Celebrating Our Farmers Today and Everyday

Many Americans may never step foot on a farm. But America’s farmers and ranchers are an integral part of our everyday lives, working to feed and clothe the nation. In fact, each American farmer feeds more than 165 people.

Today is National Agriculture Day, a day to celebrate the American farmer and recognize the incredible contributions that our food and fiber producers make every single day.

Agriculture Secretary Sonny Perdue has instituted an informal motto at the USDA: “Do Right and Feed Everyone.” The crop insurance industry is proud to support the farmers who devote themselves to this important mission.

America’s farmers are the most efficient in the world, but they can’t always predict what the future holds. Crop insurance helps protect our farmers and ranchers, ensuring that they can keep producing a safe and affordable supply of food for those here at home and abroad.

The federal crop insurance program protected a record 334 million acres in 2018. That’s more than 90% of America’s farmland. With insurance available for more than 130 different crops and affordable policies for operations both large and small, crop insurance provides an important safety net for farms across the country.

Jim Korin, chairman of National Crop Insurance Services (NCIS) and president of NAU Country Insurance Company, recently said it best: “We must remember our purpose: To provide exceptional coverage and service to farmers and ranchers to help them do what they do best…feed and clothe the world.”

Thank you to all of America’s farmers and ranchers. Today, and every day.

“My life purpose is to farm.”

“One year of disaster and I figured out how important crop insurance is.” — Lynn Wilken, Farmer, Ashkum, Illinois

‘I’d rather not collect on crop insurance.’

“To critics I’d say take one year in my shoes, on a bad year, and see if you like crop insurance or not.”

“I’d rather not collect on crop insurance.” – Mike Abbott

Agriculture Remains a Great Return on Investment

Tax season is finally over, and naturally many of us are thinking about how our checks to Uncle Sam will be spent in the upcoming year. Here’s a hint: Not very much will be going to the farm.

In fact, for every $100 spent by the Federal government, less than 25 cents actually goes to underpin the country’s food and fiber system. That’s a tremendous return on investment, according to Dr. Mechel “Mickey” Paggi, an economist with National Crop Insurance Services.

“Everybody in America eats and I think we probably have the best deal out there in terms of our food,” said Paggi in a recent interview with the National Association of Farm Broadcasters.

He noted that overall spending on farm policy is about one quarter of one percent of the federal budget. And as America’s farm policies have evolved, taxpayers are saving more and more thanks, in part, to crop insurance’s unique cost-sharing structure, Paggi explained.

“Taxpayers benefit because farmers are active participants in (crop insurance). They have skin on the game. … Farmers have to pay a premium to get protection,” he said.

All told, farmers have spent nearly $50 billion out of their own pockets since 2000. Farmers also must shoulder at least 25% of any loss before they get an indemnity.

In addition, private sector crop insurers pay indemnities from their own coffers on most claims, thus minimizing taxpayer cost.

“It’s a far cry from the old days of the ad hoc disaster bills, where taxpayers were on the hook for 100% of the payout,” Paggi told farm radio listeners.

Since the 2014 Farm Bill took hold, crop insurance has come in more than $3 billion under budget.

“There’s no secret as to why we hear leaders in both the industry and in Congress saying that we need to keep a positive attitude and a strong crop insurance program going into the next Farm Bill,” Paggi concluded.

Farm Credit Services Report Touts Crop Insurance

Crop insurance saved nearly 21,000 jobs in four states during one of the worst droughts in two decades, according to a report from Farm Credit Services of America.

The 20-page paper breaks down the history of the crop insurance program from the start in 1930s, with the Great Depression and Dust Bowl, to expansions in the 1980s and 1990s after a string of unbudgeted disaster relief bills strained federal coffers.

The paper says farmers have plenty of “skin in the game” when it comes to crop insurance and their participation helps minimize risk exposure for taxpayers.

FCS provides a step-by-step guide to the public-private partnership that makes the crop insurance program efficient when it comes to covering losses. It also highlights key points including the fact that private companies sell the insurance products and that farmers, like all other insurance customers, pay deductibles and premiums.

But the story of the drought of 2012 is where the paper really shines in showing just how important crop insurance is to keeping America’s food, clothing and fuel supplies secure.

The drought was a devastating hit in a year that was supposed to be favorable for planting. Corn, soybean and hay production declined throughout that summer as the drought intensified.

Corn production was down more than 29 percent and soybeans fell 6 percent. The low yields were coming on a year that started with low beginning stocks, the report notes, and tight U.S. and global supplies.

Projected prices rose in anticipation of short supplies. Farmers faced low yields and ended up facing big expenses to buy crops at higher prices to fulfill forward marketing obligations and to feed on-farm livestock.

Crop insurance helped cover the shortfall and saved 20,900 jobs across Iowa, Nebraska, South Dakota and Wyoming, with an annual labor income of $721.2 million, according to the report.

That’s money that ended up in Main Street shops and restaurants. Money that allowed farmers to continue to pay the bills and get ready for the next season even after a disaster like the drought of 2012.

And best of all, farmers didn’t have to go to Congress for an ad-hoc relief bill – just like Congress designed.

“Crop insurance kept me farming,” farmer Denny Marzen, of Iowa, said in the report. “It’s a business tool I use with my marketing program and to help me deal with Mother Nature.”

An Introduction to Crop Insurance

Welcome to “What’s Cropping Up.” If you’re reading us for the first time, chances are good that you’re either a new Congressional staffer or a reporter that’s joining the ag policy beat.

As such, we wanted to start with some of the basics. Of course, if you’re chomping at the bit to graduate from Crop Insurance 101, please checkout www.CropInsuranceInAmerica.org — the go-to source for crop insurance stats and information.

Crop insurance, simply put, protects the livelihoods of the farmers who grow the food we eat, the clothes we wear, and the fuel that moves us.

Farming is no easy task. It is one of the riskiest enterprises in the world, defined by uncontrollable conditions that are unlike any other profession. Bad weather, blight, insects, natural disasters, price fluctuations, and global subsidization all make it hard to make a living as a farmer.

That’s where crop insurance comes in. It’s basically no different than auto insurance or homeowner’s insurance. Banks require farmers to purchase it, just as they require insurance from homebuyers.

But because of the risks unique to agriculture, it can be cost prohibitive. Without a strong infrastructure and investment, crop insurance would be too costly for most farmers to afford or for most private-sector insurance companies to widely provide.

That’s where government steps in, acting as a middleman that encourages participation and ensures adequate coverage.

Without this middleman, crop insurance would flounder and work for just a few. And the responsibility of funding U.S. farm policy would again fall completely on taxpayers’ shoulders rather than the current cost-share system that is partially financed by farmers and insurers.

Crop insurance been around since the 1930s when the Great Depression and the Dust Bowl decimated family farms. And over the years, it’s been modernized to enable farmers to tailor individual protection for their own unique farms.

Today, it has supplanted costly, unbudgeted ad hoc disaster legislation and direct payments as the centerpiece of America’s farm policy. Here’s how it works:

  • Thanks to government investment, farmers receive a discount on coverage.
  • Private-sector agents help farmers pick the coverage that is just right for them, using historical farm data and other personalized information.
  • Farmers then spend between $3.5 billion and $4 billion a year to purchase crop insurance sold through private companies.
  • These companies service the policies and work closely with the U.S. Department of Agriculture, which acts as a reinsurer, oversees the system, and covers part of companies’ operating costs for administering it.
  • When disaster strikes, a claim is filed. A private-sector adjuster investigates, verifies the loss and an indemnity check is sent.
  • These checks usually arrive within 30 days to help the farmer rebuild – in sharp contrast to the months or years it took old-style disaster aid to show up.

Crop insurance is extremely popular, covering roughly 90 percent of farmland, or nearly 300 million acres. More than 1.2 million policies are sold nationwide, offering some $100 billion in liability protection.

Corn, cotton, soybeans, and wheat account for the largest percentage of U.S. farm acreage and crop insurance coverage. But, investments in designing new products means there’s now protection available for more than 120 crops.

What will tomorrow bring?

Those discussions will soon begin. When they do, it will be important to remember that crop insurance has proven to be a popular, efficient, lowest-cost safety net that underpins a secure domestic food, fiber, fuel and feed supply.

Insurance Basics: Skin in the Game

Crop insurance is arguably the first farm policy in history that is largely financed by the farmers who benefit from it.

Unlike policies of the past, which were 100 percent backed by taxpayers, modern-day farm policy requires growers to take an active role in its funding – a concept sometimes called “skin in the game.”

The concept may be new to farm policy, but it’s not new to insurance. From the earliest shipping insurance at Lloyds of London in the late 1600s to the modern auto policy acquired via a smartphone app, the principal is the same.

A customer pays a premium to an insurance company based on the value of property, and predicted risks, to insure its worth. If the property is damaged, the customer absorbs a portion of the loss, called a deductible, and the insurance company covers the remainder through an indemnity payment.

The deductible acts as a deterrent to risky behavior and keeps the insurance policy intact for true disasters. Meanwhile, premium dollars help customers pool resources to more cheaply buy protection and fund the system that provides peace of mind.

The larger the pool of customers, the more risk can be spread, and the cheaper coverage becomes for all.

The same applies to crop insurance, which is why it would be a bad idea to arbitrarily exclude some farmers from participation.

Since crop insurance’s rise to prominence, famers collectively pay between $3.5 billion and $4 billion a year out of their own pockets in premiums. And they absorb hefty deductibles (on average, 25 percent of loss) when disaster strikes.

Famers love the set-up because it offers some predictability for marketing and for borrowing capital, and because it gives them the opportunity to tailor protection to their farms’ unique needs. Taxpayers reap the benefits, too.

Crop insurance means farmers aren’t running to Congress for one-time disaster relief bills every time drought ruins a corn crop in Iowa or frost kills apple trees in New York.

No wonder so many are singing crop insurance’s praises and calling it their “top priority” as we head into the next Farm Bill debate.

ICYMI: Maine farmers know crop diversity is key to success. Our farm policies should reflect that

Bangor Daily News
December 13, 2016

“Diversify, diversify, diversify.” This is the mantra of most financial advisors—a popular approach to protect investors in the face of volatile market swings.

The same strategy also has served agriculture—another unpredictable market-quite well.

Here in Maine, we have established one of the most diverse agriculture “portfolios” in the nation. Growing everything from potatoes to apples and plenty of things in between, our farmers contribute more than $825 million to our state’s economy every year.

