based system depending upon both public and private sector participation.” This rise, however, has triggered “significant criticism for its level of subsidization and other aspects,” they point out. “Such a tension, especially during the development of a new farm bill, seems natural and appropriate.”

Pointing out that there are many “key issues that remain in play,” the authors offer 10 considerations that the public and policy makers should be aware of when assessing the efficacy and future path of the crop insurance system. These considerations are intended to highlight and address the primary considerations from both the public and private sector in terms of the program’s current status, future regulation and information needs. These considerations are:

1. Is there a public interest in a resilient, financially sustainable and competitive industry that produces the nation’s food and is subject to natural disasters and other shocks?

2. Should there be taxpayer (government) support for a farm safety net?

3. What is the willingness and ability to spend on the farm safety net?

4. Should the safety net be ex ante or ex post?

5. Is the safety net income support or risk management?

6. Is current risk sharing optimal?

7. What is the role of area versus individual plans?

8. Should the safety net be incentivized?

9. Can the current incentive structure be improved?

10. Is crop insurance distortionary?

“It will be interesting to observe and participate in the direction of agricultural policy in light of the expected increasing prominence of crop insurance,” noted Zacharias and Collins, adding that the sway of the political pendulum will determine short-run directional shifts in policy. “Yet, as we outlined above, key issues remain in play, and particularly the level and use of taxpayer funds in determining a proper balance between the roles of the public and private sector in agricultural risk management,” they concluded.

The California Deep Freeze: Thankfully Local Farmers Purchased Crop Insurance

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Weeks before the Midwest, Northeast and South went through their historic early January deep freeze, the citrus industry in California’s San Joaquin Valley experienced a record early cold snap – weeks before Christmas – that had many of the state’s fruit and vegetable growers reeling. This was the longest cold spell California has had this early in the season in decades. The good news was the cold snap came and went in days. The bad news was that it wasn’t even the first day of winter yet.

In the not-too-distant past, a freeze like this would have meant immediate and long-term economic devastation for the region’s economy. In 1990 and again in 1998 there were devastating freezes in the San Joaquin Valley that not only put local citrus growers on the brink of losing their farms, but also cost many of the area’s workers their jobs and caused local businesses to shutter their windows. Agriculture is the engine that drives the local economy, purchasing large amounts of goods, services and fuels. And when farmers catch a cold – as the saying goes – rural America catches pneumonia.

In 2007, yet another devastating freeze hit the valley. But this time there was no widespread scare of farm foreclosures, no downturn in the local economy and no shuttering of windows. That’s because unlike the old days, California specialty crop farmers were protected by crop insurance policies, purchased with money out of their own back pockets.

For the vast majority of California’s farmers who raise specialty crops – like citrus, almonds, grapes and stonefruit – crop insurance is the only tool available to help them recover from natural disasters. Crop insurance is a public-private partnership whereby farmers purchase policies that are sold by private crop insurance companies and partially discounted by the federal government.

First and foremost, crop insurance puts risk management squarely in the hands of farmers, requiring them to purchase polices in order to enjoy the relative protection that crop insurance offers. California farmers have certainly embraced crop insurance, spending nearly $100 million out of their own pockets in 2012 to purchase policies. As Senate Agriculture Chairwoman Debbie Stabenow pointed out, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.”

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, and more than a year in some cases, for those funds to finally reach the hands of the growers who had lost everything. For a grower whose entire citrus crop has just been frozen, a year can be about 11 months too long.

Another aspect that sets crop insurance apart is that it is sold, and delivered by private sector crop insurance agents who can only differentiate themselves from other agents through the exceptional customer service they give to farmers. Talk to a popular crop insurance agent and you will find that when a freeze hits, they’re working 24/7 to help make sure the farmers who purchased policies are getting back on their feet.

The growth of crop insurance from a policy that few farmers purchased a few decades ago to today’s policies which in 2013 protected 90 percent of planted cropland is a testament to the efficacy and affordability of the policies and the dedication and professionalism of the private sector crop insurance agents who sell and service the plans.

