CROP INSURANCE IN ACTION: Craig Corbett, Soda Springs, Idaho

Craig Corbett farms malt and seed barley, along with some wheat on roughly 2,800 acres in Soda Springs, Idaho. Corbett has been farming for more than 30 years and loves what he does for a living. “It’s challenging, it seems like something new pops up every day, and it’s great being in a production-oriented business like farming,” Corbett said.

Corbett explained that when crop insurance first came out, it didn’t work well and many farmers opted not to purchase it.  He said that many commodity organizations and the crop insurance industry have worked over the years with USDA to produce crop insurance products that are effective for producers in different parts of the country, growing vastly different crops.

“It’s hard to have a program that works for one area – like Idaho—while also working for different crops in different areas of the country as well,” Corbett said.   “And the fact that modern crop insurance can do that is a big, big plus.”

Corbett added that while he’s never had a “crop catastrophe,” he has used his policies on a number of occasions, like after going through a really bad hail storm.  “Crop insurance is never going to make you money, but it can keep you from losing your shirt,” he said.

He noted that despite the fact he spends more than $20,000 annually purchasing crop insurance, on most years he doesn’t file a claim. “And every one of those years it was money well spent,” he said.

Corbett said that while he can protect himself against price fluctuations with marketing tools, “the one thing that we can’t have is nothing to sell.”

“If I don’t have anything to market, then I’m done,” he said.   “So if you’re a producer, crop insurance is where you get the most protection for your buck.”

The 2014 Farm Bill made crop insurance the centerpiece of farmers’ risk management tools, and incorporated changes that strengthened crop insurance.  “If the Farm Bill was going to be changed, it needed to change in the direction of helping farmers better manage risk, and the new Farm Bill certainly moved in that direction,” Corbett added.

 

Crop insurance a key for producers

My husband and I have been farming in Southeastern Colorado for more than 40 years, and during that time it’s safe to say there have been a lot of changes not only in farming practices, but also in farm policy.

The biggest policy change through the years has been the affordability and availability of crop insurance.

When we first started farming, crop insurance was not an option because we couldn’t afford it.

It wasn’t until Congress made reforms to the program a couple of decades ago that we were able to participate. Additional reforms through the years have made crop insurance more widely available for a variety of crops, regardless of farm size or method of production.

It is still an expensive part of the operation, but it is a necessary part because it provides us with stability — something we can count on. This is helpful not only when we need to show our lender at the bank what our estimated income will be, but also for our own peace of mind.

You have to realize that out here, we can have a beautiful crop and phenomenal yields one year and then get wiped out by a hailstorm or drought the next.

For the last three years, the ongoing drought and the late spring freezes have dogged our crops. With crop insurance, we have been able to level out the highs and lows so we can make it to another year.

The enactment of the 2014 Farm Bill made crop insurance the centerpiece of the farm safety net — and for good reason. It is an effective risk-management tool for not only farmers, but also for taxpayers.

Gone are the days of large, unbudgeted disaster bills aimed at helping farmers when natural disasters strike. Now, because of crop insurance, everyone — policymakers, farmers and bankers — can plan and budget for those disasters.

Recently, there has been talk in Washington about yet again trying to make changes to crop insurance. This is arising just one year after the Farm Bill was enacted.

Specifically, there have been discussions about cutting the premium support that farmers receive for purchasing crop insurance. This does a disservice to everyone.

If such proposals succeed, it would only serve to increase the costs to farmers and undermine their ability to manage risk. As my husband and I can attest, premium support has helped us to afford crop insurance, which, in turn, has helped our overall farming operation.

Each new farm bill ushers in new changes to farm policy. We’ve experienced those changes firsthand, but the one part that should remain constant going forward is crop insurance. It is the key to a steady, safe food production system in the U.S. The beneficiaries of crop insurance are not just farmers but also consumers.

Cathy Scherler is the president of the Colorado chapter of Women Involved in Farm Economics (WIFE), a national non-partisan organization committed to improving the profitability and production of the agricultural industry. She and her husband grow wheat, grain sorghum, sunflowers and corn on their farm in the Eastern Plains. This op-ed appeared in the Pueblo Chieftan on April 11, 2015.

Farmers Help Fund $14 Billion of the Farm Safety Net in 2014

Farmers who filed crop insurance claims in 2014 collectively shouldered approximately $10 billion in deductible losses before collecting any payments, according to new data unveiled today by the National Crop Insurance Services (NCIS).

When combined with the $3.9 billion spent to buy insurance coverage in 2014, farmers absorbed at least $14 billion in out-of-pocket costs, which is well in excess of the $9 billion in insurance indemnity payments that flowed to rural America.

NCIS President Tom Zacharias said this is significant for several reasons.

“First, it shows that U.S. farmers are actively participating in the funding of their own safety net and minimizing taxpayer risk exposure,” he explained.   “It also proves that crop insurance is working as designed by helping farmers recover – not profit – from disaster.”

This was even the case after the historic 2012 drought, when farmers shouldered $17 billion in deductible losses and premium payments and received $17 billion in insurance payments.

Because farmers have substantial “skin in the game,” crop insurance helps reduce the cost of U.S. farm policy while discouraging risky behavior that may otherwise occur if taxpayers picked up 100 percent of the tab.

Zacharias said that growers favor the current system over past farm policies because crop insurance can be tailored to a farm’s unique characteristics and because efficient private companies administer crop insurance and speed relief when it is needed most.

The newly released deductible calculation completed the 2014 crop insurance picture.  Other relevant statistics were detailed in the May edition of NCIS’s Crop Insurance TODAY magazine and included:

  • 21 million policies were sold, protecting nearly $110 billion in crop value.
  • More than 294 million acres were insured, with a record 83.5 percent of those acres being insured at high coverage levels.
  • Private insurance companies successfully and efficiently processed claims on more than 441,000 policies.

NCIS noted that the $10 billion in deductible losses only reflects losses for crops on which an insurance claim was filed.  Farmers who shouldered smaller losses but did not file a claim are not included in the calculation.

 ###

Keep Crop Insurance Affordable

Living through the drought of 2012 as an Illinois farmer gave me a whole new appreciation for risk management tools.  There are things that farmers can do to try and deal with the curve balls served up by Mother Nature and with the ups and downs of market swings, but many things – like a massive drought or a heat wave – are completely out of our control.

If this drought would have happened a decade before, it would have left many farmers completely devastated and on the verge of bankruptcy, with nowhere to turn but to Congress for an expensive, taxpayer-funded bailout package.   In fact, past disasters have cost taxpayers tens of billions of dollars since 1979.

What was different about the drought of 2012, which was the worst natural disaster to hit this state in my lifetime, is that the vast majority of the state’s farmers had purchased the best risk management tool around:  crop insurance.  In fact, farmers spent well over $4 billion out of their own back pockets in 2012 purchasing the protection and peace of mind of crop insurance, which meant when disaster struck, they had a backup plan in hand.

The recent Farm Bill took three long years to pass and cut $23 billion out of farm programs.   But for those who for whatever reason are always looking to criticize farm policy that still wasn’t enough.   Now they have their sights set again on crop insurance, and are pushing forth ideas to make it more expensive for farmers to purchase.

What these misguided groups and members of congress seem to miss is that the reason why crop insurance has become the best risk management tool for farmers is that it’s affordable and reliable.  In fact, 90 percent of planted cropland was protected by crop insurance in 2014.  It’s this level of protection – made possible by crop insurance’s affordability – that keeps expensive disaster bills from hitting taxpayers when Mother Nature strikes.

Unlike direct payments in the past, crop insurance is not a handout. In fact, when farmers purchase crop insurance, they receive a bill, not a check, and only receive a payment if they incur a loss, and only after paying a deductible Just like homeowners insurance, when farmers buy crop insurance, they do so hoping that they will never have to use it.  And many of them rarely do.  In fact, since 2000, farmers have paid out more than $38 billion purchasing the protection of crop insurance, and in most years, they don’t collect a dime.

If crop insurance becomes more costly, then farmers simply won’t be able to afford it, and they will have nowhere to turn but the Federal government when disaster strikes.  This is a lesson we learned over and over again before crop insurance became widely available and affordable.

Crop insurance works so well and has been embraced so readily by farmers across the country because it’s a public private partnership that combines the best of the public and private sectors.  Crop insurance premiums are partially discounted by the government to ensure affordability and the policies are sold and serviced by the private sector.  And when disaster strikes, an indemnity check arrives in weeks, not years.

Like any other public policy, crop insurance isn’t perfect, and I’m sure Congress will do some fine-tuning to the program in the next Farm Bill just like they did in this one.  But the most important thing to keep in mind is that farmers are not only enormous producers, they are enormous consumers as well.  And with crop insurance policies in hand, they can bounce back from natural disaster or huge market fluctuations and continue to be the engines that drive the economy of rural America.

Keith Mussman is president of the Kankakee County Farm Bureau.  This op-ed appeared in the Champaign News-Gazette on April 27, 2015.

Crop Insurance Policies are Crucial for Farmers

As someone who has spent more than four decades managing a fourth-generation farm and the past 10 years building my family’s crop insurance agency, I believe I have valuable perspective worth sharing regarding how essential today’s federal crop insurance policies are to America’s farmers and consumers.

Specifically, I would like to explain how essential the Harvest Price Option has become to the modern agricultural producer.  The Harvest Price Option insures a crop at its actual harvest-time value. Think of it like a homeowner’s insurance policy. If your home appreciates in value after you purchase it, you are protected at the home’s current value if it burns down and you have to rebuild.

Unfortunately for agriculture, this policy that makes rebuilding possible has come under fire from those who misunderstand the unique risks for farmers who are constantly exposed to the ravages of Mother Nature. It is important to note that farmers pay an additional premium for this type of protection and it supports their risk management in two distinct ways.

First, a farmer often prices a large percentage of his anticipated – or before harvest – crop using forward price contracts with a local elevator. If a natural disaster strikes causing production to fall short of the quantity sold, the farmer would need to purchase enough of the crop to fulfill his contractual obligation. But, the price of the commodity is likely to have increased because of the overall drop in production due to the disaster. Consequently, the remaining crop available to purchase is priced much higher than what was covered under the spring contract.

By purchasing the Harvest Price Option as part of his crop insurance policy, the farmer is able to meet his contractual obligations either by buying grain to deliver under the contract or by making a financial settlement with the purchaser.

A second way the Harvest Price Option becomes essential to producers is if the grain being produced is intended to support the farm’s future animal feed needs. If a natural disaster destroys the grain that is to be harvested, then the producer will be forced to purchase feed instead.  If there is a widespread short crop, the feed costs will be much higher.  With the Harvest Price Option on the producer’s crop insurance policy, the farmer will be paid the actual harvest price on his lost production.  This, in turn, allows him to purchase the feed needs for his livestock operation and still maintain a viable business.

