Many folks might not realize this, but the passage of the 2014 Farm Bill was a turning point in American history, from an agricultural perspective.\u00a0 Largely gone are the days of government support programs like direct payments.\u00a0 In their place, and at the center stage of farm risk management tools, is crop insurance.<\/p>\n
I had a chance to learn the value of crop insurance first-hand when my cousin and I rented our first farm together in 2012.\u00a0 We\u2019ve been farming with our family for many years, but felt it was time to expand out and grab some of our own.\u00a0 Of course, little did we know that the year we kicked off our farming careers would soon become the driest year in decades. We lost all of our dryland crops, roughly forty percent of our acres that year. Thankfully, we had purchased crop insurance.<\/p>\n
Unlike days of old, crop insurance is not a federal handout.\u00a0 In fact, if farmers want to enjoy the protection provided by crop insurance, they must purchase it.\u00a0 And they do so willingly, spending roughly $4 billion per year out of their own back pockets on crop insurance premiums alone.<\/p>\n
For most beginning farmers, crop insurance is nearly a necessity, since banks are hesitant to make loans to farmers who lack sufficient collateral.\u00a0 Crop insurance allows banks the opportunity to increase lending capabilities with the security of crop insurance.\u00a0 That\u2019s because with a crop insurance policy in hand, banks feel more secure making those loans to\u00a0 farmers, since there\u2019s a guarantee of revenue even if the crop fails.<\/p>\n
Crop insurance is a public-private partnership whereby individual farmers like me can buy policies for insurance that is specifically tailored for our tolerance to risk and the profile of our farm.\u00a0 Crop insurance is affordable to farmers, thankfully, because the federal government provides a discount, ensuring that all farmers, young and old, big and small, can purchase policies if they choose to.<\/p>\n
Farmers buy crop insurance for the same reason drivers purchase auto insurance:\u00a0 it offers some degree of stability in times of disaster.\u00a0 Crop insurance has become, in essence, the nation\u2019s insurance policy for the food supply.\u00a0 When Mother Nature strikes and farmers lose their crops, those with crop insurance policies in hand can bounce back and plant again the next year.<\/p>\n
Crop insurance has also removed some of the financial risk from taxpayers.\u00a0 Prior to the rise of modern day crop insurance, the wide-scale disaster that we experienced with the great drought of 2012 would have necessitated a very expensive, ad hoc<\/em> disaster bill from Congress.\u00a0 Those bills are big and are fully funded by taxpayers.<\/p>\n And while anything is better than nothing when you literally lose the farm, those disaster funds usually took a year or more to arrive in the hands of farmers who needed them.\u00a0 In my case when I lost forty percent of my crop in 2012, a year would have been much too late.<\/p>\n Crop insurance, on the other hand, is administered by private insurance companies and the indemnity arrives in weeks or a month or two, not years later.\u00a0 The crop insurance policy I purchased not only allowed me and my cousin to pay back our production loan, but also meet our forward contracting obligations.\u00a0 And we were able to bounce back and plant the next year.\u00a0 That\u2019s a smart public policy because it ensures food security for our nation.<\/p>\n Of course crop insurance has its critics, and their sights are squarely on crop insurance, since it\u2019s really the only game in town. And that\u2019s why it\u2019s important for farmers to speak up and let their elected officials know how much they value this risk management tool.<\/p>\n Needless to say, if we hadn\u2019t purchased crop insurance our first year of farming, my cousin and I would be spending years paying off that production loan.\u00a0 And without this valuable risk management tool available, I\u2019d venture to say many more of America\u2019s farmers would have been joining us.<\/p>\n Scott Reilly farmer and crop insurance agent and lives in Spalding Nebraska. <\/em><\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Many folks might not realize this, but the passage of the 2014 Farm Bill was a turning point in American history, from an agricultural perspective.\u00a0 Largely gone are the days […]<\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,1,20],"tags":[],"class_list":["post-6814","post","type-post","status-publish","format-standard","hentry","category-headlines-and-media","category-news","category-news-headlines"],"yoast_head":"\n