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, nuts and vegetables.

Certainly the growers of mandarins, oranges and lemons in the San Joaquin Valley were stressed out by the long and unusual freeze. But those who purchased crop insurance knew that when the sun rose the next day, they won’t be alone, as their crop insurance agent and participating company will be there to help get them back onto their feet.

Laurie Langstraat is vice president of public relations for National Crop Insurance Services in Overland Park, Kansas.

 

 

Crop Insurance Is Critical to Michigan’s Specialty Crop Industry

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The affordability and bounty of the American food system did not occur by happenstance. It took wise policies supported by dedicated officials, hardworking farmers willing to risk their fortunes and a first-rate transportation and distribution system.

Many of the policies that underpin food production chiefly support the major food and feed commodities like corn, wheat and soybeans. But for those of us raising specialty crops – those fruits, vegetables and nuts that are an important part of our diet – there’s only one major risk management tool available: crop insurance.

Crop insurance is a public-private partnership whereby farmers purchase their own policies to cover the risks they choose to pay for. Michigan’s farmers face a huge amount of risk on a daily basis, including early frosts, drought, floods and market fluctuations. That’s why in 2012, farmers in this state paid $63 million to purchase policies to cover those risks.

Before crop insurance was widely available, natural disasters like the drought of 2012 would have triggered a massive, expensive ad hoc disaster bill in Congress that would have cost taxpayers dearly. In fact, 42 emergency disaster bills in agriculture have cost taxpayers $70 billion since 1989, according to the Congressional Research Service.

Last year, after a late spring freeze that destroyed the tree fruit crop followed by the worst drought in decades, there wasn’t a single large-scale outcry for help from Congress. The reason is that 86 percent of planted cropland was protected by crop insurance. Farmers put skin in the game and helped take some of the burden off of the taxpayers.

When disaster strikes a farmer, he needs help now. While every farmer appreciated the disaster bills of the past, they took a very long time to arrive – sometimes up to two years. For a farmer who has lost everything, two years might as well be 200 years.

Crop insurance is not without its critics. In fact, there are some in Washington, D.C. who, during last summer’s drought, claimed that farmers were praying for drought, not rain, implying they’d rather collect a crop insurance check than a harvest. To set the record straight, crop insurance is not cheap, and the nation’s farmers spent more than $4 billion in 2012 buying it. Most of them will spend that money without collecting an indemnity. In fact, in 2011, about two-thirds of the crop insurance policies purchased never collected an indemnity.

Michigan grows a wide variety of specialty crops each year, leading the nation in the production of several specialty crops, including dry beans, red tart cherries, blueberries, Niagara grapes and squash, making the state second only to California in the diversity of its crops.

In some ways, that abundance is a miracle, in other ways it is not. If it weren’t for hard work, investment, infrastructure and crop insurance to manage some of the major risks, Michigan’s horn of plenty might not be so full.

Steve Umlor is the president of Centennial Fruit in Conklin, Michigan. This op-ed appeared in the Lansing State Journal on May 12, 2013.

 

Former USDA Chief Economist Details Growing Popularity of Crop Insurance

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Crop insurance continues to grow in popularity, with 90 percent of planted cropland being protected by crop insurance in 2013, former USDA Chief Economist Keith Collins told Agri-Pulse radio host Ken Root during a recent interview on “Open Mic.”

Root asked Collins why he had decided to return to working on crop insurance after his retirement from USDA. Collins noted that he had worked as Chairman of the Board of Federal Crop Insurance Corporation for seven years while at USDA. “I started in 2000 when we had a couple of hundred million acres insured and I watched that program grow dramatically,” he said. “I looked out at the landscape and it seemed apparent that crop insurance was going to be the most important and most powerful program to help the financial security of American agriculture,” he said.