In fact, allowing farmers to maintain a viable business when the unexpected happens is what crop insurance is all about.  The beneficiary is not just the farmer, but also the American consumer. Crop insurance enables farm families like mine to pick up the pieces after a disaster and continue to produce food and fiber without significant price increases or supply shortages for consumers. The fact that Americans spend less of their disposable income for food than any other country speaks volume as to how critical it is that farmers have risk management tools like crop insurance.  The critics would do well to try to understand the link between a viable crop insurance program and an affordable, stable food supply before proposing measures that would destroy it. In other words, before biting the hand that feeds them.

Gary Riekhof is a farmer and crop insurance agent from Higginsville, Missouri.  This op-ed appeared in the Columbia Tribune on June 6, 2015.

Crop Insurance Helps Farmers Survive Unpredictable Weather All Across the Country

“Frost threatens northern U.S. corn; rains soak southern Plains.”

This recent headline says it all. The diversity of American agricultural production coupled with the varied growing conditions across the country and the swings in weather explains why farmers need a safety net. More importantly, it describes why crop insurance is the centerpiece of the farm safety net.

U.S. multi-peril crop insurance is a risk management tool that farmers, regardless of their location, crop, or production method, purchase to protect against the loss of their crops due to natural disasters such as hail, drought, freezes, floods, fire, disease, or the loss of revenue due to a decline in price. Farmers buy policies to fit the individual needs of the their operations. In 2014, 1.2 million policies were sold protecting more than 120 different crops covering 294 million acres.

I have been farming corn and soybeans for about three decades and I have always purchased crop insurance because it gives me some peace of mind even though we are in a climate setting that typically doesn’t experience wide weather extremes like some of our neighbors in other parts of the country.

That’s not to say we haven’t been hit with our share of unpredictable weather that made planting and harvesting a crop challenging. It does mean I customize the policy I purchase to meet the needs of my operation.

For example, just two years ago, we had a hard time getting a crop in the ground because nine inches of snow blanketed the area on the second day of May, which is normally the time when we’re wrapping up the planting season. The soil was already soaked from a rainy spring season. That year we didn’t start planting until the middle of May and didn’t finish until the first week in June.

Late planting can potentially put a farmer in double jeopardy – not only are they expecting lower yields because of the delay in planting, but that crop is also vulnerable to frost around the autumn harvest time.

This was the first time in more than 20 years of farming that we planted corn in June – more than a third of our crop. It was also the first time we elected to take prevented planting provisions for roughly 5 percent of our acres as part of our crop insurance policy. Prevented planting provisions are designed to provide coverage when extreme weather conditions prevent a farmer from getting in the fields.

Crop insurance helped us cover some of the loss from that bad year. It made it manageable, which is why it’s an essential risk management tool for my farm and others like mine all across the country. The cost of growing crops has increased substantially. It wasn’t too long ago that it took about half of what it takes to grow an acre of corn. Because of these costs, a substantial crop loss would be a major financial setback for anyone. With crop insurance, we are able to level the highs and lows.

There have been a lot of changes to farm policy through the years to reflect the changing times, but given the diversity of agriculture in our country and the way crop insurance can be uniquely tailored to address disastrous conditions in an efficient and effective way, it should only be strengthened in the years to come.

Bruce Peterson is a farmer from Northfield and the president of the Minnesota Corn Growers Association. This op-ed appeared in The Hill on June 3, 2015.

Crop Insurance Helps Farmers Survive Unpredictable Weather All Across the Country

“Frost threatens northern U.S. corn; rains soak southern Plains.”

This recent headline says it all. The diversity of American agricultural production coupled with the varied growing conditions across the country and the swings in weather explains why farmers need a safety net. More importantly, it describes why crop insurance is the centerpiece of the farm safety net.

U.S. multi-peril crop insurance is a risk management tool that farmers, regardless of their location, crop, or production method, purchase to protect against the loss of their crops due to natural disasters such as hail, drought, freezes, floods, fire, disease, or the loss of revenue due to a decline in price. Farmers buy policies to fit the individual needs of the their operations. In 2014, 1.2 million policies were sold protecting more than 120 different crops covering 294 million acres.

I have been farming corn and soybeans for about three decades and I have always purchased crop insurance because it gives me some peace of mind even though we are in a climate setting that typically doesn’t experience wide weather extremes like some of our neighbors in other parts of the country.

That’s not to say we haven’t been hit with our share of unpredictable weather that made planting and harvesting a crop challenging. It does mean I customize the policy I purchase to meet the needs of my operation.

For example, just two years ago, we had a hard time getting a crop in the ground because nine inches of snow blanketed the area on the second day of May, which is normally the time when we’re wrapping up the planting season. The soil was already soaked from a rainy spring season. That year we didn’t start planting until the middle of May and didn’t finish until the first week in June.

Late planting can potentially put a farmer in double jeopardy – not only are they expecting lower yields because of the delay in planting, but that crop is also vulnerable to frost around the autumn harvest time.

This was the first time in more than 20 years of farming that we planted corn in June – more than a third of our crop. It was also the first time we elected to take prevented planting provisions for roughly 5 percent of our acres as part of our crop insurance policy. Prevented planting provisions are designed to provide coverage when extreme weather conditions prevent a farmer from getting in the fields.

Crop insurance helped us cover some of the loss from that bad year. It made it manageable, which is why it’s an essential risk management tool for my farm and others like mine all across the country. The cost of growing crops has increased substantially. It wasn’t too long ago that it took about half of what it takes to grow an acre of corn. Because of these costs, a substantial crop loss would be a major financial setback for anyone. With crop insurance, we are able to level the highs and lows.

There have been a lot of changes to farm policy through the years to reflect the changing times, but given the diversity of agriculture in our country and the way crop insurance can be uniquely tailored to address disastrous conditions in an efficient and effective way, it should only be strengthened in the years to come.

Bruce Peterson is a farmer from Northfield and the president of the Minnesota Corn Growers Association. This op-ed appeared in The Hill on June 3, 2015.

Farmers in the Northwest Need Access to Affordable Crop Insurance

When the 2014 Farm Bill became law, it marked a pivotal moment in the history of U.S. farm policy.   The new Farm Bill eliminated direct payments and reduced some of the price support policies of the past in favor of expanding crop insurance, which allows farmers to purchase varying levels of protection for their crops.

Gone are the days when farmers got a check every year regardless of weather or market conditions. Gone are the days when large-scale natural disasters would trigger wildly expensive disaster bills aimed at helping farmers get back on their feet.  From here forward, farmers who want risk protection will receive a bill, not a check, when they sign on the dotted line every year.

This is a good thing for several reasons.  First, crop insurance ensures farmers have a risk management plan in mind early in the year.  In addition to that plan, they must put their money towards purchasing a crop insurance policy.  This is no small amount of money for many farmers, who in 2014 spent roughly $3.8 billion on crop insurance premiums.

All told, those policies protected 295 million acres of farmland valued at $129 billion.  Today, 90 percent of planted cropland is protected by federal crop insurance, which protects more than125 different varieties of crops in all 50 states.

The evolution to crop insurance has effectively moved risk management away from the public sector, funded exclusively by taxpayer dollars, and toward the private sector, where farmers and crop insurance companies help shoulder part of the cost of natural disasters.   This is good for taxpayers because it takes them off the hook for the entire bill when disaster strikes, good for farmers who must always keep their risk management plan in mind, and good for rural America because farmers are the engines that generate economic activity.

Crop insurance has been around since 1938, but it wasn’t until Congress decided to make it affordable and ubiquitous that farmers really began to sign up.   And when disaster struck – as it does nearly every year somewhere here in the Northwest – farmers turned to their crop insurance policy and their insurance company, not their member of Congress, for help.

The demographics of farming can be rather scary, with the age of the average age of the nation’s 3.2 million farm operators at 58 years old and rising daily.   For young and beginning farmers, access to affordable and reliable crop insurance is honestly a make-or-break issue.  For those just entering farming, the costs are high and their ability to sustain a loss is very limited.  For them, purchasing a crop insurance policy not only protects their crops, but their careers paths as well.

Crop insurance is very popular here in the Northwest, with farmers and ranchers in Washington, Oregon and Idaho spending more than $96 million out of their own pockets last year to purchase the peace of mind offered by crop insurance.  Those policies protect the region’s apples, potatoes, sugar beets and a long list of other crops from the ravages of Mother Nature and volatile market swings.

In the old days, farmers largely relied on disaster assistance from the federal government in times of crisis.  According to the Congressional Research Service, some forty-two ad hoc disaster assistance bills cost taxpayers $70 billion since 1989.

With access to affordable, available and viable crop insurance policies, farmers have the backstop they need to bounce back when our rapidly changing climate throws them a curve ball.  That’s good for farmers, good for consumers who eat their produce, and good for the rural economy, which is largely supported by local farmers and ranchers.

Kent Wright is president of Northwest Farmers Union.  This op-ed appeared in the Tri-City Herald on May 30, 2015.

Farmers in the Northwest Need Access to Affordable Crop Insurance

When the 2014 Farm Bill became law, it marked a pivotal moment in the history of U.S. farm policy.   The new Farm Bill eliminated direct payments and reduced some of the price support policies of the past in favor of expanding crop insurance, which allows farmers to purchase varying levels of protection for their crops.

Gone are the days when farmers got a check every year regardless of weather or market conditions. Gone are the days when large-scale natural disasters would trigger wildly expensive disaster bills aimed at helping farmers get back on their feet.  From here forward, farmers who want risk protection will receive a bill, not a check, when they sign on the dotted line every year.

This is a good thing for several reasons.  First, crop insurance ensures farmers have a risk management plan in mind early in the year.  In addition to that plan, they must put their money towards purchasing a crop insurance policy.  This is no small amount of money for many farmers, who in 2014 spent roughly $3.8 billion on crop insurance premiums.

All told, those policies protected 295 million acres of farmland valued at $129 billion.  Today, 90 percent of planted cropland is protected by federal crop insurance, which protects more than125 different varieties of crops in all 50 states.

The evolution to crop insurance has effectively moved risk management away from the public sector, funded exclusively by taxpayer dollars, and toward the private sector, where farmers and crop insurance companies help shoulder part of the cost of natural disasters.   This is good for taxpayers because it takes them off the hook for the entire bill when disaster strikes, good for farmers who must always keep their risk management plan in mind, and good for rural America because farmers are the engines that generate economic activity.