It’s exciting to see the potential that this diversified approach holds for the future of farming.

But those in agriculture face challenges that are simply incomparable to other industries. Farmers certainly can’t control the weather, which is often unforgiving, and they also have no sway over markets or the moves of foreign competitors. So it is essential that we have a safety net that protects the small percentage of individuals we enlist to feed and clothe our nation.

Unfortunately, the kind of crop diversification in Maine has not always been reflected in farm policy discussions. Farm policies of the past often focused primarily on a few crops commonly grown in the South and Midwest, while leaving others, such as specialty crops like blueberries, for example, with little support.

That’s no longer the case thanks to improvements to crop insurance. Now, crop insurance is available for more than 130 commodities and has more than 62,000 county-crop programs. Premium support discounts are the same across commodities for each plan of insurance.

This has translated into more farmers from outside the traditional farm country purchasing risk protection. Here in Maine, for example, there has been a more than 20 percent increase in acres insured over the past decade, providing the state’s farmers nearly $30 million in additional protection, according to U.S. Department of Agriculture data. Overall, almost 90 percent of farm acres in the U.S. are covered by crop insurance.

For many farmers, crop insurance offers peace of mind. A crop insurance check will never come close to what a farmer will reap from a good harvest, but it does help them keep farming year after year. And for our beginning farmers, crop insurance is even more critical. It would be almost impossible to receive the needed credit from financial institutions without some assurance that beginning farmers would be able to pay it back if a natural disaster struck.

Taxpayers have benefited as well. Prior to the emergence of crop insurance as the top risk management tool for farmers, natural disasters regularly resulted in very expensive, unbudgeted ad hoc disaster bills from Congress. Now, when disaster strikes, farmers receive an indemnity check.

But just to be clear, crop insurance is not a handout—it’s far from it. To gain coverage, farmers have to put skin in the game. In fact, since 2000, farmers have spent $48 billion out of their own pockets to purchase crop insurance protection. They only collect an indemnity after they have suffered a verifiable loss and fallen below their guarantee.

It’s a win-win for both farmers and taxpayers, yet some farm policy critics would like to send us back to the days of unbudgeted, taxpayer-funded and after-the-fact disaster aid. Legislative proposals like those presented during the last Farm Bill negotiations to limit participation and cap insurance benefits to some farmers would disproportionately affect specialty crop growers and organic farmers whose crops tend to have higher values and therefore are more likely to have higher premiums for coverage. That’s a really bad idea, especially when you consider how important crop insurance is to allowing our producers to stay competitive with the rest of the world.

Crop insurance treats all farmers equally, regardless of operation, size, region, or crop. For Maine farmers, in particular, it is crucial that we protect this safety net that does not discriminate.

E.J. Dorsey is a crop insurance agent with United Insurance in Fort Fairfield. He has more than 22 years experience in the crop insurance field.

Insurance Basics: Delivery Costs

Whenever a customer writes a premium check for an auto or home insurance product, part of that payment is allocated to servicing the policy.

That is, insurance companies include an expense load in the premium for each policy beyond anticipated losses to offset overhead costs, such as staff salaries, agent commissions, adjusting losses, employee training, computer systems, customer support, office space, marketing, etc. The expense piece also includes a profit component for the insurer.

Unlike other types of insurance, crop insurance policies are not loaded for expenses. Why? Because Congress wanted to make crop insurance policies more affordable so farmers would purchase protection with their own money and leave taxpayers less vulnerable to agricultural risk and ad hoc disaster payments.

Prior to crop insurance’s rise to prominence, Congress was routinely called upon to pass expensive, unbudgeted disaster legislation after extreme weather struck. In fact, from 1989 to 2012, 42 emergency agricultural bills cost taxpayers $70 billion, according to the Congressional Research Service – none of which was funded by farmers.

Congress’ plan to promote private-sector delivered crop insurance as a popular alternative worked. Today, farmers collectively spend almost $4 billion out of their own pockets annually to purchase 1.2 million policies, which cover 290 million acres – or 90 percent of America’s planted cropland.

Of course, private-sector insurance companies cannot afford to deliver and service 1.2 million policies for free. So, the government pays part of the delivery costs to insurance companies on farmers’ behalf.

This is known as an Administrative and Operating (A&O) payment. Unfortunately for crop insurers, A&O payments do not cover all of the costs they incur, which continue to climb as more and more Federal requirements and paperwork are piled on insurance providers.

In fact, A&O payments have fallen short of actual company delivery expenses, with an average shortfall of 6.4 percent from 1998 to 2014. The shortfall in 2014 alone totaled $782 million.

To offset such losses, providers of typical property and casualty insurance lines would simply increase expense loads in the premiums they set. But, crop insurers don’t set premiums – the Federal government does, and those premium rates have been on the decline.

This has made for a challenging business climate in recent years, where some insurance providers have exited the crop insurance business altogether or consolidated their operations. To stop this negative trend, it will be important to ensure that crop insurance remains affordable, widely available, and economically viable.

“This is my livelihood. I love it!”

George Struthers farms 9,000 acres of wheat in the south central part of Washington. Crop insurance is very important to him as he farms land that has been in his family for generations.

ICYMI: Crop Insurance: What a difference four decades make

Agri-Pulse

November 4, 2016

For nearly four decades I have worked with Connecticut River Valley farmers to help protect their livelihoods. Over that time, I’ve seen many changes, both in the make-up of farms and the tools farm families have to manage uncontrollable risk.

As our population has grown, the amount of available farmland has gotten smaller. This means our farmers have had to adapt to survive. More and more local farmers today also work jobs off the farm to help support themselves, meaning we have more part-time farms. We’ve also seen an increase in diversified farms here. Many of our dairy farmers, for example, are growing their own crops for feed to help improve their bottom lines.

Our farmers—those with a passion for the land often stretching back generations—have proven to be amazing innovators in the face of challenges. But even for the best agricultural innovators, there is one thing that always remains out of their control: Mother Nature.

Here in the Connecticut River Valley, we know this all too well. We’ve seen spring seasons that have been too dry or too wet for planting. We’ve seen hailstorms come through the Upper Valley like tornadoes, bringing destruction to one area, while miraculously sparing another area just a few miles down the road. We’ve even seen hurricanes, like Irene in 2011, and blizzards in recent years.

Thankfully, as a crop insurance agent, I have also witnessed positive changes to the crop insurance system, enabling many of our farmers to protect their operations against circumstances beyond their control.

During the 1980s, which marked the beginning of the public-private partnership between the U.S. government and private insurance companies, I was among the first crop insurance agents in the region. And the program experienced plenty of growing pains.

Participation was lacking due to high costs, spotty service and slim margins. Congress was spending considerably more each year cleaning up messes after disaster struck than beforehand on protection. Lawmakers also paid far more attention to traditional Midwest crops than those specialty products more prevalent in New England.

Even as late as the early 1990s, crop insurance participation rates nationwide hovered in the 30 percent range.

Things began to change in the mid 1990s, with the passage of the Federal Crop Insurance Reform Act of 1994, which dramatically restructured the program by strengthening the partnership between the federal government and private insurers. Through premium discounts we also started to see increased participation.

Then in May 2000, Congress approved another important 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 their own historical yields.

All of this has resulted in more crop insurance participants than ever before, but there was still work to be done. The Farm Bill of 2014 made crop insurance a cornerstone of U.S. farm policy and took steps to make it more affordable and available to specialty crop growers, organic producers and young farmers.

Today, crop insurance protects more than 90 percent of planted acres nationally. And it’s so popular that farmers are willing to collectively contribute about $4 billion a year from their own pockets to purchase protection and help remove some degree of risk from a very volatile business. That cost-sharing structure makes it a good investment for taxpayers as well, replacing expensive disaster bills of the past, while ensuring a safe and plentiful food supply.

No, a crop insurance check will never come close to what a farmer can get from a good harvest. Like homeowner’s insurance, farmers don’t collect a dime without a verifiable loss and paying a deductible. But crop insurance does offer farmers some peace of mind, which allows them to focus on producing higher-yielding, better-quality crops.

Connecticut River Valley farmers are inventive and hardworking businessmen and women and it has been an honor to work with them for the past 40 years. Given their ingenuity, and the important safety net crop insurance provides, the next 40 years should be exciting to watch.

Randy Odell is a Vermont crop insurance agent who has been in the industry for four decades.

Eliminating Farm Policy Punishes America and Rewards Foreign Competitors

 

The news has been full of foreign subsidy stories lately – whether it’s the trade case America filed against China for excessive corn, wheat and rice subsidies, complaints about Thailand’s sugar subsidy scheme, or the WTO reporting growth in trade restrictions around the globe.

It is under this backdrop that some of U.S. agriculture’s fiercest critics have begun lobbying for the complete elimination of America’s crop insurance system, which was made the centerpiece of U.S. farm policy during the 2014 Farm Bill.  In other words, getting rid of America’s farm safety net at a time when our foreign competitors are expanding their subsidies.

So what would such a scenario look like if it were to come to fruition?

Art Barnaby, an economist with Kansas State University, and Levi Russell, an economist with the University of Georgia, provided a pretty good snapshot in a peer-reviewed paper that they recently wrote for Choices Magazine.

Among their findings:

  • Land values would fall.
  • America would have fewer farmers as consolidation would be inevitable.
  • Beginning and young farmers would suffer the most due to limited equity.
  • America would be less competitive on a global scale as foreign nations would continue to subsidize and erect barriers to U.S. farm goods.
  • Regulatory burdens on U.S. producers, such as EPA regulations, would disadvantage American producers even more.

As for the critics’ hypothesis that a new private-market insurance system would be there to pick up the slack, the authors warn:

It’s unlikely that a free market crop insurance industry would form unless all government subsidies were eliminated. Few farmers would be willing to pay the higher premiums required by a fully-private market as long as the USDA infrastructure is in place for some future Congress to provide ad hoc disaster aid or other cash transfers to farmers. Congress would need to close all forms of support including commodity program payments, disaster payments, and conservation payments. If not, producers would be reluctant to pay unsubsidized premiums for fully-private insurance and would instead push for the reinstatement of disaster payments using the existing infrastructure.

Put another way: Be careful what you wish for.

Eliminating U.S. farm policy in isolation would have devastating consequences for the rural economy and America’s efficient agricultural sector, while rewarding bad actors on the global stage who are eager to seize U.S. market share with the aid of subsidies.

