CROP INSURANCE IN ACTION: John Michael Pillow, Yazoo City, Mississippi

John Michael Pillow is a fourth generation Mississippi farmer and spent the first part of his career managing his family’s farm.  In 2011, Pillow decided to strike out on his own and become a full-time farmer.

“Most of the 3,500 acres I planted that year were in corn, which is a crop whereby most of the cost is right up front,” he says.  By the time the entire field was planted, Pillow estimates he had not only his family’s future invested in the crop, but also  $2.5 million that he had borrowed from the bank to put the crop in.

“2011 started out exceptionally dry for us, and by mid-summer, the crop was already starting to show the signs of drought stress,” said Pillow.  But then Pillow’s luck changed drastically as the drought was broken by rain.  And then more rain, and then some more rain.

And although Pillow’s farm and homestead are protected by a sophisticated levee system, the levees simply weren’t high enough to accommodate the unending downpours.   “Before I knew it, the Yazoo River was knocking on my front door.”

At that point, Pillow suddenly realized the value of crop insurance, and why it was worth buying every year.  “Crop insurance, for me, not only proved to be essential, it’s the reason I’m in business today,” he said.

Just as luck would have it, Pillow’s crop insurance agent had approached him at the beginning of the crop year prior to discuss various high-loss scenarios with him.  “Out of the blue, my crop insurance agent floated the worst-case scenario by me about how well I’d handle a crop loss of 80 to 85 percent,” recalls Pillow.  “I told him that a loss that high was simply inconceivable, that it would never happen.”

But Pillow notes that, given the fact that this was his first year of farming on his own, and that he would require a $2.5 million operating loan from the local bank to put his crop in the ground, he decided the prudent thing to do would be to plan for the worst.

“I had to cut a check in excess of $60,000 in February to purchase the level of coverage the agent suggested for a level of loss that I didn’t really believe was possible,” he recalls.

And then it happened.  Roughly three months after writing that check, the Yazoo River had spilled over its banks and most of Pillow’s farm was underwater.

“I lost 80 to 85 percent of my crop that year,” said Pillow.  “And to add insult to injury, after the waters receded, although most of the corn was completely washed away, the corn that was left had been severely damaged by drought,” he said.

Pillow said that just like car insurance, crop insurance gives you a degree of stability in times of disaster.  “If you wreck your car, the insurance will replace it and you can still go to work the next day,” he says.  “Why would you not have insurance on your food source, since it’s the most important thing we have?”

Pillow notes that through the whole process, his crop insurance agent and company were by his side.  “When I found out that we were going to flood, the first call I made was to my crop insurance agent,” said Pillow.  “He was very reassuring that it would be ok.”

Pillow said that when the flood was at its height, his agent, the adjuster and the supervisor were all on his farm surveying the damage and assuring him that his indemnity check would be on the way so he could bounce back from this.

“Needless to say, I would be doing something else other than what I love besides farming, and I would be repaying the bank for the $2.5 million I borrowed to put the crop in for the rest of my life,” said Pillow.  “In fact, me, my wife and my kids would have been paying the bank back for a generation or more,” he added.