Crop insurance has been around since 1938, but it wasn’t until Congress decided to make it affordable and ubiquitous that farmers really began to sign up.   And when disaster struck – as it does nearly every year somewhere here in the Northwest – farmers turned to their crop insurance policy and their insurance company, not their member of Congress, for help.

The demographics of farming can be rather scary, with the age of the average age of the nation’s 3.2 million farm operators at 58 years old and rising daily.   For young and beginning farmers, access to affordable and reliable crop insurance is honestly a make-or-break issue.  For those just entering farming, the costs are high and their ability to sustain a loss is very limited.  For them, purchasing a crop insurance policy not only protects their crops, but their careers paths as well.

Crop insurance is very popular here in the Northwest, with farmers and ranchers in Washington, Oregon and Idaho spending more than $96 million out of their own pockets last year to purchase the peace of mind offered by crop insurance.  Those policies protect the region’s apples, potatoes, sugar beets and a long list of other crops from the ravages of Mother Nature and volatile market swings.

In the old days, farmers largely relied on disaster assistance from the federal government in times of crisis.  According to the Congressional Research Service, some forty-two ad hoc disaster assistance bills cost taxpayers $70 billion since 1989.

With access to affordable, available and viable crop insurance policies, farmers have the backstop they need to bounce back when our rapidly changing climate throws them a curve ball.  That’s good for farmers, good for consumers who eat their produce, and good for the rural economy, which is largely supported by local farmers and ranchers.

Kent Wright is president of Northwest Farmers Union.  This op-ed appeared in the Tri-City Herald on May 30, 2015.

Why America’s Cotton Producers Need Access to Affordable Crop Insurance

 

Crop insurance products were improved in the recent farm bill because Congress recognized that these products are a necessity for farmers, regardless of size. To me, a federally-supported crop insurance policy is defensible because a portion of the product’s cost is borne by the farmer.

I am one of those farmers. I raise cotton, corn, soybeans, wheat, peanuts and cattle in north Mississippi. Crop insurance is my most important risk management tool absent the direct payments that were available under previous farm law programs. Effective crop insurance products have allowed Congress to move away from providing ad hoc disaster assistance, thus reducing pressure on the federal budget.

We all have witnessed how farmers across the country have suffered from historic droughts, flooding, hail and other severe weather. Many cotton producers, in fact, have incurred particularly excessive yield losses the past three years from these weather events.

Without a doubt, the volatility of weather and commodity markets necessitates government assistance with crop insurance premiums so that our nation’s farmers have access to affordable and dependable crop insurance products.

Regarding cotton, the Stacked Income Protection Plan, known as STAX, is an insurance product that was included in the 2014 federal farm law and is available to upland cotton producers beginning with the 2015 crop year.

The U.S. cotton industry believes that STAX, like all other insurance products, should not be subjected to limits or eligibility restrictions. With cotton’s safety net now comprised solely by the marketing loan program and crop insurance, the U.S. cotton industry is especially concerned by any attempt to eliminate or place limits on key crop insurance tools.

Farm policy generally, and cotton policy specifically, was substantially reformed, funding reduced, and market orientation increased in the 2014 farm law, so now is not the time for further changes that will only undermine production agriculture’s risk management foundation.

The bottom line is that America’s farmers need an affordable and dependable insurance policy if they are going to continue producing safe, abundant, and affordable food and fiber – which is essential to our national security. Affordable and dependable crop insurance will provide the stability needed for U.S. cotton producers – and undergird an industry that provides employment for some 200,000 Americans and produces direct business revenue of more than $27 billion. Accounting for the ripple effect of cotton through the broader economy, direct and indirect employment surpasses 420,000 workers with economic activity well in excess of $100 billion.

Sledge Taylor is a farmer from Como, Miss., and chairman of the Memphis-based National Cotton Council of America.  This op-ed appeared in the Southeast Farm Press on May 21, 2015.

Why America’s Cotton Producers Need Access to Affordable Crop Insurance

 

Crop insurance products were improved in the recent farm bill because Congress recognized that these products are a necessity for farmers, regardless of size. To me, a federally-supported crop insurance policy is defensible because a portion of the product’s cost is borne by the farmer.

I am one of those farmers. I raise cotton, corn, soybeans, wheat, peanuts and cattle in north Mississippi. Crop insurance is my most important risk management tool absent the direct payments that were available under previous farm law programs. Effective crop insurance products have allowed Congress to move away from providing ad hoc disaster assistance, thus reducing pressure on the federal budget.

We all have witnessed how farmers across the country have suffered from historic droughts, flooding, hail and other severe weather. Many cotton producers, in fact, have incurred particularly excessive yield losses the past three years from these weather events.

Without a doubt, the volatility of weather and commodity markets necessitates government assistance with crop insurance premiums so that our nation’s farmers have access to affordable and dependable crop insurance products.

Regarding cotton, the Stacked Income Protection Plan, known as STAX, is an insurance product that was included in the 2014 federal farm law and is available to upland cotton producers beginning with the 2015 crop year.

The U.S. cotton industry believes that STAX, like all other insurance products, should not be subjected to limits or eligibility restrictions. With cotton’s safety net now comprised solely by the marketing loan program and crop insurance, the U.S. cotton industry is especially concerned by any attempt to eliminate or place limits on key crop insurance tools.

Farm policy generally, and cotton policy specifically, was substantially reformed, funding reduced, and market orientation increased in the 2014 farm law, so now is not the time for further changes that will only undermine production agriculture’s risk management foundation.

The bottom line is that America’s farmers need an affordable and dependable insurance policy if they are going to continue producing safe, abundant, and affordable food and fiber – which is essential to our national security. Affordable and dependable crop insurance will provide the stability needed for U.S. cotton producers – and undergird an industry that provides employment for some 200,000 Americans and produces direct business revenue of more than $27 billion. Accounting for the ripple effect of cotton through the broader economy, direct and indirect employment surpasses 420,000 workers with economic activity well in excess of $100 billion.

Sledge Taylor is a farmer from Como, Miss., and chairman of the Memphis-based National Cotton Council of America.  This op-ed appeared in the Southeast Farm Press on May 21, 2015.

Convo 58

Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.

Convo 58

Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.

Convo 57

I would not have had the opportunity to grow my farm without crop insurance.

Convo 57

I would not have had the opportunity to grow my farm without crop insurance.

No crop insurance would mean no food

We are blessed in this country to have the ability to grow our own food and have enough to export to other nations.

In fact, that is what inspired me to farm. I had a passion for growing food and, in the case of my home state of Washington where wheat is a highly exported commodity, I had the satisfaction of knowing that my work as a farmer contributed to feeding people not only at home, but all across the globe.

The food security we enjoy in this country is made possible in no small part through United States farm policy. With the 2014 Farm Bill, Congress shifted the focus of farm policy to risk management. It made crop insurance the centerpiece, and quite rightly. It helps farmers recover from natural disasters and volatile market fluctuations. It enables them to plan and budget for the long term in the most effective and efficient way.

Farming is an inherently risky business. Even my wheat farm, which is located in the rolling hills above the Palouse River, and considered some of America’s most fertile ground, is vulnerable to serious weather events that can devastate my crops in any given year. I have been farming for more than three decades and I can say, without question, if it weren’t for crop insurance I would not be in business.

And, crop insurance is good for consumers and taxpayers, too.

Without effective and affordable crop insurance, catastrophic production losses would sap the rural economy by setting in motion a series of harmful events: farm failures and consolidation, job losses, financial stress on rural banks and reduced investment in U.S. agriculture.

Emergencies can happen to all of us. There have been enormous emergency bailouts for victims of floods, hurricanes, earthquakes and other disasters. But because of modern crop insurance, farmers have survived some of the worst production years in memory without that kind of disaster relief. Crop insurance fills the need.

This reality is why I am always concerned by those who criticize farm policy or, worse, advocate for its demise, usually by spreading misinformation about the cost and mechanics of farm policy and crop insurance.

One of the misconceptions is that crop insurance is a handout to farmers. Actually, farmers spend $4 billion a year out of their own pockets for insurance protection. They only collect an indemnity after they’ve suffered a verifiable loss and they’ve shouldered their deductible.

Another attack includes barring farmers with large operations from participating in crop insurance. This would be foolish policy because any risk management pool needs a large and diverse group of participants. We want the most productive farmers in the pool to spread the risk. In the same vein, car insurers want safe drivers to buy insurance to help balance losses from more accident-prone drivers.

A financially healthy rural economy requires a financially healthy farm production sector. And that sector relies on a safety net when catastrophic events happen. It is a modest investment considering the return, which is a stable and affordable national food and fiber supply.

Brett Blankenship is the president of the National Association of Wheat Growers. He farms winter wheat in southeast Washington.

Hollis, Oklahoma farmer: Affordable Crop Insurance is Critical

I started farming and ranching with my father and grandfather in southwest Oklahoma and the Texas panhandle 40 years ago, and I am the fourth generation to farm cotton, peanuts, wheat, corn, milo and cattle on our family’s land.

I was 17 when I started farming on my own, and although I have four decades of experience under my belt, the many issues we face today on the family farm — worked by me, my son, my brother-in-law and my son-in-law — are no less challenging than they were when I began. In most careers, things get easier as you move along. In farming, since the weather and prices are so unpredictable, it really never gets easier.

With few risk management tools available in the early days, it could take years to recover from a hailstorm, an early freeze or any of the many other natural perils that could be thrown at you. When I first learned of crop insurance, I didn’t purchase it because premiums were unaffordable and margins were too slim to afford it. Thankfully, Congress made crop insurance more available and affordable — by partially discounting the premium — and now I wouldn’t farm without it.

Since the passage of the 2014 Farm Bill, crop insurance is the best tool farmers have to manage risks and revenue. It’s not cheap, but it is something that we budget for annually and can’t imagine not having.

The key to crop insurance’s success has been its affordability, its availability and its viability. Last year, farmers spent nearly $4 billion on crop insurance policies that protected 90 percent of planted cropland in the United States. I’d bet that many of the farmers in our area wouldn’t be surviving the current drought — which started in 2011 — if it wasn’t for crop insurance.

Despite the fact that agriculture’s safety net programs took a huge cut in the last farm bill, some in Congress seem to think we need to give more. I wonder if some of those people have any idea where their food and clothes come from or what it takes to get it from the farm to their plate or closet.

It seems almost daily that someone in Congress is proposing a bill to cut the premium support on crop insurance. It would not serve anyone to cut these risk management tools to farmers, as they allow farmers to concentrate on producing higher-yielding, better-quality crops that reduce the costs to the consumer.

Crop insurance is not a gift but insurance, just like homeowner’s insurance, that farmers buy. And like homeowner’s insurance, we don’t collect a dime without a verifiable loss and paying a deductible. Without crop insurance, many farmers couldn’t get financed and it would be almost impossible for a beginning farmer to get started.