ICYMI: This much is certain: For farmers, crop insurance is essential

There are a number of certainties in life. I know, for example, that every morning on my farm, the sun will rise in the east, and that every evening it will dip beneath the west horizon. And we know Iowa summers will be warm, the winters will be harsh and when the soil has thawed, spring growth will begin anew.

But a life of farming is also full of uncertainties. We can’t control the markets, nor the role Mother Nature will play in bringing our crops to harvest. Let me tell you, farmers are always in a constant negotiation with Mother Nature. Some years, Mother Nature is a farmer’s best friend. In other years, it can be our worst enemy. And in those years, there is no substitute for the risk protection that crop insurance provides.

Crop insurance allows farmers to pay a premium to alleviate some degree some of the uncertainties involved in farming. A crop insurance check will never come close to what a farmer can get from a bountiful harvest, but it does provide some peace of mind.

I’ve been farming for almost four decades and have witnessed firsthand the difference crop insurance can make. In fact, in 1977, my first year full-time farming, we suffered a major drought that resulted in a pitiful 28-bushel corn yield. Crop insurance and other assistance is what kept me going after that first disastrous year.

As president of the Iowa Farm Bureau for the past five years, and a member for many years prior to that, I also have also had the opportunity learn why crop insurance works. It succeeds, in no small part, because of its diverse participation. By spreading the chance of loss among a wide and varied group of insured farmers, premiums become less expensive for everyone. It’s a concept known as a “risk pool” and it is what makes things like auto insurance and homeowners insurance work, too. None of these programs would work if only a few folks participated.

But it hasn’t always been this way. Farm leaders across the country have worked with legislators effectively in recent years to strengthen crop insurance by expanding the size of the “risk pool” through encouraging and incentivizing increased participation. If you need evidence that this approached worked, just look at the numbers.

Today, almost 90 percent of farm acres in the U.S. are covered by crop insurance. It has become the primary safety net for today’s farmer.  Because of this, it has also become one of the biggest targets for anti-farm policy critics.

Crop insurance’s detractors — many whom have never negotiated with Mother Nature — often weave a tale about farmers resting on our laurels and laughing all the way to the bank. But that’s all it is: a tall tale. These critics are especially prone to calling out a policy known as revenue protection, which shields farmers in periods of extreme market volatility. But crop insurance, no matter what type, is far from a handout. And having revenue protection doesn’t necessarily equal an indemnity payment, even in years with low crop prices. In 2015, for example, of total indemnities paid to growers, including revenue protection as well as coverage from weather events, only 3 percent were the result of low prices.

The safety net that crop insurance provides is essential and is more important now than ever before. Not only does the average American farm feed about 168 people worldwide, but one in five Iowans go to work because of agriculture. But our farm economy has seen better days, with farm income projected to decrease again.

Farming is a tough job and perils are many, especially in today’s environment. Crop insurance provides a measure of stability and is an investment in both today’s farm economy and our future.

Without it, we’d have a whole lot less American farmers growing affordable food for America and the world. That much is certain.

Craig Hill of Milo is the president of the Iowa Farm Bureau Federation. His family grows corn and soybeans and raises livestock.

Senator Grassley Touts Crop Insurance Amid Recent Flooding

Crop insurance enjoys widespread bipartisan backing on Capitol Hill. And this week, one high-profile leader, Senator Chuck Grassley (R-IA), was emphatic in his support, saying the recent floods in eastern Iowa serve as an important reminder why crop insurance is so essential.

grassley-floodGrassley recently surveyed the flood damage in several eastern Iowa cities, and discussed his experience on Money Matters, a program on the Iowa Agribusiness Radio Network.

“I saw debris and damage left by receding floodwaters, many homes underwater, preparations to mitigate flooding downstream and farmers surveying their flooded crops,” Grassley told program host Ben Nuelle.

Grassley says crop insurance, which is partially funded by farmers and delivered by the private sector, will be crucial for farmers whose crops flooded this year so close to harvest.

“With grain prices as low as they have been in years, that program will provide some relief to insure producers who will be forced to take a complete loss on their flooded fields. It is important reminder heading into the farm bill of the critical role crop insurance plays in the farm safety net.”

“Without crop insurance, some of the impacted farmers could be knocked out of the business altogether,” Grassley added. And that would be bad news for farmers, rural communities, and consumers alike.

Current Farm Economics Reminds Us Why We Need a Farm Safety Net

With a third straight year of declining farm income and reports of agriculture credit conditions deteriorating, we are reminded why lawmakers put a safety net in place for farmers, and why that safety net must be affordable and widely available to all producers in the country.

A recent report from the Federal Reserve Bank of Kansas City, which revealed the results of an ag credit survey, noted, “agricultural producers continued to reduce capital and household spending as profit margins generally remained weak.” And, these strenuous conditions are expected to continue for the foreseeable future.

It’s a fact that Todd Van Hoose, the president and CEO of the Farm Credit Council, recently discussed in an editorial for Farm Policy Facts.

“There is a lot of pain in farm country right now and we are seeing a lot of farmers limiting or foregoing equipment purchases and recalibrating other expense controls to balance their operations against the new commodity price level,” Van Hoose explained.

Consequently, the problem is not isolated to farmers and ranchers. It extends to the entire rural economy and beyond. Randy Nelson, the president of CHS Capitol, LLC, the financing arm of a large farmer-owned cooperative, told members of the House Agriculture Committee earlier this year that, “this is a far-reaching problem that goes down Main Street in the rural communities.”

Recent headlines suggest as much with John Deere announcing in July that it would cut more than 100 jobs at its East Moline, Illinois plant. This was followed by an August announcement to lay off another 120 jobs in Waterloo, Iowa. The company said both decisions were made due to anticipated decreases in the sales of agricultural equipment.

These are uncertain times for our agricultural producers and rural Americans, and the last thing they need is to have risk management tools like crop insurance ripped out from under them as some special interest groups in Washington, D.C., are pushing to do.

Critics spread false information about the mechanics and cost of crop insurance and then propose gutting it altogether. Meanwhile, they fail to appreciate that crop insurance has been the one thing that farmers, ranchers, and their lenders can count on in lean times.

“The role that farm policy and crop insurance plays in enabling that production cannot be overlooked or dismissed,” concluded Van Hoose. “In order to maintain and support a healthy, vibrant, competitive, and innovative farm sector, we must continue to invest in it.”

Advance Marketing Pays Off

CROP INSURANCE IN ACTION: Richard Selover, Colusa, California

richard selover california 2014California is the nation’s number one agriculture state and has been for more than 50 years, growing more than half of the nation’s fruits, vegetables, and nuts.  We paid a visit to Richard Selover, a farmer in Colusa, CA, a small farming community in Northern California, approximately 75 miles north of Sacramento, to find out why crop insurance is important to his farming operation.

According to Selover, the city of Calusa represents about 80% of the gross product for the County of Calusa.  The top commodities for the county include rice, tomatoes, almonds, and walnuts.  The county also has a fair amount of cattle.

Selover grows rice, almonds, walnuts, wheat, and beans and has counted on crop insurance consecutively for the last 10 years.  “We have used crop insurance to level out the perils throughout the years.”  He says that crop insurance offers stability to his farm income, just like any other line of insurance you would purchase to protect your risks.

During our conversation, he explained how crop insurance protects against issues like late spring rains that cause excess moisture at planting time extending planting dates, late frost, and hailstorms.  “Rice has a fairly long growing season, so we have to be careful not to get into the fall range, which can come in early and catch us on that side.”  He went on to say “Over the years [crop insurance] has leveled out the playing field so we don’t have big income swings.”

According to University of California Cooperative Extension, rice is one of Calusa County’s major commodities, with approximately 500,000 acers planted yearly.  Selover said “There is a lot of milling capacity here for rice, it’s a medium grain rice that’s shipped all over the world.”  Further stating that “California is famous for their special rice varieties.”

When we asked him about the Environmental Working Group accusing farmers of “praying for drought, not praying for rain,” Selover replied, “We are in a drought right now, and NOBODY is praying for it. This is probably going to be, depending on how this pans out, economically devastating to our community that has been here for almost 200 years.”

To sum it all up, Selover states, “Not too many people profit from an insurance policy.  All it does is protect you from the unexpected.”

In 2015, Federal Crop Insurance protected $8.8 billion of liability on growing crops in California.  There were 5.8 million acres insured and more than $537 million was paid to farmers in indemnities for production and/or revenue losses. The private crop-hail insurance product provided an additional $37 million in liability protection.

What They are Saying About Crop Insurance

With 297 million acres of farmland covered by crop insurance, this risk management tool has become an integral part of the farm safety net for American producers. Policies are available for more than 120 crops for farmers of all operation sizes in all states. This is a fact that farmers, policymakers, lenders, and other agricultural leaders all recognize and appreciate. Below is a look at what people are saying about crop insurance and its importance in maintaining strong agricultural production in this country.

“One of the least understood points about crop insurance is that it’s not just for farmers. That’s how we as farmers talk about it, that it’s a way to keep us in business when we suffer a catastrophic loss. That it’s a way to protect our yearly investment when things go wrong. That is all true, of course, but we don’t explain that it is also insurance for every consumer.” – Zach Hunnicutt, Nebraska farmer

“The important message we can talk about is, keep crop insurance whole. It is worth the investment of the federal government in helping farmers manage the risk.” – Todd Van Hoose, CEO & President, Farm Credit Council

“The truth is that crop insurance is a highly successful public-private partnership between the federal government and private insurance companies. It functions as a risk management tool for farmers to mitigate the numerous risks – financial, meteorological or the like – that they take to produce the finest food and fiber in the world.” – Rep. Jim Costa (CA-16)

“The program keeps family farms in the family, even after a bad year, and provides a safety net that allows beginning farmers to pursue their dream of farming…. Federal crop insurance has become an essential part of the farm safety net due to its ability to provide dependable protection and grow with the needs of farmers and ranchers.” – Brandon Willis, Risk Management Agency Administrator

“Crop insurance and farm policy enables everyone – from the farmer to the banker to the taxpayer – to plan for those disasters and overcome them when they happen. If lawmakers continue to try and chip away at this safety net, farmers will not have the ability to survive. This is especially true for young, beginning farmers that have less access to credit and capital.” – Larry Kummer, Indiana farmer

“As farmers, we have no control over weather. We have no control over markets. We have no control over our foreign competitors. We cannot just turn our operations on or off. We have to take care of the land 365 days a year. We need a safety net when commodity prices fall. We need affordable and reliable crop insurance to protect our yearly investments.” – Jeremy Brown, Texas farmer

“We still have land and equipment payments to make regardless of whether we have a good or bad growing season, or whether a natural disaster wipes out our crops altogether. Crop insurance is something we purchase each year to manage this risk and we only receive an indemnity when we suffer a verifiable loss. Even then, it doesn’t make us whole, but it does soften the blow from a bad year.” – Lorraine Greco, California farmer

“This is why having a sufficient farm safety net — with crop insurance as the cornerstone — is more critical than ever. Crop insurance provides protection against the one thing that even the most resilient farmer cannot defeat — the wrath of Mother Nature.” – Scott VanderWal, Vice President of the American Farm Bureau Federation

Crop Insurance Preserves South Dakota Farm Economy

South Dakota’s history is deeply rooted in agriculture, perhaps more so than any other state in the union. From the homesteaders who came here in the 19th century, with little more than a plow and a dream, to their descendants who still work the land, agriculture is the way of life for many South Dakotans.

