CROP INSURANCE IN ACTION: Danny Davis, Elk City, Oklahoma

Late in the 19th century, the Great Western Cattle Trail used to run from Texas to Dodge City, Kansas. The route passed directly over a creek that eventually became the center of Elk City, Oklahoma. This is a region of dry land farms and ranches. Two years ago, it was the epicenter of the worst drought in a century to strike the region.

Danny Davis farms around 1,700 acres of cotton near Elk City and about 200 to 400 acres of rye for grain. He also runs a small commercial cowherd. He has been farming for more than 41 years.

For him, crop insurance has become an essential tool in surviving the wild swings in weather on the farm. “Crop insurance, in my opinion, is the only meaningful risk management tool available to us now,” said Davis.

Davis has purchased crop insurance every year since the early 1990s.

The first time he used it was during an August hailstorm in 1996, when “we lost all but about 200 acres of our cotton,” he said. “There is no doubt in my mind that hail storm would have been the end of our farming operation had it not been for crop insurance.”

“This was a very pivotal time in the history of our farm, we were still trying to recover from the three-year drought of 1980 to 1982, a devastating early freeze in ’87, and the ever tighter operating margins that surfaced in the mid-to late 80s, and has become the norm since,” Davis explained.

Texas-Oklahoma farmers, like farmers elsewhere, face many weather-related challenges. Planting time in the spring can be delayed by a lack of moisture, hail and windstorms can uproot the plants, and drought is an all too regular hazard.

Davis explained that in 2011, the dry spell reached into the record books. The worst in nearly a century hit the area, and it did not let up too much in 2012. “The current long-term drought we are in has hit us very hard the last two years, and crop insurance has come through not only for our farm, but our lenders, suppliers and our service providers.”

He said there is sometimes a giant misconception by some urbanites that farmers are on “easy street” because they can just plant and collect crop insurance.

“[There is] a near total disconnect with society in general from the land and this nostalgic idea of Granddad’s 40-acre farm, gathering eggs every morning, and green grass all year, and he doesn’t have a care in the world because he’s getting farm subsidies, has crop insurance and life is good,” Davis said.

For Davis, the idea of making sure crop insurance stays in the Farm Bill and is a vital part of farm policy is basic common sense. He strongly feels the idea of being “near self-sufficient” as possible is a key component in the country’s future.

One time, he was getting a haircut and a stranger “was going on and on about how good the farmers had it last year during the drought due to crop insurance settlements. He was one of those guys that knew it all and wouldn’t shut up.”

“Finally, I turned to him and asked what his house was worth and if it blew away or burned to the ground what he would expect from his insurance company. Bragging, he said around $250,000 and he had a full replacement policy so it didn’t really matter what it was insured for, because the insurance company would rebuild his house and rent him a place to live while his was being rebuilt.

“I then asked him what his premium was, and he said around $1,800 a year. Doing a little math in my head I said (that’s) less than 1 percent a year, and he agreed. Davis then asked him if he would be happy with insurance that made him eat the first 15 to 35 percent and cost him 6 to 14 percent of the total value of his house, and if the back bedroom was all that was lost and he didn’t receive a settlement if he’d be happy? ‘Why hell no’, he said.”

Davis showed the gentleman his insurance schedule and explained the math he was facing on his farm should disaster strike. He also explained that, in general, he pays the insurance company an entire crop’s worth of income every 7 to 8 years in premiums.

“The first words out of his mouth were ‘you’re crazy’,” Davis declared.