Crop insurance is critical in meeting these challenges, and guarantees the American consumer a safe, affordable supply of quality food and fiber that is unsurpassed anywhere in the world.

Kelly Horton lives in Hollis.

Why Farmers Need This Program

I always knew I was going to be a farmer.  I grew up learning from my grandfather who turned me loose and gave me a lot of responsibility on his farm from a young age.  I was driving machinery by the time I was 10 years old and running my own harvest crew by the time I was 14.

When I was in school, I entertained being a veterinarian and farming on the side mainly because people told me it was a tough life and I wouldn’t be able to make a living.

That kind of talk only made me more determined, so when I came home from college I started farming full time despite the fact that I barely had a dollar to my name and farming is a capital-intensive business.

I remember the first time I went to borrow money, my banker asked me right off if I had crop insurance and how much was the coverage. I was prepared to answer those questions as crop insurance was then and remains today my primary risk management tool. I wouldn’t think of trying to grow a crop without it.

It’s essential — especially for young farmers, like I was at the time, just starting an operation.

It enables farmers to get financing and also enables them to survive a major catastrophic weather event.

Young farmers are particularly vulnerable to such risks because they are more leveraged than more established farmers. They can’t afford a major hit in their finances or a year without any income.

Just look at my state of Texas where we have suffered a historic drought for the last five years. 2012 and 2013 were particularly bad.

Without crop insurance, this sustained drought would have wiped out an entire generation of farmers. They would not have had the means to make it to another year without something to at least help cover part of the losses.

That’s why it is critical that crop insurance remain affordable and widely available. Thankfully the 2014 Farm Bill strengthened crop insurance and added provisions to help beginning farmers. But, the critics of farm policy, including some lawmakers in Congress, never seem to rest and are already clamoring once again for cuts.

They would be wise to take note of an alarming trend that puts the average age of a U.S. farmer at 58. Moreover, in 2012, the number of beginning farmers – those operating fewer than 10 years – was down 20 percent from 2007.

My desire to farm at such a young age is the exception, not the rule. Many young people can’t stomach the risk that is involved and have no desire to try.

Cuts to the farm safety net only make an inherently risky business, riskier. The expense of raising crops, the perils of weather-related disasters, and the low returns on investment, are enough to make anyone run in the other, more secure direction.

Now is not the time to create barriers at the starting point of farming and ranching. Now is the time to give certainty to young people with farm policy they can afford and count on.

Matt Huie farms cotton, corn, sorghum, and livestock in Southeast Texas near Corpus Christi.

Evolution of Farm Policy Benefits Farmers, Taxpayers

Some stereotypes about U.S. farm policy just won’t die.

For example, the belief that farmers get paid for not growing; or that benefits just go to big agribusinesses; or that farm spending is out of control.

Such criticisms make splashy headlines but are no longer relevant thanks to the significant evolution of farm policy over the past 20 years. Over that time, government control of agriculture has given way to a system where farmers take more responsibility, make decisions based on market forces, and are asked to help fund their own safety net.

The most significant reforms occurred in the 2014 farm bill, which is projected to reduce farm spending by billions over the next decade.

The farm bill repealed direct payments – checks that some farmers received every year no matter the market conditions or how crops fared. In their place are crop insurance policies made available to all growers regardless of size, geographic location or cropping decision.

With crop insurance, most farmers get bills in the mail instead of government checks, and because producers are now paying more of the farm policy tab, spending has trended downward over the years (to less than three-tenths of 1 percent of the federal budget).Here’s how it plays out on my sugar beet, soybeans and wheat farm.

Every year, I analyze input costs, market prices and yield trends. Then I purchase crop insurance tailored to the unique risks on my farm.

Most years, my crops succeed and no insurance check is collected, meaning insurance companies and the government keep my premiums to offset other policy costs.

In disaster years when we suffer from drought, frost, flood, hail or a host of other calamities, insurance only kicks in after I’ve shouldered a sizable deductible, meaning I share the cost of aid.

Collectively, farmers spend about $4 billion out of their own pockets every year to buy insurance. They do this because the government ensures policies are affordable and widely available and because an efficient infrastructure maintained by the private sector speeds assistance to us much faster than old government disaster programs, which were 100 percent taxpayer-funded.

Crop insurance is just part my story. Our farmer-owned cooperative also takes out government-backed operating loans on our sugar crop. These loans help cash flow the operation as the sugar is sold over the course of the year, and, like any other business loan, it is repaid with interest.

As a result, sugar policy typically operates at no taxpayer expense and is projected by the U.S. Department of Agriculture to cost $0 over the next decade.

Admittedly, agriculture’s transition to lower costs isn’t fast enough for some detractors. But, as a farm leader involved in the 2014 farm bill debate, I can attest that tremendous headway has been made, and I know that it is vital to remove remaining stumbling blocks to further reform.

For example, unnecessary environmental regulations on agriculture breed bureaucratic inefficiencies, drive up costs of production and make it difficult to compete.

And, while U.S. farm supports are getting smaller, foreign subsidies are rapidly increasing abroad and distorting global markets.

In the case of sugar, foreign subsidies have created the most volatile commodity market in the world, where global prices currently cover just half the cost of producing the crop. In other words, exporters would lose 50 cents for every $1 worth of sugar sold if it weren’t for subsidies propping them up.

Putting an end to the domestic and foreign policies that stifle U.S. agriculture’s competitiveness should take top priority in the years ahead as the current farm bill is implemented.

And as we wage that fight, taxpayers can take comfort in the fact that they are shouldering less risk and that U.S. farm policy is headed in the right direction.

Kelly Erickson is immediate past president, American Sugarbeet Growers Association, and farms with his son near Hallock, Minn.

Keep Crop Insurance Affordable

Living through the drought of 2012 as an Illinois farmer gave me a whole new appreciation for risk management tools. There are things that farmers can do to try and deal with the curveballs served up by Mother Nature and with the ups and downs of market swings, but many things — like a massive drought or a heat wave — are completely out of our control.

If this drought would have happened a decade before, it would have left many farmers completely devastated and on the verge of bankruptcy, with nowhere to turn but to Congress for an expensive, taxpayer-funded bailout package. In fact, past disasters have cost taxpayers tens of billions of dollars since 1979.

What was different about the drought of 2012, which was the worst natural disaster to hit this state in my lifetime, is that the vast majority of the state’s farmers had purchased the best risk-management tool around: crop insurance. In fact, farmers spent well over $4 billion out of their own back pockets in 2012 purchasing the protection and peace of mind of crop insurance, which meant when disaster struck, they had a backup plan in hand.

The recent Farm Bill took three long years to pass and cut $23 billion out of farm programs. But for those who for whatever reason are always looking to criticize farm policy that still wasn’t enough. Now they have their sights set again on crop insurance, and are pushing forth ideas to make it more expensive for farmers to purchase.

What these misguided groups and members of Congress seem to miss is that the reason why crop insurance has become the best risk-management tool for farmers is that it’s affordable and reliable. In fact, 90 percent of planted cropland was protected by crop insurance in 2014. It’s this level of protection — made possible by crop insurance’s affordability — that keeps expensive disaster bills from hitting taxpayers when Mother Nature strikes.

Unlike direct payments in the past, crop insurance is not a handout. In fact, when farmers purchase crop insurance, they receive a bill, not a check, and only receive a payment if they incur a loss, and only after paying a deductible. Just like homeowners’ insurance, when farmers buy crop insurance, they do so hoping that they will never have to use it. And many of them rarely do. In fact, since 2000, farmers have paid out more than $38 billion purchasing the protection of crop insurance, and in most years, they don’t collect a dime.

If crop insurance becomes more costly, then farmers simply won’t be able to afford it, and they will have nowhere to turn but the federal government when disaster strikes. This is a lesson we learned over and over again before crop insurance became widely available and affordable.

Crop insurance works so well and has been embraced so readily by farmers across the country because it’s a public private partnership that combines the best of the public and private sectors. Crop insurance premiums are partially discounted by the government to ensure affordability and the policies are sold and serviced by the private sector. And when disaster strikes, an indemnity check arrives in weeks, not years.

Like any other public policy, crop insurance isn’t perfect, and I’m sure Congress will do some fine-tuning to the program in the next Farm Bill just like they did in this one. But the most important thing to keep in mind is that farmers are not only enormous producers, they are enormous consumers as well. And with crop insurance policies in hand, they can bounce back from natural disaster or huge market fluctuations and continue to be the engines that drive the economy of rural America.

Keith Mussman is president of the Kankakee County Farm Bureau.

Keep Crop Insurance Affordable

Living through the drought of 2012 as an Illinois farmer gave me a whole new appreciation for risk management tools. There are things that farmers can do to try and deal with the curveballs served up by Mother Nature and with the ups and downs of market swings, but many things — like a massive drought or a heat wave — are completely out of our control.

If this drought would have happened a decade before, it would have left many farmers completely devastated and on the verge of bankruptcy, with nowhere to turn but to Congress for an expensive, taxpayer-funded bailout package. In fact, past disasters have cost taxpayers tens of billions of dollars since 1979.

What was different about the drought of 2012, which was the worst natural disaster to hit this state in my lifetime, is that the vast majority of the state’s farmers had purchased the best risk-management tool around: crop insurance. In fact, farmers spent well over $4 billion out of their own back pockets in 2012 purchasing the protection and peace of mind of crop insurance, which meant when disaster struck, they had a backup plan in hand.

The recent Farm Bill took three long years to pass and cut $23 billion out of farm programs. But for those who for whatever reason are always looking to criticize farm policy that still wasn’t enough. Now they have their sights set again on crop insurance, and are pushing forth ideas to make it more expensive for farmers to purchase.

What these misguided groups and members of Congress seem to miss is that the reason why crop insurance has become the best risk-management tool for farmers is that it’s affordable and reliable. In fact, 90 percent of planted cropland was protected by crop insurance in 2014. It’s this level of protection — made possible by crop insurance’s affordability — that keeps expensive disaster bills from hitting taxpayers when Mother Nature strikes.

Unlike direct payments in the past, crop insurance is not a handout. In fact, when farmers purchase crop insurance, they receive a bill, not a check, and only receive a payment if they incur a loss, and only after paying a deductible. Just like homeowners’ insurance, when farmers buy crop insurance, they do so hoping that they will never have to use it. And many of them rarely do. In fact, since 2000, farmers have paid out more than $38 billion purchasing the protection of crop insurance, and in most years, they don’t collect a dime.

If crop insurance becomes more costly, then farmers simply won’t be able to afford it, and they will have nowhere to turn but the federal government when disaster strikes. This is a lesson we learned over and over again before crop insurance became widely available and affordable.

