{"id":5449,"date":"2014-04-22T10:00:57","date_gmt":"2014-04-22T14:00:57","guid":{"rendered":"http:\/\/www.ncis.staging.wpengine.com\/?p=5449"},"modified":"2014-04-22T10:00:57","modified_gmt":"2014-04-22T14:00:57","slug":"crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy","status":"publish","type":"post","link":"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/","title":{"rendered":"Crop Insurance: From Little Known Law to Cornerstone of Farm Policy"},"content":{"rendered":"

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.<\/p>\n

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.<\/p>\n

Concerned that the federal government\u2019s responses to natural disasters had typically been \u201cgenerally reactive and ad hoc,\u201d House Agriculture Committee Chairman E. \u201cKika\u201d de la Garza asked the General Accounting Office (GAO) for guidance on how to better manage expensive, recurring disasters.<\/p>\n

The resulting 1989 GAO examination and report <\/a>would help pave the way for a new approach to agricultural policy \u2013 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.<\/p>\n

Specifically, the GAO studied USDA\u2019s three main disaster programs \u2013 ad hoc direct disaster payments, disaster emergency loans and crop insurance \u2013 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 \u201ccrop insurance is a more equitable and efficient way to provide disaster assistance\u201d than both direct disaster payments and emergency loans.<\/p>\n

The report noted \u201ccrop insurance treats disaster victims more equitably\u201d and also \u201cprovides 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.\u201d<\/p>\n

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.<\/p>\n

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.<\/p>\n

The Federal Crop Insurance Reform Act of 1994 restructured things to boost farmer participation, increase the private sector\u2019s role and create the USDA\u2019s Risk Management Agency (RMA). Other important reforms to crop insurance can also be found in the \u201cBlueprint for Financial Soundness,\u201d published <\/a>in the Federal Register in 1994. Many of these recommendations have been implemented since its publication.<\/p>\n

They include:<\/p>\n

\u2022 Determination of more accurate yields;<\/p>\n

\u2022 Better tracking of ineligible producers;<\/p>\n

\u2022 Premium rate adjustments;<\/p>\n

\u2022 Improved underwriting;<\/p>\n

\u2022 Better program compliance;<\/p>\n

\u2022 Introduction of new products to improve participation;<\/p>\n

\u2022 Increased risk bearing by AIPs;<\/p>\n

\u2022 Management actions to correct if changes not working.<\/p>\n

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.<\/p>\n

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.<\/p>\n

By the summer of 2012, more than 280 million acres were enrolled in crop insurance \u2013 just in time for historic drought that would have otherwise crippled rural America.<\/p>\n

As a result of these continuous improvements to modern-day insurance program, there have been no calls for ad hoc disaster bailouts \u2013 even after the widespread floods of 2011 and Dust Bowl-like conditions of 2012.<\/p>\n

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.<\/p>\n

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. \u201cThere is one simple reason why crop insurance has lasted for over 75 years while other programs have come and gone. It\u2019s because it makes sense \u2026 for consumers, for taxpayers and for farmers,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"

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 […]<\/p>\n","protected":false},"author":22,"featured_media":5447,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[32],"tags":[],"class_list":["post-5449","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-farm-policy"],"yoast_head":"\nCrop Insurance: From Little Known Law to Cornerstone of Farm Policy - Crop Insurance Keeps America Growing<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Crop Insurance: From Little Known Law to Cornerstone of Farm Policy - Crop Insurance Keeps America Growing\" \/>\n<meta property=\"og:description\" content=\"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 […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/\" \/>\n<meta property=\"og:site_name\" content=\"Crop Insurance Keeps America Growing\" \/>\n<meta property=\"article:publisher\" content=\"http:\/\/www.facebook.com\/cropinsuranceinamerica\" \/>\n<meta property=\"article:published_time\" content=\"2014-04-22T14:00:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/wp-content\/uploads\/2014\/04\/NCIS_carousel_image_95.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1266\" \/>\n\t<meta property=\"og:image:height\" content=\"573\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Laurie Langstraat\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@UScropinsurance\" \/>\n<meta name=\"twitter:site\" content=\"@UScropinsurance\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Laurie Langstraat\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/\"},\"author\":{\"name\":\"Laurie Langstraat\",\"@id\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/#\/schema\/person\/7cf19e3fe01a682ddad2c6dbc59b30f1\"},\"headline\":\"Crop Insurance: From Little Known Law to Cornerstone of Farm Policy\",\"datePublished\":\"2014-04-22T14:00:57+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/\"},\"wordCount\":731,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/wp-content\/uploads\/2014\/04\/NCIS_carousel_image_95.jpg\",\"articleSection\":[\"Farm Policy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/\",\"url\":\"https:\/\/iripreviewsite.com\/cropinsuranceinamerica\/crop-insurance-from-little-known-law-to-cornerstone-of-farm-policy\/\",\"name\":\"Crop Insurance: From Little Known Law to Cornerstone of Farm Policy - 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