Root pointed out that it took a long time for the crop insurance program to reach its full potential because Congress continually undercut its success with disaster programs. “That is absolutely true,” said Collins. “We had standing disaster programs in the 1970s, ad hoc disaster programs from the 1930s,” he said. Collins noted that when farmers were protected by those other programs, plus standing disaster bills, plus ad hoc disaster bills, “there wasn’t a big need for crop insurance for a lot of farmers.”

Root pointed out that today, farmers and farm organizations are saying that if they could only get one thing from the federal government, it would be crop insurance. “The government supports critical sectors for which there is public interest, and agriculture is one of those sectors,” said Collins. “And within agriculture, what is the primary safety net for famers,” he asked? “It’s crop insurance.”

Root asked if it was possible to get crop insurance coverage for the country without government involvement. Collins pointed out that “Congress has historically said that we’re willing to put more money in to get farmers to buy crop insurance so that we can cover the acreage that needs to be covered in the U.S. to avoid ad hoc disaster assistance and financial disruption.”

CROP INSURANCE IN ACTION: Bing Von Bergen, Moccasin, Montana

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Bing Von Bergen is not only the president of the National Association of Wheat Growers, he’s a third-generation Montana wheat farmer who has seen all kinds of weather over the years. “Last year, parts of the nation had the worst drought since the ‘Dirty 30s,” he said, recalling the name given the Dust Bowl years.

Von Bergen farms about 4,700 acres near Moccasin, Montana, close to the heart of the state. Growing up in agriculture, he knows hard times can be just around the corner.

But a lot has changed since the Dust Bowl years, including the tools farmers have to manage risk. At the top of that list is crop insurance. “Crop insurance is our principal safety net,” he said. “And farmers are fighting to preserve it.”

Von Bergen says that in the 34 years that he’s been farming, crop insurance has gone from being a program that few could afford or would consider purchasing to being the most important risk management tool available to farmers today. “It has taken 30 years for crop insurance to develop from a program that offered little protection into a program with real protection,” he said.

Read Bing Von Bergen’s 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: The New Face of Farm Policy

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From walking on soil baked into near-concrete during the worst drought in over 50 years in 2012, to dredging across flooded fields this soggy spring, farmers are wondering when an “average” year will occur. And that’s just weather. As a 26 year-old farmer, I’m starting to wonder what “average” or “normal” even means.

In my relatively short career, corn prices have been below $2.00 and over $8.00 per bushel, land prices have nearly tripled since I purchased my first field, proposed regulations point to increasing costs without offsetting revenues, and farm policy has evolved from focusing on price supports and direct payments to farmers towards a more market-oriented risk management tool called crop insurance, a public-private partnership whereby farmers purchase policies and only receive a payment if there is a documented loss.

In light of our new “normal” characterized by volatility — in weather, markets, and regulation —farmers would struggle without access to crop insurance. The Farm Bill, which will guide American agriculture for the next five years, is currently being debated in Congress. At its centerpiece is crop insurance, a vital component that is an economic and social development tool for rural America and the new face of farm policy.

The average American farmer is 58, the oldest at any time in our history. Assuming most of us retire at 65, that puts us seven years away from real problems if we don’t start transitioning to the next generation. Crop insurance helps young farmers because it serves as a “stop-loss” collateral source to back credit—a crucial transition tool given the high capital costs of farming. In this sense, crop insurance is a bridge to the future for America’s farmers, as well as a first-rate risk management tool.

Crop insurance is also a working capital tool. But why farmers and not other business sectors? Non farmers do not negotiate with the whims of Mother Nature, cater to consumers in foreign and domestic markets, AND compete with neighbors two miles up the road, farmers two states over and farmers outside our borders to produce a non-differentiated commodity.

Farmers in other countries need to stockpile a large share of their profits into cash reserves planning for a bad year – be it weather, price or market related – so that they have sufficient liquidity when disaster strikes. Because American farmers can purchase crop insurance, we don’t need enormous cash reserves and we can instead reinvest our profits. I have paid down debt faster and invested in newer and more sustainable technologies because I had crop insurance to cover big, volatile losses. Farmers put profits back into their communities and do so more quickly because of crop insurance.