As the president of the S.D. Farm Bureau and a livestock, corn and soybean farmer myself, I can tell you firsthand that our state’s farmers personify a work ethic and a sense of pride and purpose that we are seeing less and less of outside of agriculture these days.

But agriculture is more than just a proud tradition — it’s also S.D.’s top industry, with a $25.6 billion economic impact each year. Our farmers and ranchers generate 20 percent of our state’s economic activity and provide jobs, directly and indirectly, to 122,000 residents.

It’s essential that we preserve S.D.’s farm economy, not just for our own economic well-being, but for all Americans. Our nation’s farmers play an indispensable role in ensuring a safe, affordable and stable food supply. And this role is becoming increasingly important as we struggle to meet the needs of a growing world population. In short, food security is a vital part of our national security and that’s something we need now more than ever.

Unfortunately, our farm economy has seen better days. Our farm families are facing a year of projected below-cost returns on corn, soybeans and wheat. Overall, farm income is also projected to decrease again in 2016. This will be the third consecutive year of declining farm income, following sharp drops in 2014 and 2015 totaling 56 percent in those two years. If the 2016 income projection comes to fruition, it would mark the lowest farm income level since 2002.

This is why having a sufficient farm safety net — with crop insurance as the cornerstone — is more critical than ever. Crop insurance provides protection against the one thing that even the most resilient farmer cannot defeat — the wrath of Mother Nature.

Crop insurance is a unique public-private partnership that not only supports farmers, but eases the burden on taxpayers. Prior to the emergence of crop insurance as the top risk management tool for farmers, natural disasters regularly resulted in very expensive, unbudgeted ad hoc disaster bills from Congress. Now, when disaster strikes, farmers receive an indemnity check.

Let’s be clear, crop insurance is not a handout — far from it. To gain coverage, farmers have to put skin in the game. In fact, since 2000, farmers have spent nearly $30 billion out of their own pockets to purchase crop insurance protection. We only collect an indemnity after we’ve suffered a verifiable loss and met our deductible.

We purchase crop insurance for our family farm every year and have never filed a major claim. But that’s hardly the point. Like our fellow farmers, we purchase crop insurance for the same reasons we purchase home insurance or car insurance — with the hope we’ll never need it. But we’ll keep purchasing it every year because some day we might. Crop insurance gives us peace of mind, and if we ever experience a major crop disaster, would provide us with the resources to keep farming.

Farmers have faced tough times before and rest assured we will get through them again. Old fashioned hard work, innovation and smart farm policies like crop insurance will help ensure that the proud S.D. farming tradition will live on for many future generations, and, in turn, will secure a bright future for us all.

Scott VanderWal is a third-generation family farmer from Volga. He is president of the South Dakota Farm Bureau and vice-president of the American Farm Bureau. This op-ed appeared in the Sioux Falls Argus Leader on August 9, 2016.

New Video Spotlights Public Support for U.S. Farmers, Farm Policy

America’s farmers and farm policies, including crop insurance, receive overwhelming, bipartisan support from voters, according to a new video released today by National Crop Insurance Services (NCIS).

The video comes after the Republican and Democratic parties wrapped up their national conventions, moving America into the heart of the election season.

“As the first Tuesday in November approaches, voters will be busy examining candidates from the left, candidates from the right, and hoping they won’t be left behind,” the video states. “But there’s one thing almost everybody can agree on: America’s farmers and farm policies are moving the country forward.”

The educational piece is based on results from a recent public opinion poll showing that nearly 90 percent of U.S. voters have a favorable view of farmers, with 92 percent agreeing it is important to provide farmers with federal funding.

NCIS’ video also illustrates that the majority of voters prefer crop insurance, which is delivered by private companies instead of the federal government and partially funded by farmers.

“That’s a winning set-up in most voters’ minds,” it states. “Nearly 80 percent of whom said they approved of farmers getting discounts on crop insurance premiums, with nearly three-fourths applauding farm policy’s current cost-sharing structure.”

These results, the video continues, shouldn’t be a surprise as eight in 10 voters agree that a strong and thriving farming industry is critical to America’s national security.

“So while agriculture’s critics may continue their unrelenting, misguided fight on farmers and farm policy,” it concludes, “the numbers show that Farm Country will have a powerful ally in its corner this November and beyond…the American people.”

ICYMI: Trust the ag lender, crop insurance cuts would most harm family farms

This is the time of year when farmers are meeting with their lenders to renew farm operating loans for 2016. The past few years have been challenging for producers as commodity prices have fallen, input costs have risen, and severe weather has damaged or destroyed entire crops.  With the downturn in the ag economy, multiple years of lost revenue and less than favorable forecasts for 2016, many producers are facing the tough question: can I afford to continue farming?

Without access to capital, the answer to this question is a resounding no.

I’ve worked in the ag finance business in Texas for more than 30 years and have seen highs and lows in the farm sector. Though those in agriculture have always faced risks, those risks have escalated over the past two decades. Volatility has become the norm rather than an infrequent event. In the last five years farmers have experienced a multi-year drought, hail storms in October, late spring freezes, and too much rain literally drowning their crops. Prices for farm commodities have dropped drastically to below the costs of production as foreign subsidies and market-manipulating policies have drastically risen.

As a way to mitigate these risks and make access to capital possible, Congress selected crop insurance as the primary risk management tool for farmers in the last farm bill. The modern crop insurance system in place today replaced ad hoc disaster relief programs ensuring farmers would have some protection against natural disasters. Congress designed crop insurance to be affordable to the farmer, yet accountable, requiring producers to pay premiums for the insurance coverage on their crops and shoulder a portion of losses through deductibles.

In the cotton industry, a major crop in the 43 counties served by AgTexas, crop insurance is basically the only risk management tool available to producers. It can literally make the difference between farming another year or losing so much a farmer must call it quits.

From the lending perspective, crop insurance provides a guarantee of a minimum income for a lender to rely on to repay loans should a farmer lose a crop. This insurance guarantee makes it much easier for producers to obtain the financing they need to farm. This is similar to the guarantee any car owner would have on their car loan if they got into an accident. Crop insurance is a safety net for some of the events that cannot be controlled.

For perspective, an average family farm in the panhandle of Texas farms between 1500 to 2500 acres and must borrow $500,000 to $1 million each year to produce a cotton crop. Because of the low price of cotton and the high input costs in 2015, many had farm losses exceeding $150,000.   On top of the loss, they still have loan payments, living expenses, and the same farming costs to keep operating another year.

As producers and ag lenders work together to prepare cash flows for 2016, it is extremely difficult to forecast enough income to cover operating loans, meet debt payments, and pay living costs. Especially vulnerable are the young and beginning farmers who face these challenges with limited financial resources. These young producers and multi-generation family farms are the most affected by the volatile prices, increased production costs, and weather uncertainty in their operations.

Some in our country wish to do away with farm programs and any support of a crop insurance system that supports farmers and ranchers who produce the food and fiber that not only feeds and clothes our nation, but also serves other nations around the world. The reality is, without a viable, affordable crop insurance program most of these producers’ businesses will not survive. And if farmers go under, the Main Street businesses they support are not far behind.

Scotty Elston is the Chief Credit Officer at AgTexas Farm Credit in Lubbock, TX. This op-ed appeared in the Southeast Farm Press on June 20, 2016.

ICYMI: Farm policy, crop insurance wise investments for all Americans

Although I was born and raised on a farm, the standing rule in our house was I had to spend two years after college pursuing other things. This was not to discourage me from continuing the family farming tradition. Rather, my father wanted to make certain I knew what kind of life I was signing up for. Perhaps another job elsewhere would provide me with greater financial security and stability than one that was beholden to the weather, markets, foreign subsidies, and even lawmakers in Congress.

I recognized the wisdom in my father’s counsel, but after a couple of years, I knew I wanted to get back to the farm. By then I was married and the thought of raising my family in a small, rural town, combined with returning to the family farm, appealed to me. I have been farming on my own for the past nine years.

What I have learned during this time is this: farming is an enormous game of risk management. It’s not if something bad is going to happen, it’s when. I was aware of this reality growing up, but I fully appreciate it now that I am working to sustain my own farm and support my own family.

Droughts, floods, hailstorms, high input prices, unpredictable commodity prices, the uncertainty of what will come out of Washington whether it is talk of cutting the farm safety net during the life of a farm bill or applying a new regulation that increases the cost of doing business; in addition to competing with foreign governments that cheat on their commitments to free trade and fair markets. These are the challenges that farmers face every year. It is a life that is rife with risk and uncertainty.

Today’s depressed farm economy is a prime example. Commodity prices are half what they were a few years ago while the cost of doing business has not followed the same trend. The financial situation for many farming operations all across the country has deteriorated fast and many lenders are nervous about providing financing.

This is why we need strong farm policy and crop insurance to help us manage things beyond our control like a natural disaster or a collapse in commodity prices.

One of the least understood points about crop insurance is that it’s not just for farmers. That’s how we as farmers talk about it, that it’s a way to keep us in business when we suffer a catastrophic loss. That it’s a way to protect our yearly investment when things go wrong.

That is all true, of course, but we don’t explain that it is also insurance for every consumer.