Crop insurance works so well and has been embraced so readily by farmers across the country because it’s a public private partnership that combines the best of the public and private sectors. Crop insurance premiums are partially discounted by the government to ensure affordability and the policies are sold and serviced by the private sector. And when disaster strikes, an indemnity check arrives in weeks, not years.

Like any other public policy, crop insurance isn’t perfect, and I’m sure Congress will do some fine-tuning to the program in the next Farm Bill just like they did in this one. But the most important thing to keep in mind is that farmers are not only enormous producers, they are enormous consumers as well. And with crop insurance policies in hand, they can bounce back from natural disaster or huge market fluctuations and continue to be the engines that drive the economy of rural America.

Keith Mussman is president of the Kankakee County Farm Bureau.

Former USDA Chief Economist Discusses 40-Year Career, Farm Policy in New Videos

(OVERLAND PARK, Kan.) — Renowned agricultural economist Dr. Keith Collins reflects on his distinguished career and the future of farm policy in a series of videos released today by National Crop Insurance Services (NCIS).

Collins spent 32 years in federal service, where he served as the U.S. Department of Agriculture’s (USDA) chief economist to four secretaries of agriculture and as chairman of the board of the Federal Crop Insurance Corporation for seven years.  After leaving USDA in 2008, he became a consultant to NCIS.

Collins recorded the three videos as one of his last projects before he officially retired from NCIS on March 31.

The videos attest to Collins’ nearly 40 years of farm policy experience, during which time he was a witness at 80 congressional hearings; received five Presidential Rank Awards for Distinguished or Meritorious Executive and was elected a fellow of the Agricultural  & Applied Economics Association.

“I have had the best of all possible careers over that period of time,” he said. “I owe a great deal of gratitude to the American farmer for what they have done, for the food that they produced, the way they produced it.”

Collins urged new administrations and members of Congress to recall the farm policies of the past and why decisions were made to make crop insurance the centerpiece of today’s farm safety net.

“Look at the program that we have today, look at where it came from, look at how it evolved, how it emerged as the best of many different programs that were tried over the years,” he said.  “And the success of the program has hinged on it being available to producers widely across America, being affordable for producers large and small, and having a private-sector [component] that is financially viable.”

Collins concluded saying, “Looking to the future, we want to prevent anything that would undo the success of this program.”

The first video is Collins’ testimonial, chronicling why Congress turned to crop insurance as the foundation of the farm safety net, and it is available here.

The second video tracks farm policy’s journey from complete government control to being more market oriented and driven by the private sector.  It can be viewed here.

Finally, Collins discusses why affordability, availability and viability of crop insurance are so crucial in the third recording, which can be seen here.

NCIS President Discusses the Important Role of Crop Insurance

NCIS President Tom Zacharias discussed the growing role of crop insurance as the primary risk management tool for farmers in a recent radio interview with Courtnay Doyle of Dignity Farm Network in southwestern Minnesota.  “The 2014 Farm Bill solidified crop insurance as the primary tool for farmers in dealing with production and price swings,” said Zacharias.

Zacharias noted that farmers purchase crop insurance to protect their crops from both volatile weather conditions and uncertain market conditions, which can fluctuate daily.  “It gives farmers and lenders a peace of mind and ensures financial stability, which is important in the agricultural sector,” he said.

He explained that multi-peril crop insurance protects farmers from a whole host of natural disasters, including hail, freeze, drought, disease and loss of revenue due to drops in prices.  “There are roughly 128 crops covered by crop insurance,” he said.

Zacharias also pointed out that in order to enjoy the protection of crop insurance, farmers must first purchase policies.  “Farmers spend about $4 billion each year to purchase crop insurance.  This means that they have significant skin in the game, and they assume a good deal of the risk as well,” he said.

He also pointed out that in addition to paying premiums, farmers have deductibles on these policies ranging from 15 to 35 percent.  “So when a farmer receives an indemnity, it’s after this deductible has been met and the premium has been paid,” he said.

Give Crop Insurance a Chance to Work

A year after the farm bill was enacted the debate over crop insurance is brewing again. As cost estimates grow for the 2014 farm bill’s commodity program, several members of Congress are calling for program cuts.

These congressmen seem to have forgotten that while the farm bill was being debated in 2012, Illinois was at the center of the most devastating drought in recent memory. The only saving grace — for not only farmers, but also for taxpayers — was high participation levels in the crop insurance program. Having purchased crop insurance enabled [Illinois] farmers to survive the $5 billion disaster.

What’s more, following the drought, there wasn’t a single request for ad hoc disaster assistance. Crop insurance indemnities helped Illinois farmers cover a portion of their losses, pay their bills and get a crop in the ground the following spring.

The 2014 farm bill places even greater emphasis on risk management. And just so everyone understands, with crop insurance farmers don’t receive a check, they write a check. In fact, farmers spend about $4 billion each year for crop insurance coverage from private companies with no expectation of anything but a favorable growing season.

We had a chance to change crop insurance during the farm bill debate. And we did change it. For the better.

Now, let’s give crop insurance a chance to work.

Keith Mussman, is president of the Kankakee (Illinois) County Farm Bureau. This op-ed appeared in the Kankakee Daily Journal on March 18, 2015.

Crop Insurance a Key for Producers

My husband and I have been farming in Southeastern Colorado for more than 40 years, and during that time it’s safe to say there have been a lot of changes not only in farming practices but also in farm policy.

The biggest policy change through the years has been the affordability and availability of crop insurance.

When we first started farming, crop insurance was not an option because we couldn’t afford it.

It wasn’t until Congress made reforms to the program a couple of decades ago that we were able to participate. Additional reforms through the years have made crop insurance more widely available for a variety of crops, regardless of farm size or method of production.

It is still an expensive part of the operation, but it is a necessary part because it provides us with stability — something we can count on. This is helpful not only when we need to show our lender at the bank what our estimated income will be, but also for our own peace of mind.

You have to realize that out here, we can have a beautiful crop and phenomenal yields one year and then get wiped out by a hailstorm or drought the next.

For the last three years, the ongoing drought and the late spring freezes have dogged our crops. With crop insurance, we have been able to level out the highs and lows so we can make it to another year.

The enactment of the 2014 Farm Bill made crop insurance the centerpiece of the farm safety net — and for good reason. It is an effective risk-management tool for not only farmers, but also for taxpayers.

Gone are the days of large, unbudgeted disaster bills aimed at helping farmers when natural disasters strike. Now, because of crop insurance, everyone — policymakers, farmers and bankers — can plan and budget for those disasters.

Recently, there has been talk in Washington about yet again trying to make changes to crop insurance. This is arising just one year after the Farm Bill was enacted.

Specifically, there have been discussions about cutting the premium support that farmers receive for purchasing crop insurance. This does a disservice to everyone.

If such proposals succeed, it would only serve to increase the costs to farmers and undermine their ability to manage risk. As my husband and I can attest, premium support has helped us to afford crop insurance, which, in turn, has helped our overall farming operation.

Each new farm bill ushers in new changes to farm policy. We’ve experienced those changes firsthand, but the one part that should remain constant going forward is crop insurance. It is the key to a steady, safe food production system in the U.S. The beneficiaries of crop insurance are not just farmers but also consumers.

Cathy Scherler is the president of the Colorado chapter of Women Involved in Farm Economics (WIFE), a national non-partisan organization committed to improving the profitability and production of the agricultural industry. She and her husband grow wheat, grain sorghum, sunflowers and corn on their farm in the Eastern Plains. This op-ed appeared in The Pueblo Chieftain on April 11, 2015.

Crop Insurance a Key for Producers

My husband and I have been farming in Southeastern Colorado for more than 40 years, and during that time it’s safe to say there have been a lot of changes not only in farming practices but also in farm policy.

The biggest policy change through the years has been the affordability and availability of crop insurance.

When we first started farming, crop insurance was not an option because we couldn’t afford it.

It wasn’t until Congress made reforms to the program a couple of decades ago that we were able to participate. Additional reforms through the years have made crop insurance more widely available for a variety of crops, regardless of farm size or method of production.

It is still an expensive part of the operation, but it is a necessary part because it provides us with stability — something we can count on. This is helpful not only when we need to show our lender at the bank what our estimated income will be, but also for our own peace of mind.

You have to realize that out here, we can have a beautiful crop and phenomenal yields one year and then get wiped out by a hailstorm or drought the next.

For the last three years, the ongoing drought and the late spring freezes have dogged our crops. With crop insurance, we have been able to level out the highs and lows so we can make it to another year.

The enactment of the 2014 Farm Bill made crop insurance the centerpiece of the farm safety net — and for good reason. It is an effective risk-management tool for not only farmers, but also for taxpayers.

Gone are the days of large, unbudgeted disaster bills aimed at helping farmers when natural disasters strike. Now, because of crop insurance, everyone — policymakers, farmers and bankers — can plan and budget for those disasters.

Recently, there has been talk in Washington about yet again trying to make changes to crop insurance. This is arising just one year after the Farm Bill was enacted.

Specifically, there have been discussions about cutting the premium support that farmers receive for purchasing crop insurance. This does a disservice to everyone.

If such proposals succeed, it would only serve to increase the costs to farmers and undermine their ability to manage risk. As my husband and I can attest, premium support has helped us to afford crop insurance, which, in turn, has helped our overall farming operation.

Each new farm bill ushers in new changes to farm policy. We’ve experienced those changes firsthand, but the one part that should remain constant going forward is crop insurance. It is the key to a steady, safe food production system in the U.S. The beneficiaries of crop insurance are not just farmers but also consumers.

Cathy Scherler is the president of the Colorado chapter of Women Involved in Farm Economics (WIFE), a national non-partisan organization committed to improving the profitability and production of the agricultural industry. She and her husband grow wheat, grain sorghum, sunflowers and corn on their farm in the Eastern Plains. This op-ed appeared in The Pueblo Chieftain on April 11, 2015.

Convo 54

Farmers buy crop insurance to protect their crops from volatile weather and/or crop prices.  It gives farmers and lenders peace of mind.  The 2014 Farm Bill solidified crop insurance as the primary tool for farmers in dealing with production and price risk.  Farmers urged Congress to strengthen crop insurance because it allows them to tailor the coverage needed for their specific farms and risk tolerance.

Convo 54

Farmers buy crop insurance to protect their crops from volatile weather and/or crop prices.  It gives farmers and lenders peace of mind.  The 2014 Farm Bill solidified crop insurance as the primary tool for farmers in dealing with production and price risk.  Farmers urged Congress to strengthen crop insurance because it allows them to tailor the coverage needed for their specific farms and risk tolerance.