Crop insurance saves taxpayers money. In the past, when disasters struck — and they struck often — the federal government was called upon. Recovery was paid for completely by taxpayers. Last year, when farmers here in Illinois were decimated by drought, we had crop insurance policies and didn’t need a disaster bill to help us plant this year.

Crop insurance is a vast improvement over the price support system and direct payments of the past. It puts emphasis on farmers having “skin in the game” to protect themselves from the risks they deem most likely to occur. It is not uncommon to hear a farmer complain about the money he has spent over the years purchasing crop insurance. It’s a major expense for us, but one we’re happy to pay for because it gives us something this new era rarely allows: peace of mind.

Crop insurance allows market forces to work; we can fail or succeed. Crop insurance is only a buffer, not a guarantee; it is based on historical yields and current prices. It protects “good” farmers — those that apply new technologies, manage risk, and preserve soil and resources — from circumstances beyond their control, like last year’s drought, this year’s flood and the volatile market we now accept as the new “normal.” In contrast, it allows “bad” farmers to fail because, over time, they will tend to have lower yields. The free market still works, just with a buffer that ensures long-term stability in an unstable environment.

Is crop insurance perfect? No. In my perfect world, I want the final 50 years of my farming career forged in a landscape with a stable dollar and interest rate, vastly reduced government regulations, increased free trade and an educated, appreciative consumer. But today, in the real world, crop insurance is the best risk management tool we have. It helps farmers survive the worst of times, reduces costs to taxpayers and allows market forces to work. It’s the new face of farm policy.

Andrew Bowman is a fifth generation farmer, Certified Crop Adviser, and full lines insurance agent, including crop insurance, from Oneida, Ilinois. This op-ed appeared in the Farm Bureau News Service on August 2, 2013.

New NCIS Video: Crop Insurance By The Numbers

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As we continue pressing forward in the 2013 Farm Bill debate, the success of the crop insurance program and the benefit that it has had to the American taxpayer is the subject of a recently released NCIS video.

“Over the last decade, overall taxpayer spending on farm policy as a whole has steadily declined,” notes Tom Zacharias, president of National Crop Insurance Services. “That’s no accident,” he adds, explaining that commodity prices have strengthened and the country began shifting to an insurance system that reduced the need for traditional subsides and limited taxpayer exposure.

From 1998 to 2012, insured acreage has increased by 100 million acres. “It has become such a success, that most farmers agreed in 2012 to get rid of direct payments during the Farm Bill debate,” Zacharias notes.

But in addition to eliminating the need for direct payments, the public-private partnership of crop insurance has also eliminated the need for costly ad hoc disaster bills. “Since 1989, 42 pieces of legislation, totaling $70 billion in unbudgeted dollars were passed to help farmers following a disaster, he explains. “Those days are over.”

With crop insurance in place, farmers and private insurance companies now share the risk, ensuring that the entire burden doesn’t fall solely on the laps of taxpayers. Each farmer must pay the premium for their individual policy, and when disaster occurs, the billions paid in premiums by farmers help offset the cost of the insurance. “Farmers have paid $30 billion of their own money on crop insurance protection to buy this coverage,” Zacharias notes. In addition to the premiums paid by farmers, the government has collected more than $4 billion in underwriting gains from 2001-2010, which helped offset losses in the bad years as well.

Zacharias points out that crop insurers have stood alone in offering up budget reductions in recent years, totaling $12 billion. Unfortunately, some in Congress are angling for more, says Zacharias. “The additional cuts they are proposing would result in lower crop insurance participation, ironically shifting risk away from farmers and crop insurance companies right back to taxpayers,” he said.

“As we go forward in the next farm Bill, we would say ‘Do No Harm” to crop insurance.”