It\u2019s no big secret that Missouri is facing its worst drought in 30 years. This has had a catastrophic impact on the state\u2019s farm and livestock sector, prompting Secretary of Agriculture Tom Vilsack to declare every county in the state a disaster area in July. And while tropical storm Isaac brought us some much-needed rain, every county in the state remains in some level of drought.<\/p>\n
As a Missouri farmer, I can tell you that there are few disappointments in life bigger than losing a crop. The loss not only robs you of the income that it should bring \u2013 especially with commodity prices at record highs \u2013 but also robs you of the joy of the harvest, which is what we farmers are all about.<\/p>\n
If I hadn\u2019t purchased a crop insurance policy this year to help me through an event like this, I possibly wouldn\u2019t be able to farm again next year. But that\u2019s the main reason why the federal government teamed up with the private sector years ago to form this public-private partnership that helps farmers manage their risk while shielding taxpayers from expensive farm disaster bailouts.<\/p>\n
Droughts like this don\u2019t happen often, but they do happen. And when they happened in the past \u2013 before crop insurance was widely available and affordable for most farmers \u2013 Congress responded with expensive ad hoc disaster bills. In fact, these disaster bills totaled $45 billion from FY1989 to FY2001.<\/p>\n
They don\u2019t call Missouri the \u201cShow Me State\u201d for nothing, and crop insurance has proven its value. Last year, although conditions here were fairly good, there was a string of natural disasters across the rest of the country \u2013 from freezes to floods to hurricanes and even wildfires \u2013 that left many farms in shambles. And despite these disasters, there wasn\u2019t a single call for a federal farm bailout, because roughly 84 percent of all eligible land was protected by crop insurance.<\/p>\n
Crop insurance isn\u2019t cheap for farmers, who have forked over $4 billion out of our own pockets this year to purchase policies, which protect 128 different crops from a wide variety of natural disasters.<\/p>\n
This is a great example of the federal government and the private sector working hand in hand for the common good of the country and the food, feed, fuel and fiber supply. In this unique partnership, farmers purchase crop insurance policies \u2013 that are partially underwritten by the federal government \u2013 and they only receive an indemnity if they incur actual losses. The crop insurance system is efficient, because it is sold, serviced and delivered by the private sector.<\/p>\n
In fact, in years past, federal aid for farm disasters like the one we\u2019re in would have taken months or years to get into the hands of the farmers. Compare that to crop insurance, which has been delivering indemnities to farmers as they filed their claims, and thus far this year has put more than $2 billion into the hands of farmers who suffered losses.<\/p>\n
Agriculture is certainly a very risky business, which means that banks are often hesitant to lend to farmers, particularly those who are just starting off. But farmers who purchase crop insurance are deemed a much lower risk by the banks, who count the crop insurance indemnity as collateral for the loan.<\/p>\n
As disagreeable as things might seem sometimes in Washington, D.C., the fact that crop insurance is a quintessential risk management tool for farmers is one of the few things that both Republicans and Democrats can agree on. And farmers made their feelings on the issue quite clear earlier this year when they delivered a unified message to Congress regarding the upcoming Farm Bill: \u201cDo no harm to crop insurance.\u201d<\/p>\n
Of course, there are those who would like to see all farm programs cut, either because of their dislike of government spending or their dislike of family farming. They charge that farmers would rather collect a crop insurance indemnity than harvest a crop. Imagine if a similar charge was leveled against someone who purchased car insurance. Can anyone really believe that people purposely crash their cars to collect the indemnity?<\/p>\n
If rains don\u2019t come this winter, we could be looking at the second year of this. Mother Nature strikes in cycles, so that possibility isn\u2019t entirely out of the question. But there are things that we can count on. And at the top of that list is this country\u2019s crop insurance system, which will allow farmers like me who take a beating this year to come back to the table again next year for another try.<\/p>\n