It’s up to us to explain the importance of crop insurance

It was 2010 and I was expecting to harvest my best crop. I had done everything right and the weather had been kind. Or so I thought. Then on a late October night, it hailed for six hours and what was anticipated to be my best crop year turned into nothing. But the worst of it was yet to come. It stopped raining. It stopped for 336 days straight. It kicked off what would be the worst drought since the 1950s. The conditions would improve slightly, but it’s not an exaggeration to say that for the last five years, my part of the world – West Texas – has essentially been on fire.

Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.

That’s what today’s crop insurance offers farmers. A safety net that is both affordable and widely available.  It’s what’s helped me make it to the next year.

That hasn’t always been the case. When crop insurance got its start in the 1930s, it was a poorly run government program. It hobbled along through the 60s and 70s, but the premiums were too high so the participation was low with limited available coverage. Farmers mainly relied on costly ad hoc disaster assistance when natural disasters wiped out their crops. It was so ineffective that the Secretary of Agriculture, Bob Bergland, told Congress in 1977 that disaster programs “are for the most part…a disaster.” This gave birth to the Federal Crop Insurance Act of 1980 that created a successful public-private partnership that remains today.  Since then there have been other pieces of legislation along the way that have made additional improvements to the delivery and mechanics of crop insurance with the most recent being the 2014 Farm Bill.

Sadly, there are some who don’t know or understand the history and improvements that have taken place to make crop insurance what it is today. Meanwhile, there are others who are bent on attacking farm policy regardless.

I was reminded of this on a recent visit to Washington, D.C. where I met with lawmakers and staff on behalf of producers across the country. Each time I visit I am struck by how important outreach is to ensure agriculture remains successful in this country and that crop insurance remains a viable, affordable, and widely available safety net for farmers and ranchers.

I tend to walk away both encouraged and discouraged by my visits. I am encouraged because there are some who understand the challenges that we face; and discouraged because there is always more to be done. The battle never ends and we need more voices in support of American agriculture.

Our form of government requires participation.  When we don’t show up and tell our story, without a doubt, someone who doesn’t understand or care about production agriculture and the importance of crop insurance will fill the void.

We all sit on the tractor or the combine and talk to ourselves about how to make things better, but sometimes you have to get off the tractor and find your voice. We can’t assume policymakers understand the anxiety we feel when we’re days away from harvesting a good crop and it’s destroyed in matter of minutes by something beyond our control. We can’t assume policymakers know the one thing that enables us to start again is crop insurance. It’s up to us to tell them.

Wade Cowan is the president of the American Soybean Association. He farms soybeans, guar, cotton, wheat, and grain sorghum in West Texas.

It’s up to us to explain the importance of crop insurance

It was 2010 and I was expecting to harvest my best crop. I had done everything right and the weather had been kind. Or so I thought. Then on a late October night, it hailed for six hours and what was anticipated to be my best crop year turned into nothing. But the worst of it was yet to come. It stopped raining. It stopped for 336 days straight. It kicked off what would be the worst drought since the 1950s. The conditions would improve slightly, but it’s not an exaggeration to say that for the last five years, my part of the world – West Texas – has essentially been on fire.

Mother Nature is the toughest, most unpredictable boss. Farmers are resilient and they adapt, but a safety net is crucial to their survival. And, it’s not a safety net if it’s not affordable.

That’s what today’s crop insurance offers farmers. A safety net that is both affordable and widely available.  It’s what’s helped me make it to the next year.

That hasn’t always been the case. When crop insurance got its start in the 1930s, it was a poorly run government program. It hobbled along through the 60s and 70s, but the premiums were too high so the participation was low with limited available coverage. Farmers mainly relied on costly ad hoc disaster assistance when natural disasters wiped out their crops. It was so ineffective that the Secretary of Agriculture, Bob Bergland, told Congress in 1977 that disaster programs “are for the most part…a disaster.” This gave birth to the Federal Crop Insurance Act of 1980 that created a successful public-private partnership that remains today.  Since then there have been other pieces of legislation along the way that have made additional improvements to the delivery and mechanics of crop insurance with the most recent being the 2014 Farm Bill.

Sadly, there are some who don’t know or understand the history and improvements that have taken place to make crop insurance what it is today. Meanwhile, there are others who are bent on attacking farm policy regardless.

I was reminded of this on a recent visit to Washington, D.C. where I met with lawmakers and staff on behalf of producers across the country. Each time I visit I am struck by how important outreach is to ensure agriculture remains successful in this country and that crop insurance remains a viable, affordable, and widely available safety net for farmers and ranchers.

I tend to walk away both encouraged and discouraged by my visits. I am encouraged because there are some who understand the challenges that we face; and discouraged because there is always more to be done. The battle never ends and we need more voices in support of American agriculture.

Our form of government requires participation.  When we don’t show up and tell our story, without a doubt, someone who doesn’t understand or care about production agriculture and the importance of crop insurance will fill the void.

We all sit on the tractor or the combine and talk to ourselves about how to make things better, but sometimes you have to get off the tractor and find your voice. We can’t assume policymakers understand the anxiety we feel when we’re days away from harvesting a good crop and it’s destroyed in matter of minutes by something beyond our control. We can’t assume policymakers know the one thing that enables us to start again is crop insurance. It’s up to us to tell them.

Wade Cowan is the president of the American Soybean Association. He farms soybeans, guar, cotton, wheat, and grain sorghum in West Texas.

Farmers Grow Florida Jobs, Crop Insurance Protects Them

Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?

The answer isn’t healthcare, transportation, technology or even government.  Agriculture is Florida’s second biggest job supplier, according to the University of Florida.

“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms.  Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.

Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.

A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.

And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.

So how do farmers gain some control over the uncontrollable and add stability to the region’s economy?

Crop insurance is key.

Farmers purchase protection from weather disasters and price volatility, while private-sector insurers underwrite policies, verify claims and speed assistance to farmers when it is needed most.

The government, in turn, helps discount premiums to promote farmer participation and shield taxpayers from unbudgeted disaster aid that would be necessary without the private-sector insurance structure.

Crop insurance was long viewed as a tool primarily used by corn, soybean and wheat farmers in the nation’s midsection.  But lately, specialty crop participation along the coasts is growing and insurance protection is available on more than 100 different crops nationwide.

More than $1.3 billion in annual insurance protection is being purchased for Florida orange trees alone with another half a billion for nursery crops.  And thank goodness farmers are purchasing these policies.

In the back-to-back disaster years of 2004 and 2005, for example, more than $400 million in indemnity checks flowed to farmers in the state to help them pick up the pieces following hurricanes.

More can be done, too, to make insurance even more attractive to Florida’s farming community and help growers buy higher coverage levels to shield against tomorrow’s disasters.

The 2014 Farm Bill took initial steps by strengthening insurance for organic growers and making it more accessible for beginning farmers.  Other provisions boosted protection for livestock producers and will help bring new insurance products to the marketplace.

From Feb. 8-11, leaders from the crop insurance industry, American agriculture and the federal government will be at the Hyatt Regency Coconut Point Resort in Bonita Springs to discuss risk protection in the 21st century and what can be done to continually improve the system.

Among the key discussion points: Keeping crop insurance affordable for all farmers regardless of their size or planting choices; ensuring widespread availability of insurance across all states and numerous crops; and maintaining the viability of private-sector delivery, which is far more efficient and effective than a government-managed alternative.

It is a packed agenda, and as the cornerstone of today’s farm policy, crop insurers have a lot to discuss.  However, I fully expect us to do our part in supporting the other major Florida employer – tourism – while we are in town.

Tom Zacharias is president of National Crop Insurance Services, based in Overland Park, Kan.  The guest column appeared on February 6, 2015 in the Fort Meyers News-Press and is available

Convo 53

“Let’s face it, if we don’t do that, the government will step in anyway in that kind of disaster and all the costs will be paid by taxpayers. Washington D.C. can help provide the safety net, but they shouldn’t dictate the terms.”

Crop insurance important for state’s ag industry

Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?

The answer isn’t health care, transportation, technology or even government. Agriculture is Florida’s second-biggest job supplier, according to the University of Florida.

“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.

Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.

A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.

And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.

So how do farmers gain some control over the uncontrollable and add stability to the region’s economy?

Crop insurance is key.

Read more here.

Crop insurance important for state’s ag industry

Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?

The answer isn’t health care, transportation, technology or even government. Agriculture is Florida’s second-biggest job supplier, according to the University of Florida.

“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.

Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.

A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.

And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.

So how do farmers gain some control over the uncontrollable and add stability to the region’s economy?

Crop insurance is key.

Read more here.

Crop Insurance In Action: Matthew King, Delaware County, Ohio

Farming in Central Ohio, much like the rest of the traditional corn belt, tends to be a business that’s very even keel.  The soil is great and the climate is just about perfect for growing corn, soybeans and wheat.  Because of this, bushels per acres are fairly predictable from year to year.

“That whole equation was turned on its head in 2012, which was the worst year that I had ever experienced as a farmer and will be forever seared in the minds of those of us who work the land as the Great Drought of 2012,” said farmer Matthew King.   “Thankfully, like me, most farmers here in Central Ohio purchase crop insurance every year.”

King notes that they’ve purchased crop insurance his entire life, as do most farmers he knows.   He says folks who are not involved directly in farming don’t understand the enormous economies of scale – the prices of fertilizer, seed, machinery, labor and herbicide – that must be paid by farmers in order to get a crop in the ground.

“You literally have to lay out tens of thousands of dollars and then pray for good weather, and if that all comes together, you’ve got a bountiful harvest and you’re set for the next year,” he explains.   “If it doesn’t come together, then hopefully you have crop insurance.”

King notes that crop insurance is also no small expense.  “In fact, in 2013, our farming operations crop insurance premium totaled more than my wife’s annual salary as a local school teacher,” he said.

In most years, crop insurance is just a net cost of doing business for us, since we rarely make a claim.  It’s just like homeowner’s insurance in that you don’t insure your home in the hopes that it burns down but rather in the hope that it never burns down.

“That’s why it’s so aggravating that during the 2012 drought, some outside groups opposed to farm policy charged that ‘farmers were praying for drought, not praying for rain,’ implying that we’d rather collect an indemnity check than get a decent harvest,” noted King.   “Let me set the record straight on that one:  I would take a better crop than a crop insurance payment every time, because well-marketed grain can make me far more money than any crop insurance indemnity ever would,” he said.

King notes that during the 2012 drought, farmers in the area talked about how awful things were in their fields, how much their harvest was down due to extreme heat and lack of moisture, but curiously, none of them mentioned the possibility of losing their farms.   “That’s because they had all purchased crop insurance, knowing that if the bottom fell out, they had a backup plan.”