Just look at the drought of 2012 – one of the worst droughts on record – that devastated most of the country. There were times in our nation’s history when that kind of devastation would have put thousands of farmers out of business, especially beginning farmers like me, because farm policy and crop insurance wasn’t what it is today. But, that didn’t happen in 2012. Those risk management tools gave us the ability to stay in business, to make it another year. It provided banks with assurance that operating loans would be repaid despite large losses, and in the process it enabled us to keep a stable and affordable food supply for all American consumers because we were able to begin again.

What affects the farmer will affect the consumer. The tools that help farmers stay viable from year to year and decade to decade, allows consumers to get what they need and want in the grocery stores.

We’re all in this together. We have to remember that fact when Congress begins reauthorizing the next farm bill or some lawmaker in D.C. proposes an arbitrary and irresponsible cut to farm policy and crop insurance. These risk management tools serve us all, especially the next generation of farmers. They are a sound and wise investment for America.

Zach Hunnicutt is a fifth-generation farmer from Giltner who raises corn, soybeans, popcorn, seed corn and milo.  This op-ed appeared in the Grand Island Independent on June 17, 2016. 

Diversity Makes Crop Insurance Special

Congress made crop insurance a cornerstone of U.S. farm policy for numerous reasons.

It is efficiently delivered by the private sector. Farmers and insurers help fund the system so taxpayers aren’t on the hook for the entirety of disaster aid. Payments get into the hands of farmers after disaster strikes within days, not years, but only after the claim is verified. And it’s easily tailored to the farmer’s needs no matter where they grow or what they put in the ground.

This kind of regional and crop diversification is often overlooked during farm policy debates, but it is a big part of crop insurance’s popularity in the countryside. For years, U.S. farm policy was criticized for primarily focusing on a few crops in the South and Midwest while leaving others – namely specialty crops and livestock – with little support.

That’s no longer the case thanks to smart investments in crop insurance. Now farmers and ranchers have a safety net whether they raise cattle, corn, cotton, canola, cranberries, citrus, cucumbers, cabbage, or hundreds of other crop combinations.

The chart below shows the improved availability of crop insurance products over the years, including coverage for lots of fruits and vegetables and protection for pasture, rangeland, and forage.

Over 100 Product Introductions Since 2000

And that has translated into more farmers from outside the traditional farming belt purchasing risk protection, which has decreased taxpayers’ exposure to agricultural disasters.

 

 

 

Check out the participation growth in these states – the 20 fastest growing in the country – over the past 15 years.

State 2001 Insured Acres 2015 Insured Acres* % Increase
1. Nevada 8,792 1,834,421 20,765%
2. New Hampshire 9,885 302,772 2,963%
3. Vermont 53,771 1,293,322 2,305%
4. New York 598,110 12,258,266 1,950%
5. Connecticut 27,200 233,589 759%
6. Wyoming 357,930 1,894,014 429%
7. Maine 100,866 499,704 395%
8. Utah 100,807 489,213 385%
9. New Mexico 620,312 2,720,537 339%
10. Pennsylvania 978,759 3,919,801 300%
11. Arizona 388,190 1,216,915 213%
12. Texas 16,124,120 45,988,387 185%
13. Kentucky 1,864,327 4,050,009 117%
14. Colorado 3,580,621 7,178,023 100%
15. Maryland 638,568 1,147,376 80%
16. California 4,010,128 6,759,327 69%
17. Florida 1,523,472 2,526,249 66%
18. Ohio 4,390,250 6,981,914 59%
19. Virginia 933,335 1,451,435 56%
20. Wisconsin 3,547,633 5,337,156 50%

*Includes livestock gross margin protection insurance

Amazingly, some farm policy critics want to unravel this success, which would send us back to the days of unbudgeted, taxpayer-funded, and after-the-fact disaster aid. Their legislative proposals to limit participation and cap insurance benefits to some farmers would even disproportionately harm specialty crop growers in areas outside the nation’s breadbasket.

It doesn’t make much sense. Then again, neither does attacking the tiny sliver of the federal budget dedicated to underpinning America’s food and fiber supply.

Convo 71

USDA’s Risk Management Agency recently announced the improper payment rate — a closely-watched standardized measure of waste and abuse required of all major federal spending programs – fell sharply last year for crop insurance. The rate dropped to a new level of 2.20 percent, representing a 62 percent drop from the prior year’s 5.58 percent.

Ken Ackerman, a former Administer for USDA’s Risk Management Agency and now a Washington D.C. based legal counsel, recently wrote a blog post explaining why that  drop matters.

Convo 71

USDA’s Risk Management Agency recently announced the improper payment rate — a closely-watched standardized measure of waste and abuse required of all major federal spending programs – fell sharply last year for crop insurance. The rate dropped to a new level of 2.20 percent, representing a 62 percent drop from the prior year’s 5.58 percent.

Ken Ackerman, a former Administer for USDA’s Risk Management Agency and now a Washington D.C. based legal counsel, recently wrote a blog post explaining why that  drop matters.

Convo 70

Nearly 90 percent of Americans have a favorable view of farmers, and 92 percent said it was important to provide farmers with federal funding, according to a new national poll released this week. The poll, commissioned by the National Crop Insurance Services, surveyed 1,000 registered voters in early April. Jon McHenry is the Vice President of North Star Opinion Research, the research firm that conducted the poll.

Convo 70

Nearly 90 percent of Americans have a favorable view of farmers, and 92 percent said it was important to provide farmers with federal funding, according to a new national poll released this week. The poll, commissioned by the National Crop Insurance Services, surveyed 1,000 registered voters in early April. Jon McHenry is the Vice President of North Star Opinion Research, the research firm that conducted the poll.

Farm Policy is Essential to Maintaining Ag Production in the U.S.

If there is one place that, in recent years, overwhelmingly demonstrates the need and importance of U.S. farm policy, it is California. For the past four years, this top agricultural producing state has experienced record drought conditions and for farmers like my husband and me, it has taken a toll on our operation.

We have been growing rice in the Sacramento Valley for 30 years and we have never seen a weather event this relentless. Although the arrival of El Nino has provided much needed rain, the effects are marginal because of the intensity of the drought.

Operating loans are essential for every farmer because of the cost of producing crops, but for my family they have enabled us to keep going to the next year despite depressed yields and prices, and in some cases the inability to plant a crop at all.

And we would not be able to receive this crucial financing without crop insurance and farm policy in place. Farming is an inherently risky business and bankers want assurances that we will be able to pay back the loan if disaster strikes. We were not born into farming – we built our operation from the ground up – so we still have land and equipment payments to make regardless of whether we have a good or bad growing season, or whether a natural disaster wipes out our crops altogether. Crop insurance is something we purchase each year to manage this risk and we only receive an indemnity when we suffer a verifiable loss. Even then, it doesn’t make us whole, but it does soften the blow from a bad year.

It’s important to have this kind of safety net in place for all farmers, all across the country. And, I am always alarmed by the calls in Washington to cut what remains of the farm safety net, especially from those who have no idea what it takes to grow food and fiber. We need risk management tools now more than ever to help us overcome unpredictable weather events.

Additionally, we need policy in place to combat unfair practices with our foreign competitors like China and Thailand whose support for their rice growers far exceeds that of the United States and actually violates agreements under the World Trade Organization (WTO). While the U.S. was reforming its policy in the 2014 Farm Bill, other countries were ramping up support for their farmers, in some cases by more than a 100 percent. Their policies are trade distorting and leave American growers at a competitive disadvantage.

American farmers can and do manage extraordinary risks, year in and year out, but we cannot manage the challenges associated with unpredictable and sustained natural disasters, volatile markets, and trade distorting policies of our foreign counterparts without risk management tools like crop insurance and farm policy.

Lawmakers in Washington should consider this reality the next time they want to cut farm policy spending. If they want to continue to have agricultural production in this country, and in California in particular, they need to invest in it.

Lorraine Greco serves on the California Board for the U.S. Rice Producers Association. She grows organic rice with her husband in northern California.

Crop Insurance is Critical for Beginning Farmers

Agriculture has been my passion since an early age growing up on the family farm. I have continued the tradition with a farm of my own.Additionally, I have worked as an agricultural banker for nearly four decades. I started out working in the Farm Credit System, but eventually moved over to the private sector because I wanted to help farmers with estate planning needs in addition to providing credit.

I like to help farmers make the right decisions about their operations, especially as it relates to setting up the next generation of agricultural producers. I want them to be in a good position for the future and prepared for the inevitable challenges that will come their way.

But, I grow more and more concerned about two current trends that I believe threaten the success of agriculture. One is the average age of the American farmer continues to climb while the number of beginning farmers is trending downward. The second trend is the relentless attacks on the farm safety net in Washington that make the uncertainty of farming even more precarious, especially for those young producers just starting.

For example, the 2014 Farm Bill had barely been in place when opponents began proposing cuts – the worst of which appeared in a budget agreement that came together late last year under the cover of darkness and without any consultation with anyone remotely close to farming. The proposal would have essentially gutted crop insurance, which is one of the key elements of the farm safety net.Fortunately, the agricultural community came together and fought off that cut, but this type of attack is a sign of things to come, and it doesn’t bode well for the overall outlook for American agriculture.

A farmer has to invest so much money to grow a crop that they rely on banks for operating loans. Banks would have a hard time making those loans without assurance that farmers would have a way to pay it back if a natural disaster struck.

Crop insurance and farm policy enables everyone – from the farmer to the banker to the taxpayer – to plan for those disasters and overcome them when they happen. If lawmakers continue to try and chip away at this safety net, farmers will not have the ability to survive. This is especially true for young, beginning farmers who have less access to credit and capital.

Therefore, it’s critical that crop insurance remain intact. Investing a future in farming is already a chilling prospect for most young people, given the expense of raising crops, the volatility of the markets and weather events and the low returns on investment. It’s enough to discourage any reasonable person from even trying regardless of whether they are starting from scratch or inheriting the family operation.

As Congress and the White House wrestle with their respective budgets in the coming weeks, I hope good sense will prevail and they’ll leave crop insurance and farm policy alone. Given the current demographics of farming, now is not the time to jeopardize the one thing that farmers can count on.

Larry Kummer is Market President for the Northeast Indiana Horizon Bank.

