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

Bing Von Bergen is not only the president and acting CEO 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.

“The farmer’s cost of purchasing crop insurance has gone up substantially, but it works,” he noted. The statistics bare out the fact that farmers everywhere think crop insurance is worth spending their money on. Last year, roughly 1.2 million crop insurance policies were purchased by farmers, protecting 86 percent of planted cropland and covering 128 different crops.

Von Bergen says that despite facing the greatest drought in decades last year, farmers who had purchased crop insurance bounced back and were ready to plant again this spring. “It wasn’t long ago that farmers were on Capitol Hill every year after a big natural disaster asking for aid,” he pointed out.

“Nowadays, with the vast majority of farmers purchasing crop insurance, that’s no longer the case. That means that taxpayers are no longer stuck footing the bill for large-scale natural disasters through ad hoc disaster payments.”

Von Bergen recalled stories he had heard while growing up about the collapse of the farm economy during the Dust Bowl years and how farmers left their land in droves and fled to the cities.

“If we didn’t have federal crop insurance, some farmers would have failed and many others would have suffered crippling losses like in the 30s,” he said. “The federal government stepped in because they realized that if we couldn’t keep people on the farms, we couldn’t feed the nation,” he noted. “This is about national security.”

One of the biggest obstacles farmers will face in the upcoming years are potential changes to the crop insurance system, despite the fact that it has proven that it works well as constructed, Von Bergen said. For example, there are groups pushing the idea of means testing, which could force some of the largest and most successful farmers to pay higher premiums for the same crop insurance coverage.

“We have a system that works well, and we don’t know where the tipping point is,” he noted. “It’s not by chance that we have this system that works; it has been through years of tweaking and now it’s a system that works,” he said. “If you use means testing, crop insurance might no longer be viable, affordable or workable.”

Von Bergen said that crop insurance is basically like any other form of insurance. It takes a large swath of the population and pools their combined risk together to get a premium that is affordable. “But if you take the best drivers out of the pool, the cost goes up for everyone,” he noted.

Von Bergen explained that as a Montana wheat producer, he knows that he lives in a part of the country that is inherently at higher risk of drought than other parts of the nation.

“If they do means testing, you’re definitely going to alter the mix of those who purchase crop insurance and skew it against those of us who are in the high risk areas,” he said. “We fear premiums in Montana, and through out the rest of wheat country, will go up.”

But Von Bergen is confident that farmers will stand together and push for a strong crop insurance policy in the upcoming farm bill. “Every major commodity group believes that preserving federal crop insurance is a top priority issue for them,” he said.