Crop Insurance in Action: Bill Christ, Metamora, Illinois

For those who have ever visited America’s Corn Belt, they know that the region has soil and climatic conditions for growing corn and soybeans.   “And our farmers are hardworking, committed and driven to produce record crops every year,” notes farmer and crop insurance agent Bill Christ.

In the past, when drought would occasionally come, “many hardworking farmers watched their crops wither and their dreams blow away with the dust, because they didn’t have a backup plan in place in case something like this happened,” said Christ.

Today, most farmers purchase crop insurance, which ensures that when drought or flood or early freeze visits our region, farmers have some level of protection to recoup the tens of thousands of dollars they’ve spent trying to raise a crop.

“The droughts in the 1980s taught the area farmers that if they relied on disaster payments and subsidized federal loans to bounce back from natural disasters, they were going to eventually fall on their faces,” he said.   On the other hand, crop insurance, which today protects 94 percent of planted cropland in the U.S, combines the resources of the federal government with the ingenuity and entrepreneurship of the private sector.

Crop insurance allows individual farmers to purchase the coverage they need, tailored to their farms, their financial standing and their tolerance to risk.  “Crop insurance has become indispensable because farming is so expensive that banks are afraid to make production loans without a crop insurance policy as collateral,” said Christ.   “That way, if the crop fails, the bank, and the farmer, have something to fall back on.”

Christ says he’ll never forget the drought of 2012.   “Farmers calmly walked their fields, yet inside, we all knew we were heading for big trouble,” he said.  Well before the harvest, the corn was burning up and the plants themselves were stunted.   In some parts of the state, corn crops were condemned but the plants were so small they could hardly be chopped for silage.

But unlike previous droughts I had witnessed, there was a sense of optimism in the farmers I knew.  “They were more upbeat and positive because they had adequate protection and that they could bounce back,” he said.  “And guess what?  Everyone bounced back in 2013 and produced an enormous harvest for the nation.”

In 2014, Illinois farmers spent $302 million out to purchase 124,000 crop insurance policies protecting 19 million acres valued at nearly $11 billion.

Christ notes that we live in one of the richest nations in the world and virtually anything you want to eat is right at your fingertips.  “But that doesn’t occur by accident,” he says.  “It’s possible due to good farm policies and hardworking farmers, who together produce the cheapest and most reliable food in the world.”

Ag Groups Ready to Work Together to Defend Crop Insurance

Representatives of various agricultural groups in Washington, D.C. voiced support for crop insurance during the annual meeting of the American Association of Crop Insurers and the National Crop Insurance Services.  The session was designed to give crop insurers perspective not only from Capitol Hill, but also from farmers across the country.

“We want crop insurance for all commodities in all states. It’s very clear every commodity wants to have crop insurance,” said American Farm Bureau Federation’s Mary Kay Thatcher.

“Our farming members are by and large very happy with the crop insurance options in front of them,” added Bev Paul of the American Soybean Association.

The message was consistent with a letter that more than 30 groups sent to Congressional committees last week expressing disappointment in the president’s budget proposal that undermined crop insurance. The groups encouraged Congressional leaders to look elsewhere when they prepare their own budget plans. In the letter, they explained “budget levels currently in place for crop insurance ensure the affordability and availability of risk protection, while maintaining the viability of private-sector delivery.”

Indeed, these three tenets of affordability, availability, and viability were mentioned as the key to keeping the crop insurance system working effectively and efficiently. Another takeaway from panelists was the importance of sticking together and building alliances to make sure crop insurers can continue to offer a variety of options to farmers.

“Our focus in the years to come will be defending what we have,” said Robbie Minnich of the National Cotton Council of America.

###

Crop Insurers’ Returns in Question

(BONITA SPRINGS, Fla.) – Financial returns for crop insurers have fallen nearly 60 percent below expectations since 2011, according to the National Crop Insurance Services, the industry’s main trade organization.

The Standard Reinsurance Agreement — the business contract between the federal government and private-sector insurers that went into effect in 2011 — targeted average returns on retained premium of 14.5 percent.  Returns on retained premium have averaged only 6 percent over the four-year period.

And because these calculations only measure gross revenue, not net profit, the actual financial pain has been far greater, said NCIS Chairman Tim Weber.  When expenses are subtracted from gross revenue, average net profit since 2011 has been less than 1 percent, with the industry experiencing negative returns in 2012.

This “falls well short of the averages for other lines of property and casualty insurance,” Weber noted when he spoke today at the industry’s annual convention.

Weber explained that unexpected premium reductions implemented by the U.S. Department of Agriculture (USDA) in 2012, $600 million a year in reduced funding under the SRA, increased regulatory burdens, falling crop prices, and bad weather have caused the poor financial performance.

The worst year, 2012, saw companies absorb $1.3 billion in underwriting losses when premiums collected failed to cover indemnities paid out during the record drought.

“Companies need to make a reasonable return on their investment to stay in business…but we cannot do it for free, or worse yet, a negative return,” Weber said.

Crop insurers at the convention expressed disappointment in recent remarks by the Agriculture Secretary, who misinformed reporters about industry returns while advocating for additional funding cuts.

“One of those reforms would be to take a look at what the average rate of return is on crop insurance.  Today it’s roughly 14 [to] 15 percent on average of return on investment,” Secretary Tom Vilsack said during an interview with Politico.

“The Secretary is pointing to revenue projected by the USDA, not what has actually materialized in the marketplace,” noted Tom Zacharias, president of NCIS.  “And the budget proposed by this administration would only further jeopardize the farm safety net.”

The President’s proposed budget would strip an additional $1.6 billion a year from the crop insurance system, which, Zacharias said, “leaves farmers and taxpayers more vulnerable to the whims of Mother Nature.”

###

ICYMI: Farmers Grow Florida Jobs, Crop Insurance Protects Them

On the eve of the annual convention in Florida, the president of the National Crop Insurance Services (NCIS), Tom Zacharias, penned an editorial for the Fort Myers News-Press highlighting how important agriculture is to the state’s economy and how crop insurance is the key to protecting this industry from disaster.

In the piece, Zacharias explains how, contrary to popular belief, crop insurance is available for a variety of crops nationwide and more specialty crop growers are using crop insurance as their key risk management tool. Florida growers purchased more than $1.3 billion in annual protection for orange trees alone and another half a billion for nursery crops.

Over the next few days, crop insurers, agricultural leaders, and government officials will be discussing ways to continually improve the system so that crop insurance remains affordable, widely available, and viable for growers in Florida and all across the country.

The full editorial follows and is linked here:

Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?

The answer isn’t healthcare, transportation, technology or even government. Agriculture is Florida’s second biggest job supplier, according to the University of Florida.

“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.

Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.

A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.

And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.

So how do farmers gain some control over the uncontrollable and add stability to the region’s economy.

Crop insurance is key.

Farmers purchase protection from weather disasters and price volatility, while private-sector insurers underwrite policies, verify claims and speed assistance to farmers when it is needed most.

The government, in turn, helps discount premiums to promote farmer participation and shield taxpayers from unbudgeted disaster aid that would be necessary without the private-sector insurance structure.

Crop insurance was long viewed as a tool primarily used by corn, soybean and wheat farmers in the nation’s midsection. But lately, specialty crop participation along the coasts is growing and insurance protection is available on more than 100 different crops nationwide.

More than $1.3 billion in annual insurance protection is being purchased for Florida orange trees alone with another half a billion for nursery crops. And thank goodness farmers are purchasing these policies.

In the back-to-back disaster years of 2004 and 2005, for example, more than $400 million in indemnity checks flowed to farmers in the state to help them pick up the pieces following hurricanes.

More can be done, too, to make insurance even more attractive to Florida’s farming community and help growers buy higher coverage levels to shield against tomorrow’s disasters.

The 2014 Farm Bill took initial steps by strengthening insurance for organic growers and making it more accessible for beginning farmers. Other provisions boosted protection for livestock producers and will help bring new insurance products to the marketplace.

From Feb. 8-11, leaders from the crop insurance industry, American agriculture and the federal government will be at the Hyatt Regency Coconut Point Resort in Bonita Springs to discuss risk protection in the 21st century and what can be done to continually improve the system.

Among the key discussion points: Keeping crop insurance affordable for all farmers regardless of their size or planting choices; ensuring widespread availability of insurance across all states and numerous crops; and maintaining the viability of private-sector delivery, which is far more efficient and effective than a government-managed alternative.

It is a packed agenda, and as the cornerstone of today’s farm policy, crop insurers have a lot to discuss. However, I fully expect us to do our part in supporting the other major Florida employer – tourism – while we are in town.

Tom Zacharias is president of National Crop Insurance Services, based in Overland Park, Kan.

Crop Insurance Important for State’s Ag Industry

Tom ZachariasPop quiz: Next to tourism, what Florida industry is the state’s largest employer?

The answer isn’t health care, transportation, technology or even government. Agriculture is Florida’s second-biggest job supplier, according to the University of Florida.

“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.

Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.

A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.

Read more…

This op-ed by Tom Zacharias, president, National Crop Insurance Services, appeared in the Fort Myers News-Press on February 6, 2015.

Crop Insurance Important for State’s Ag Industry

Tom ZachariasPop quiz: Next to tourism, what Florida industry is the state’s largest employer?

The answer isn’t health care, transportation, technology or even government. Agriculture is Florida’s second-biggest job supplier, according to the University of Florida.

“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.

Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.

A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.

Read more…

This op-ed by Tom Zacharias, president, National Crop Insurance Services, appeared in the Fort Myers News-Press on February 6, 2015.

New NCIS Video: Private-Sector Delivery Essential to Crop Insurance’s Future and Viability

Private companies are integral to crop insurance’s future because they shoulder risk that would otherwise be borne by taxpayers and because they maintain the system used to efficiently provide assistance to farm families following disasters.  However if the business does not remain viable, private-sector participation could wane, which would weaken America’s farm policy, according to a new NCIS video.

“Key to this viability is a reasonable rate of return for insurers on the infrastructure they built to deliver farmers’ most important risk management tool,” the video explained.  “An adequate return on investment enables insurance providers to routinely reinvest in technology, infrastructure efficiency, and service improvements for farmers and ranchers.  Unfortunately, adequate returns don’t always happen.”

Among the factors that have made crop insurance less viable in recent years:

  • Weather disasters and crop price volatility since 2011 have resulted in record loss payments from crop insurance providers;
  • $1.2 billion a year in federal funding was cut in 2008 and 2011; and
  • Farm policy opponents are targeting crop insurance for further funding reductions.

The 2014 Farm Bill took steps toward improving crop insurance by expanding coverage, by bringing new customers into the system, and by providing new tools to continually minimize waste, fraud and abuse.