Crop Insurance is Critical for Beginning Farmers

Agriculture has been my passion since an early age growing up on the family farm. I have continued the tradition with a farm of my own.Additionally, I have worked as an agricultural banker for nearly four decades. I started out working in the Farm Credit System, but eventually moved over to the private sector because I wanted to help farmers with estate planning needs in addition to providing credit.

I like to help farmers make the right decisions about their operations, especially as it relates to setting up the next generation of agricultural producers. I want them to be in a good position for the future and prepared for the inevitable challenges that will come their way.

But, I grow more and more concerned about two current trends that I believe threaten the success of agriculture. One is the average age of the American farmer continues to climb while the number of beginning farmers is trending downward. The second trend is the relentless attacks on the farm safety net in Washington that make the uncertainty of farming even more precarious, especially for those young producers just starting.

For example, the 2014 Farm Bill had barely been in place when opponents began proposing cuts – the worst of which appeared in a budget agreement that came together late last year under the cover of darkness and without any consultation with anyone remotely close to farming. The proposal would have essentially gutted crop insurance, which is one of the key elements of the farm safety net.Fortunately, the agricultural community came together and fought off that cut, but this type of attack is a sign of things to come, and it doesn’t bode well for the overall outlook for American agriculture.

A farmer has to invest so much money to grow a crop that they rely on banks for operating loans. Banks would have a hard time making those loans without assurance that farmers would have a way to pay it back if a natural disaster struck.

Crop insurance and farm policy enables everyone – from the farmer to the banker to the taxpayer – to plan for those disasters and overcome them when they happen. If lawmakers continue to try and chip away at this safety net, farmers will not have the ability to survive. This is especially true for young, beginning farmers who have less access to credit and capital.

Therefore, it’s critical that crop insurance remain intact. Investing a future in farming is already a chilling prospect for most young people, given the expense of raising crops, the volatility of the markets and weather events and the low returns on investment. It’s enough to discourage any reasonable person from even trying regardless of whether they are starting from scratch or inheriting the family operation.

As Congress and the White House wrestle with their respective budgets in the coming weeks, I hope good sense will prevail and they’ll leave crop insurance and farm policy alone. Given the current demographics of farming, now is not the time to jeopardize the one thing that farmers can count on.

Larry Kummer is Market President for the Northeast Indiana Horizon Bank.

Crop Insurance is Money Well Spent by Farmers

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.  Largely gone are the days of government support programs like direct payments.  In their place, and at the center stage of farm risk management tools, is crop insurance.

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.  We’ve been farming with our family for many years, but felt it was time to expand out and grab some of our own.  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.

Unlike days of old, crop insurance is not a federal handout.  In fact, if farmers want to enjoy the protection provided by crop insurance, they must purchase it.  And they do so willingly, spending roughly $4 billion per year out of their own back pockets on crop insurance premiums alone.

For most beginning farmers, crop insurance is nearly a necessity, since banks are hesitant to make loans to farmers who lack sufficient collateral.  Crop insurance allows banks the opportunity to increase lending capabilities with the security of crop insurance.  That’s because with a crop insurance policy in hand, banks feel more secure making those loans to  farmers, since there’s a guarantee of revenue even if the crop fails.

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.  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.

Farmers buy crop insurance for the same reason drivers purchase auto insurance:  it offers some degree of stability in times of disaster.  Crop insurance has become, in essence, the nation’s insurance policy for the food supply.  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.

Crop insurance has also removed some of the financial risk from taxpayers.  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 disaster bill from Congress.  Those bills are big and are fully funded by taxpayers.

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.  In my case when I lost forty percent of my crop in 2012, a year would have been much too late.

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.  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.  And we were able to bounce back and plant the next year.  That’s a smart public policy because it ensures food security for our nation.

Of course crop insurance has its critics, and their sights are squarely on crop insurance, since it’s really the only game in town. And that’s why it’s important for farmers to speak up and let their elected officials know how much they value this risk management tool.

Needless to say, if we hadn’t purchased crop insurance our first year of farming, my cousin and I would be spending years paying off that production loan.  And without this valuable risk management tool available, I’d venture to say many more of America’s farmers would have been joining us.

Scott Reilly farmer and crop insurance agent and lives in Spalding Nebraska.

 

Crop Insurance is Money Well Spent by Farmers

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.  Largely gone are the days of government support programs like direct payments.  In their place, and at the center stage of farm risk management tools, is crop insurance.

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.  We’ve been farming with our family for many years, but felt it was time to expand out and grab some of our own.  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.

Unlike days of old, crop insurance is not a federal handout.  In fact, if farmers want to enjoy the protection provided by crop insurance, they must purchase it.  And they do so willingly, spending roughly $4 billion per year out of their own back pockets on crop insurance premiums alone.

For most beginning farmers, crop insurance is nearly a necessity, since banks are hesitant to make loans to farmers who lack sufficient collateral.  Crop insurance allows banks the opportunity to increase lending capabilities with the security of crop insurance.  That’s because with a crop insurance policy in hand, banks feel more secure making those loans to  farmers, since there’s a guarantee of revenue even if the crop fails.

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.  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.

Farmers buy crop insurance for the same reason drivers purchase auto insurance:  it offers some degree of stability in times of disaster.  Crop insurance has become, in essence, the nation’s insurance policy for the food supply.  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.

Crop insurance has also removed some of the financial risk from taxpayers.  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 disaster bill from Congress.  Those bills are big and are fully funded by taxpayers.

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.  In my case when I lost forty percent of my crop in 2012, a year would have been much too late.

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.  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.  And we were able to bounce back and plant the next year.  That’s a smart public policy because it ensures food security for our nation.

Of course crop insurance has its critics, and their sights are squarely on crop insurance, since it’s really the only game in town. And that’s why it’s important for farmers to speak up and let their elected officials know how much they value this risk management tool.

Needless to say, if we hadn’t purchased crop insurance our first year of farming, my cousin and I would be spending years paying off that production loan.  And without this valuable risk management tool available, I’d venture to say many more of America’s farmers would have been joining us.

Scott Reilly farmer and crop insurance agent and lives in Spalding Nebraska.

 

Crop Insurance Can Help Keep Multi-Generational Farms Within the Family

My farm has been in my family since the mid-1800s. I have seen firsthand how farming has changed over the decades. It is certainly more expensive to farm than when my parents and grandparents and great-great grandparents farmed the land, but one thing hasn’t changed in more than 150 years: farming is an unpredictable business.

Farmers can’t predict the future, but we can make a genuine effort to be smart, informed business owners. We try to make the right decisions and work with what we have. The problem is when ‘what we have to work with’ is ripped out from underneath us. Without crop insurance, many farmers wouldn’t be able to keep farming. Cutting crop insurance would be pulling the rug from underneath agriculture.

Before the modern day crop insurance system, farmers relied on ad hoc disaster relief payments. This was a costly and unpredictable option for all of us – the government, the taxpayer and the farmer, who in some cases may have received a payment too late to avoid bankruptcy.

Congress agreed that crop insurance was the best risk management tool for farmers. In the 2014 Farm Bill, they implemented a crop insurance system that ensured farmers would have access to affordable crop insurance while removing the risk from the taxpayer. In stride, farmers have made operating decisions with the assumption that all the policies of this bill would be in place until the Farm Bill expires in 2018.

Now, in 2015, this proven risk management tool, crop insurance, is in front of the firing squad. I’m not certain why some Members of Congress are willing to turn their backs on farmers now. Washington is nearly 900 miles away from my family farm. From that distance, it may be easy to assume that cuts to farm programs, like crop insurance, would have no effect on farmers, but that’s not an accurate picture.

Crop insurance is the only safety net that most farmers have anymore. Nearly all the cropland in the United States is protected by crop insurance. In Wisconsin, a majority of crop acres are insured, including grain commodities and specialty crops.

Insurance not only allows farmers to face natural disasters and damaging production years without losing everything, but it provides assurance that we can make payments to our banks. The same way any person in this country cannot get a house loan or a car loan without proof of insurance, agricultural banks want the guarantee that farmers can make their payments.

The agriculture economy is struggling. Farm income continues to decline, crop prices are down and inputs continue to rise. The 2015-16 farm year may be a make or break year for many farmers who are ending the year in the red. Forty years ago, a farmer could lose a crop one year and still farm the next. Nowadays one crop loss could end someone’s farming career. In the current state of agriculture, we can’t afford to have another leg chopped off our stool that’s already leaning.

My wife and I have risked our livelihood to maintain the farm for our children and grandchildren, just as my parents and grandparents did for us. Without crop insurance, we would have to quit farming. For the events we can’t predict, crop insurance ensures we won’t lose our multi-generational family farm.

Darrell Crapp is a farmer from Lancaster, Wisconsin. He farms in partnership with his two sons.  This op-ed appeared in the Prairie du Chien Courier Press on January 20, 2016.

Crop Insurance Can Help Keep Multi-Generational Farms Within the Family

My farm has been in my family since the mid-1800s. I have seen firsthand how farming has changed over the decades. It is certainly more expensive to farm than when my parents and grandparents and great-great grandparents farmed the land, but one thing hasn’t changed in more than 150 years: farming is an unpredictable business.

Farmers can’t predict the future, but we can make a genuine effort to be smart, informed business owners. We try to make the right decisions and work with what we have. The problem is when ‘what we have to work with’ is ripped out from underneath us. Without crop insurance, many farmers wouldn’t be able to keep farming. Cutting crop insurance would be pulling the rug from underneath agriculture.

Before the modern day crop insurance system, farmers relied on ad hoc disaster relief payments. This was a costly and unpredictable option for all of us – the government, the taxpayer and the farmer, who in some cases may have received a payment too late to avoid bankruptcy.

Congress agreed that crop insurance was the best risk management tool for farmers. In the 2014 Farm Bill, they implemented a crop insurance system that ensured farmers would have access to affordable crop insurance while removing the risk from the taxpayer. In stride, farmers have made operating decisions with the assumption that all the policies of this bill would be in place until the Farm Bill expires in 2018.

Now, in 2015, this proven risk management tool, crop insurance, is in front of the firing squad. I’m not certain why some Members of Congress are willing to turn their backs on farmers now. Washington is nearly 900 miles away from my family farm. From that distance, it may be easy to assume that cuts to farm programs, like crop insurance, would have no effect on farmers, but that’s not an accurate picture.

Crop insurance is the only safety net that most farmers have anymore. Nearly all the cropland in the United States is protected by crop insurance. In Wisconsin, a majority of crop acres are insured, including grain commodities and specialty crops.

Insurance not only allows farmers to face natural disasters and damaging production years without losing everything, but it provides assurance that we can make payments to our banks. The same way any person in this country cannot get a house loan or a car loan without proof of insurance, agricultural banks want the guarantee that farmers can make their payments.

The agriculture economy is struggling. Farm income continues to decline, crop prices are down and inputs continue to rise. The 2015-16 farm year may be a make or break year for many farmers who are ending the year in the red. Forty years ago, a farmer could lose a crop one year and still farm the next. Nowadays one crop loss could end someone’s farming career. In the current state of agriculture, we can’t afford to have another leg chopped off our stool that’s already leaning.

My wife and I have risked our livelihood to maintain the farm for our children and grandchildren, just as my parents and grandparents did for us. Without crop insurance, we would have to quit farming. For the events we can’t predict, crop insurance ensures we won’t lose our multi-generational family farm.

Darrell Crapp is a farmer from Lancaster, Wisconsin. He farms in partnership with his two sons.  This op-ed appeared in the Prairie du Chien Courier Press on January 20, 2016.

Keep Crop Insurance Out of the Crosshairs

The passage of the 2014 Farm Bill was the beginning of a new chapter in U.S. farm policy, putting to rest most of the old farm support programs and replacing them with a reformed farm safety net and its centerpiece: Crop insurance.

Unlike farm programs of the past, only farmers who purchase crop insurance enjoy its protection. In fact, when a farmer purchases crop insurance, they are handed a bill, not a check. Crop insurance is not cheap by any stretch of the imagination, with farmers paying tens of thousands of dollars per year on premiums for policies that most of them will hopefully not need.

The Farm Bill was a grand compromise. In exchange for $23 billion in spending cuts programs, Congress required market-oriented reforms to commodity programs and made a five-year commitment to ensure the affordability, availability and viability of crop insurance. Unfortunately, anti-farmer groups are targeting crop insurance with proposed cuts that would seriously hamstring the private sector delivery that is the hallmark of success for the program. That would not only threaten to make the system unworkable for farmers, but also endanger the reliability of our nation’s food supply.

Farmers and farm groups value crop insurance because it combines the efficiency of the private sector with the universal coverage of the public sector. Today, virtually any farmer who wants to purchase crop insurance can, and here in Wisconsin, farmers spent roughly $86 million out of their own pockets to do so this year alone. Nationally, that number usually exceeds $4 billion annually.

Remember the historic drought of 2012 that threatened the nation’s heartland and was compared to the dreadful days of the great Dust Bowl? In the past, a disaster of that magnitude would have triggered an overly expensive and completely taxpayer-funded disaster bill. And although those funds were appreciated, they could take months or years to arrive, oftentimes too late to stop a foreclosure.

Things have changed dramatically now that farmers have much improved access to crop insurance, which now protects more than 90 percent of planted cropland. When the drought laid siege to the nation’s heartland, private sector crop insurance adjusters were quickly on the scene, and indemnity checks were usually in the hands of farmers who had verifiable losses in weeks, not months.

Crop insurance worked so well in 2012 that the nation’s farmers bounced back the next year and produced an enormous bounty of grains. And there wasn’t a single call for a disaster bill.

Farmers are the engines that drive the economy of rural America, and without a sufficient safety net in place – like crop insurance – that entire equation is at risk. That is why not only farmers, but ranchers, input suppliers, processors, and equipment companies have all called on Congress to protect crop insurance from any further cuts.

As a farmer, I can tell you that I take great pride in what I do and I understand the important role I play in producing the nation’s food, fiber, feed, and fuel supply. It seems that farmers and consumers alike here in Wisconsin need to remind our congressional delegation of this fact as well.

Tom Gillis, President, Wisconsin Corn Growers Association

Keep Crop Insurance Out of the Crosshairs

The passage of the 2014 Farm Bill was the beginning of a new chapter in U.S. farm policy, putting to rest most of the old farm support programs and replacing them with a reformed farm safety net and its centerpiece: Crop insurance.

Unlike farm programs of the past, only farmers who purchase crop insurance enjoy its protection. In fact, when a farmer purchases crop insurance, they are handed a bill, not a check. Crop insurance is not cheap by any stretch of the imagination, with farmers paying tens of thousands of dollars per year on premiums for policies that most of them will hopefully not need.

The Farm Bill was a grand compromise. In exchange for $23 billion in spending cuts programs, Congress required market-oriented reforms to commodity programs and made a five-year commitment to ensure the affordability, availability and viability of crop insurance. Unfortunately, anti-farmer groups are targeting crop insurance with proposed cuts that would seriously hamstring the private sector delivery that is the hallmark of success for the program. That would not only threaten to make the system unworkable for farmers, but also endanger the reliability of our nation’s food supply.

Farmers and farm groups value crop insurance because it combines the efficiency of the private sector with the universal coverage of the public sector. Today, virtually any farmer who wants to purchase crop insurance can, and here in Wisconsin, farmers spent roughly $86 million out of their own pockets to do so this year alone. Nationally, that number usually exceeds $4 billion annually.

Remember the historic drought of 2012 that threatened the nation’s heartland and was compared to the dreadful days of the great Dust Bowl? In the past, a disaster of that magnitude would have triggered an overly expensive and completely taxpayer-funded disaster bill. And although those funds were appreciated, they could take months or years to arrive, oftentimes too late to stop a foreclosure.

Things have changed dramatically now that farmers have much improved access to crop insurance, which now protects more than 90 percent of planted cropland. When the drought laid siege to the nation’s heartland, private sector crop insurance adjusters were quickly on the scene, and indemnity checks were usually in the hands of farmers who had verifiable losses in weeks, not months.

Crop insurance worked so well in 2012 that the nation’s farmers bounced back the next year and produced an enormous bounty of grains. And there wasn’t a single call for a disaster bill.

Farmers are the engines that drive the economy of rural America, and without a sufficient safety net in place – like crop insurance – that entire equation is at risk. That is why not only farmers, but ranchers, input suppliers, processors, and equipment companies have all called on Congress to protect crop insurance from any further cuts.

As a farmer, I can tell you that I take great pride in what I do and I understand the important role I play in producing the nation’s food, fiber, feed, and fuel supply. It seems that farmers and consumers alike here in Wisconsin need to remind our congressional delegation of this fact as well.

Tom Gillis, President, Wisconsin Corn Growers Association

Insurance on crops boosts farms of all sizes

It is no secret that farm demographics demonstrate an alarming trend in American agriculture.

The average age of the American farmer is rising while the number of beginning farmers is decreasing.

These beginning farmers are typically younger than their more established counterparts with less access to credit and capital.

I see this reality every day as a banker at one of the largest agricultural lending institutions in Indiana. In general, all farmers need access to credit to operate and manage a farm, but it is even more crucial for a young farmer because of the enormous startup costs.

It is not an exaggeration to say that farmers borrow more in a single year to grow a crop than some Americans borrow in a lifetime.

And, frankly, banks can be wary of lending to a young farmer just starting out because of the combination of a short credit history and the inherent riskiness of the business.

The one factor in their favor is crop insurance. By purchasing a policy, young farmers enhance their ability to obtain financing because banks have the assurance they can make payments even during tough times.

But opponents of farm policy in Washington are proposing legislation that, if enacted, would threaten the viability of this important risk management tool and make it harder for young, beginning farmers to survive.

These farm policy critics would have you believe that barring producers with large operations from participating in crop insurance helps smaller farmers.

Actually, it does the opposite.

Pooling of risk is essential for any viable insurance program. Because every farmer of every size in every part of the country can purchase crop insurance, the risk pool is large and diverse, which makes crop insurance affordable for all farmers and minimizes the financial exposure of the bank, the farmer and the taxpayer.

Similarly, car insurers want older, more experienced drivers in the same risk pool as those who are younger and potentially more accident-prone.

Eliminating the more established farmers from the mix shrinks this pool and undermines the entire system, making it harder for smaller, beginning farmers to get insurance coverage and, subsequently, agricultural financing.

Statistics already show us that farming is a hard life with fewer and fewer people willing to try it.

Now is not the time to make starting a farm even more difficult by destroying the viability and affordability of crop insurance.

Now is the time to protect the one thing beginning farmers and their bankers can count on.

Joe Kessie is the senior vice president and commercial south regional manager at Lake City Bank in Warsaw, Indiana.

Insurance on crops boosts farms of all sizes

It is no secret that farm demographics demonstrate an alarming trend in American agriculture.

The average age of the American farmer is rising while the number of beginning farmers is decreasing.

These beginning farmers are typically younger than their more established counterparts with less access to credit and capital.

I see this reality every day as a banker at one of the largest agricultural lending institutions in Indiana. In general, all farmers need access to credit to operate and manage a farm, but it is even more crucial for a young farmer because of the enormous startup costs.

It is not an exaggeration to say that farmers borrow more in a single year to grow a crop than some Americans borrow in a lifetime.

And, frankly, banks can be wary of lending to a young farmer just starting out because of the combination of a short credit history and the inherent riskiness of the business.

The one factor in their favor is crop insurance. By purchasing a policy, young farmers enhance their ability to obtain financing because banks have the assurance they can make payments even during tough times.

But opponents of farm policy in Washington are proposing legislation that, if enacted, would threaten the viability of this important risk management tool and make it harder for young, beginning farmers to survive.

These farm policy critics would have you believe that barring producers with large operations from participating in crop insurance helps smaller farmers.

Actually, it does the opposite.

Pooling of risk is essential for any viable insurance program. Because every farmer of every size in every part of the country can purchase crop insurance, the risk pool is large and diverse, which makes crop insurance affordable for all farmers and minimizes the financial exposure of the bank, the farmer and the taxpayer.

Similarly, car insurers want older, more experienced drivers in the same risk pool as those who are younger and potentially more accident-prone.

Eliminating the more established farmers from the mix shrinks this pool and undermines the entire system, making it harder for smaller, beginning farmers to get insurance coverage and, subsequently, agricultural financing.

Statistics already show us that farming is a hard life with fewer and fewer people willing to try it.

Now is not the time to make starting a farm even more difficult by destroying the viability and affordability of crop insurance.

Now is the time to protect the one thing beginning farmers and their bankers can count on.

Joe Kessie is the senior vice president and commercial south regional manager at Lake City Bank in Warsaw, Indiana.