Tom Zacharias, president of NCIS, applauded Congress’ actions and said it will be important to continue making improvements by reducing regulatory burdens, avoiding further funding cuts and keeping crop insurance actuarially sound.  And he believes that all Americans have a stake in the future of crop insurance.

“After all, not everyone farms, but everyone eats.  So everyone depends on a strong farm policy,” the video concluded.

The video is the most recent in a three-part series dedicated to the key policy attributes essential to crop insurance’s continued success.  Previous pieces examined the importance of making crop insurance widely available and affordable to farmers.

NCIS President Tom Zacharias Talks Crop Insurance on Agri-Talk

The increasingly important role of crop insurance to farmers, ranchers and producers across the country – and its place of prominence in the 2014 Farm Bill – were among the many topics of conversation during Mike Adams’ recent interview with NCIS President Tom Zacharias on Agri-Talk.

“We think this is a very positive Farm Bill for farmers and ranchers in the U.S. and for the crop insurance industry in general,” said Zacharias.

Zacharias pointed out that crop insurance has changed dramatically over the last 10 to 15 years, now protecting 294 million acres with crop insurance premiums running at about $10 billion.  “That’s a liability of $110 billion of coverage for America’s farmers and ranchers,” noted Zacharias.  “This is a private/public partnership and on both sides of the equation, the companies involved have a fiduciary responsibility to their shareholders and with the public sector,” he added.

Zacharias pointed out that the last few years have posed some real challenges to both farmers and crop insurance companies.  “If you look over the last couple of years, we have faced some headwinds,” he said.  “Take the situation in 2012 with the extensive drought we had in the Midwest.  Last year, when we had the swing in prices and a lot of other revenue policies kicked in, so there were indemnities paid there.”

Zacharias also explained that in order for crop insurance to remain strong, it must remain viable to the private sector.  “It is important for the private sector to remain viable.  If you look at where this Farm Bill has taken us, the availability for farmers to have different risk management options, affordability of that part of the program remains very much intact.  We need both farmers and insurers to see reasonable returns in this business to help manage the risk.”

Zacharias said the 2014 Farm Bill has maximized choices for the farmer.  “With that choice, comes great responsibility,” he added.  He noted that there are many Title I provisions that farmers needs to be aware of so they can purchase the protection they need.  That, of course, is where the industry’s 12,000 agents come into play.  “They will need to go out and seek the expertise of both the crop insurance agency force as well as those folks in extension and farm managers who are grinding through the Title I Component,” he added.

Read the full transcript of the interview here.

Affordability of Crop insurance Policies Focus of New Video

Crop insurance policies must remain affordable for farmers and ranchers or the entire farm safety net will fail, crop insurance providers said today in a new educational video.

Farmers help fund current farm policy by spending approximately $4 billion a year out of their own pockets on crop insurance policies and by shouldering a portion of losses in the form of deductibles before receiving assistance.

“But if insurance bills get too big, or deductible losses get too high, fewer farmers will sign up for policies, and the whole system will collapse,” noted the video.  “If that happens, not only will it be harder for farm families to bounce back after disaster, but costs that are currently being borne by farmers and private insurance providers will shift back to taxpayers.”

Congress took steps in the 2014 Farm Bill to keep crop insurance affordable.  Among the steps spotlighted in the video:

  • Farmers receive discounts on the premiums they pay for coverage, including discounts for new and beginning farmers looking to start a career in agriculture.
  • Some of the typical insurance delivery expenses that would otherwise be built into a policy’s cost are offset.
  • Supplemental coverage is made available to help counterbalance a portion of deductible losses.
  • Congress defeated attempts by some opponents of agriculture to cap crop insurance benefits and make policies more expensive for everyone.

This is the second in a series of educational videos meant to highlight three policy attributes that are essential to maintaining a strong crop insurance system.  The first three-minute segment examined the importance of making crop insurance, widely available, and a future piece will look at maintaining the viability of private-sector delivery.

“Congress cemented crop insurance’s role as the centerpiece of the farm safety net during the 2014 Farm Bill,” explained Tom Zacharias, president of National Crop Insurance Services (NCIS).  “However, that safety net will breakdown if crop insurance policies aren’t widely available, aren’t affordable to producers, and aren’t economically viable to be administered by efficient private insurance providers.”

View other videos on NCIS’s YouTube channel here.

CONVO 50

Farmers spend tens of thousands of dollars and then pray for good weather. If it all comes together, you’ve got a bountiful harvest and you’re set for the next year. If it doesn’t, then hopefully you have crop insurance.

Private-Sector Delivery Essential to Crop Insurance’s Future

Private companies are integral to crop insurance’s future because they shoulder risk that would otherwise be borne by taxpayers and because they maintain the system used to efficiently provide assistance to farm families following disasters.

However if the business does not remain viable, private-sector participation could wane, which would weaken America’s farm policy, according to a new video released today by National Crop Insurance Services (NCIS).

“Key to this viability is a reasonable rate of return for insurers on the infrastructure they built to deliver farmers’ most important risk management tool,” the video explained.  “An adequate return on investment enables insurance providers to routinely reinvest in technology, infrastructure efficiency, and service improvements for farmers and ranchers.  Unfortunately, adequate returns don’t always happen.”

Among the factors that have made crop insurance less viable in recent years:

·         Weather disasters and crop price volatility since 2011 have resulted in record loss payments from crop insurance providers;

·         $1.2 billion a year in federal funding was cut in 2008 and 2011; and

·         Farm policy opponents are targeting crop insurance for further funding reductions.

The 2014 Farm Bill took steps towards improving crop insurance by expanding coverage, by bringing new customers into the system, and by providing new tools to continually minimize waste, fraud, and abuse.

Tom Zacharias, president of NCIS, applauded Congress’ actions and said it will be important to continue making improvements by reducing regulatory burdens, avoiding further funding cuts, and keeping crop insurance actuarially sound.  And he believes that all Americans have a stake in the future of crop insurance.

“After all, not everyone farms, but everyone eats.  So everyone depends on a strong farm policy,” the video concluded.

The NCIS video, which can be viewed here, is the last in a three-part series dedicated to the key policy attributes essential to crop insurance’s continued success.  Previous pieces examined the importance of making crop insurance widely available and affordable to farmers.

 

###

New NCIS Video: Availability A Key to Crop Insurance’s Future

Crop insurance providers recently released the first in a series of educational videos meant to highlight three policy attributes that are essential to maintaining a strong crop insurance system in the face of future market and weather challenges.

The first three-minute segment examines the widespread availability of crop insurance, whereas future videos will look at the affordability of policies and the viability of private-sector delivery.

“Congress cemented crop insurance’s role as the centerpiece of the farm safety net during the 2014 Farm Bill,” explained Tom Zacharias, National Crop Insurance Services president. “However, that safety net will collapse if crop insurance policies aren’t widely available, aren’t affordable to producers, and aren’t economically viable to be administered by efficient private insurance providers.”

According to the first video, “Crop insurance is similar to other kinds of insurance. The more people who purchase policies, the more people who help share risk.  And when risk can be spread out along a broader base, it helps lower the cost for everyone.”

That is why it is it is so important for insurance to be available for all kinds of crops and to farmers of all sizes and backgrounds, NCIS noted.

“The more the merrier.  From corn and cotton to cherries and canola, every single acre enrolled helps strengthen the whole system,” the video explained.

The recently passed 2014 Farm Bill took big steps to make crop insurance more available to beginning farmers, organic producers, and fruit and vegetable growers.  Lawmakers also stopped legislative attempts to reduce insurance benefits available to larger farms – a plan that would have raised costs on all farmers and increased taxpayers’ risk exposure.

“Congress got it right by making crop insurance more widely available and stronger than ever.  Now, we just need to keep it that way,” the video concluded.  “After all, not everyone farms, but everyone eats.  So everyone depends on a strong farm policy.”

The NCIS video can be viewed here.  Segments on affordability and viability will be released in the coming weeks.

CROP INSURANCE IN ACTION: Shawn Holladay, Lamesa, Texas

Shawn Holladay, a fourth-generation cotton farmer from Dawson County, Texas, looks to agriculture as his sole source of income. It’s not a bad argument for wanting the status quo to continue.

Ask one who’s been in farming for decades for his proverbial ‘staying power’ and he will likely tell you farming is a beloved legacy, he has a passion for growing crops that ensure the well-being of Americans, and throw in a bit of spiel about how crop insurance has made it possible for him to  survive against nature’s odds.

For 25 years, Holladay has used crop insurance to protect his 6,500-acre farmland in Lamesa — devoted to cotton, some grains and peanuts — and ensure its stability in the face of prolonged drought.  Especially vulnerable are farms like his that have been in families for three or four generations.

“My operation could not begin to stand the losses associated with drought and the severe weather without it,” said Holladay, an industry leader and cotton grower who has won the Farm Press/Cotton Foundation High Cotton Award for his conservation and sustainable farming practices. “The current drought would have taken out most, if not all, farms in the area where my operation is located.”

Read Shawn’s story here.

Columbus Dispatch Guest Opinion: In Tough Years, Crop Insurance is Vital

Farming in central Ohio tends to be very even-keel, largely due to the great soil we sit on and the favorable climatic conditions in most years. Local crops, including corn, soybeans and wheat, tend to come in at fairly predictable yields, offering local farmers some peace of mind in a business known for its risk.

That whole equation was turned on its head in 2012, which will be forever seared in the minds of those of us who work the land as the Great Drought of 2012. Thankfully, most farmers here in central Ohio, like me, purchase crop insurance every year.

Crop insurance is a public-private partnership whereby farmers purchase individual policies with their own money and tailored to their own risk tolerance.

Folks who are not involved directly in farming don’t understand the enormous costs — for fertilizer, seed, machinery, labor and herbicide — that must be shouldered by farmers in order to get a crop in the ground. Farmers spend tens of thousands of dollars, then pray for good weather. If it all comes together, you’ve got a bountiful harvest and you’re set for the next year. If it doesn’t, hopefully you have crop insurance.

Now, crop insurance is also no small expense. In 2013, our farming operation’s crop-insurance premium totaled more than my wife’s annual salary as a local teacher. And in most years, we don’t make a claim. It’s just like homeowner’s insurance — you hope you never need to make a claim.

During the 2012 drought, farmers talked about how awful things were, but, curiously, none mentioned the possibility of losing their farms. That’s because they had all purchased crop insurance, knowing that if the bottom fell out, they had a backup plan.

And thankfully, for consumers in the U.S. and abroad, those farmers were back again in 2013, producing the healthiest, best and most affordable food in the world.

Matthew King is a farmer from Radnor, Ohio.   This op-ed appeared in the Columbus Dispatch on October 18, 2014.