Cuts to the Farm Safety Net Jeopardize a National Asset

“When the well’s dry, we shall know the worth of water,” said Benjamin Franklin.

Similarly, if ever we lose the hard-working independent family farms that take care of the nation’s landscape while producing a diverse set of crops more reliably and efficiently than any farm sector in history, then, and only then will we truly understand the value they provide.

I, for one, hope we as a nation never get to that point and I will work every day on behalf of agricultural producers to prevent such a scenario. But, it’s a challenge for a number of reasons; chief among them is we take our secure, affordable, national food supply for granted. It’s always been there, it always will be.

To be sure, the “well” that is the American farmer is not going dry, but here are some reasons why we should make certain that the policies we embrace don’t put our farmers in danger.

First, the demographics are not on our side. The number of farmers continues to decline and the age of farmers continues to increase. These numbers speak to a way of life that is hard and seems to grow harder by the day.

Second, the business of farming is getting ugly. The Secretary of Agriculture is forecasting a 32 percent decline in net farm income from 2014 to 2015 and lower commodity prices for the foreseeable future.

Third, when farmers aren’t dealing with the vagaries of Mother Nature and falling commodity prices, then they’re worried about the constant threat of new regulatory burdens.  Just consider recent activity in Washington: the Environmental Protection Agency finalized a rule that some have labeled the biggest land grab in the history of the U.S. causing every ditch across rural America to be regulated as a major waterway. Farmers and ranchers will endure the brunt of this new regulation as the primary stewards of land resources in the U.S.

Finally, to add to this political risk and uncertainty, some lawmakers are trying to use the appropriations process to threaten farm policy one year into the 2014 Farm Bill. This is after the farm safety net has already borne dramatic cuts over the last decade in an effort to reduce our national deficit.

Crop Insurance was the primary target.  And, while the efforts were rightly rejected, they could have brought an agricultural sector that is already suffering to its knees.  Farmers purchase crop insurance to protect against losses due to natural disasters.  They only receive an indemnity after suffering a verifiable loss and paying their deductible. Crop insurance enables farmers to rebound quickly after a disaster and it prevents dramatic farm losses, which in turn allows them to pay credit obligations and fixed expenses.

This system is hugely important for not only farmers, but also to rural communities and the national economy as a whole. Agriculture accounts for nearly $800 billion in economic activity and supports one out of every 11 jobs in the economy. Cutting the farm safety net would serve to reduce farm financial protection and drive independent American farm families out of business.

Meanwhile, our foreign competitors seem more than ready to move the U.S. out of the agriculture business as they ramp up support for their own farmers. As Texas Tech University’s Darren Hudson recently told a Congressional committee, “Other countries are treating their agricultural sectors as a national asset for security purposes and for the U.S. not to consider the implications of those choices would leave us at a competitive disadvantage.”

Indeed, it would be a tragic commentary if years from now – having squandered our own national asset because we didn’t fully appreciate its worth – we look back and remember what we had and lost.

Tim Lust is the CEO of the National Sorghum Producers.

 

Crop insurance essential for farmers

Crop insurance essential for farmers

ICYMI: Farming needs strong policy and crop insurance

Lubbock Avalanche-Journal
May 28, 2016

If I don’t take care of the land, then it won’t take care of me, so I consider myself one of the stewards of the earth. I know I’m not alone. My brethren in farming are also caretakers of the land, water and air. We want to be productive and profitable, and pass on our farming operations to the next generation better, more fertile, and more sustainable than we received it.

Given this reality, I naturally become concerned and even a bit cross when I see special interest groups in Washington, D.C., trying to paint farmers in negative light as it relates to taking care of the land and our environment. They attack farm policy and crop insurance, but in critiquing these important tools, with little or no empathy for the risks we take, they are really going after me and farmers like me.

One myth these groups perpetuate is that crop insurance encourages farmers to grow on fragile, uncultivated lands. This is simply not reality, as the number of crop acres in the country has remained stable for more than three decades at roughly 328 million. Meanwhile, the number of those acres that are insured by crop insurance is approximately 298 million.

The 2014 Farm Bill layered additional red tape to ensure conservation compliance on all acres where crop insurance is purchased, and fragile lands are protected by eliminating all crop insurance premium support for farmers if they damage wetlands or plow up native sod.

Another myth they spread is that crop insurance only helps big conventional farming operations when in fact it is a risk management tool that is available to all farmers regardless of operation, size, region or crop. I am a young farmer. I grow both conventional and organic cotton. Crop insurance is arguably more critical for me than it is for the long-established farmers, and I purchase a specialized and exceptionally valuable insurance policy for my organic crop.

It’s a big concern of mine that there is a constant need to defend crop insurance against the myths and outright lies that these special interest groups spread in Washington and beyond. And, frankly, sometimes, I’m amazed that there is so much debate in Congress about the small investment in crop insurance and farm policy, considering the return for every American.

Federal spending on these items is well below one percent of the nation’s entire budget, but the benefit to every American consumer is a safe, secure, diverse and affordable food and fiber supply. Moreover, agriculture is the backbone of a strong economy and a strong society, and from a national security standpoint, it is crucial. We don’t want to be held hostage by another country when it comes to feeding our own people. And right now we are competing with foreign countries that are investing far more in their own agriculture sectors than we are and are cheating on their commitments to free trade in the process.

This constant attacking of farm policy and crop insurance undermines those who work hard to grow the food and fiber we all rely upon.

As farmers, we have no control over weather. We have no control over markets. We have no control over our foreign competitors. We cannot just turn our operations on or off. We have to take care of the land 365 days a year. We need a safety net when commodity prices fall. We need affordable and reliable crop insurance to protect our yearly investments.

Today in my part of the country, I know plenty of farmers who are struggling to make it another year because of the current depressed farm economy while others are making the tough decision to get out of the business altogether. Meanwhile, young people are nervous about jumping into a line of work that is mired in risk and is constantly under attack by special interest groups and some lawmakers in Congress. This is an alarming trend.

Sometimes it takes something drastic to happen for people to realize what they have. I certainly hope it is not the loss of agricultural production in this country as a result of Congress chipping away at the farm safety net for us all to fully appreciate how important it is.

JEREMY BROWN is a multi-generational Lubbock farmer who grows both conventional and organic cotton in west Texas. He is on the executive committee of Plains Cotton Growers and also grows wheat, rye and peanuts.

In Contrast to the Critics, Crop Insurance Does Not Discriminate

Perennial critics of farm policy have taken aim at one of the key risk management tools for farmers – crop insurance – and are ramping up efforts to spread misinformation about the program. Specifically, they are trying to distort how the premium discount works to leave some farmers with fewer risk management options.
Their claims include that this discount only goes to large farming operations, not small and beginning farmers, and that the discount should be capped for certain farmers.

These claims demonstrate a fundamental lack of knowledge on how insurance works and are out of step with the views of most Americans.

First, farmers purchase policies to protect their crops and operation from a loss. Crop insurance treats all farmers equally, regardless of operation, size, region, or crop. There is a discount for premiums so farmers – most of whom borrow more money each year than the rest of us borrow in a lifetime – can afford to purchase protection.

The crop insurance premium discount is not a cash payment to farmers, but rather a credit to farmers.  The only way producers actually receive money from their crop insurance policies is if they suffer a verifiable loss. This is an indemnity payment to help them recover. Further, the farmer must shoulder a deductible before receiving an indemnity.

A few years ago, Politico, a Washington, D.C.-based paper, described the premium discount this way:

“The premium discount is really an inside-the-government book transaction, involving no cash payment to the farmer, who must still make a hefty contribution as well.

“For example, a Washington state apple and cherry operation is credited with having received a $1.3 million premium subsidy on a policy covering more than 5,000 acres of orchards and $33.7 million liability. But the same farmer paid $627,409 in premiums for the coverage and got nothing back since no losses were reported.”

Most Americans support the mechanics of modern-day crop insurance because farmers are helping to fund their own safety net and taxpayers are not left paying for the entire cost of assistance when a natural disaster strikes.

A new national poll reveals that more than 80 percent of Americans believe that a thriving farming industry is critical for national security. Further, 79 percent of Americans support providing a premium discount to farmers so that crop insurance is affordable.

Yet, the affordability of crop insurance will be greatly diminished if critics have their way in preventing certain farmers from receiving discounted premiums. This is because the purpose of any insurance program is to diversify the risk pool. Insurance functions more efficiently when the pool is large and diverse, which only happens when insurance is widely available. This keeps insurance affordable, especially for beginning farmers, who typically have reduced access to credit and capital.

In the same vein, automobile insurers want older, more experienced drivers to balance losses from younger and possibly more accident-prone drivers. If there is a cap on who receives the discount it will shrink the risk pool and undermine the effectiveness of crop insurance.

Also, placing a cap on premium discounts would disproportionately affect certain growers, especially specialty crop growers and organic growers whose crops tend to have higher values and therefore more likely to have higher premiums for coverage.

In short, crop insurance does not discriminate against certain types of farmers in this country by making risk management tools affordable for some, but not to others. Rather, it is widely available and affordable for all producers. Americans support and appreciate this approach to public policy.

Political Pundit Takes to the Airwaves to Discuss Agriculture

This week was a first for John McHenry, the well-known political pollster for North Star Opinion Research, who is in high demand during election season.

McHenry has worked with countless national campaigns and has appeared on Fox News, CNN, NBC Nightly News, BBC, NPR and many others to share research analysis and commentary. But he’s never been on farm radio…until Thursday.

North Star Opinion Research conducted a national public opinion poll to determine voters’ views of farmers, farm policy and crop insurance, and the results have been of great interest to rural America. So the National Association of Farm Broadcasting interviewed McHenry and distributed his remarks to every farm radio broadcaster in the country yesterday.

And McHenry didn’t disappoint, adding valuable context to the survey’s findings.

For example, the fact that farmers’ favorability ratings are higher than what is usually seen for the military, and the fact that there was no deviation from this popularity between political parties, was significant in McHenry’s eyes.

Since voters are generally unhappy with the country’s direction and are inundated with polarizing political rhetoric, agriculture’s bipartisan public support becomes all the more remarkable, according to McHenry.

“This is one of the rare highlights where you can say that Congress found a solution here that voters are happy with,” he concluded.

If you’re interested in hearing the interview in its entirety, click here.

More information about the poll can he found here.