CROP INSURANCE IN ACTION: Richard Selover, Colusa, California

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

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

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

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

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

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

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

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

CROP INSURANCE IN ACTION: Matt Fisher, Delano, California

matt fisher

Imagine overseeing a multi-generational family farm without crop insurance. When disaster strikes will your farm be able to financially bounce back? This possibility became a reality for one family in Delano, California. And after disaster struck, Matt Fisher said he and his family learned the true value of crop insurance.

“Back in 1990-1991, our family didn’t have crop insurance,” Fisher explained. “And we had a disastrous freeze that wiped out everything we had, and the next year’s crop. We even lost some trees it got so cold. Our family operation almost went broke at that time, but we were able to fight our way back to profitability. And now we buy crop insurance because of that one lesson and experience.”

Today, Fisher’s farm produces a wide variety of citrus, including navels, Valencias, blood oranges, grapefruit, tangerines and lemons. To protect their fruit from the unpredictability of Mother Nature, Fisher said it is vital that they continue to purchase crop insurance year after year to ensure they do not have a repeat of what happened in 1991.

“When I say protection, we’re not getting rich on the crop insurance,” Fisher elaborated. “It’s merely covering our costs and allowing us to get to the next year. So it’s very, very important in what we do.”

Fisher not only has a family of four to worry about feeding, but his operation also employs more than 40 full-time individuals who have families of their own to feed. He added that their farm indirectly, through farm labor contractors and harvest crews, employ another 100-125 individuals to keep their operation up and going.

“That’s not counting the chemical industries,” Fisher stated. “We’re using fertilizers, pesticides to keep the bugs down on the trees, etc. And even the packing houses employ hundreds, if not thousands of people. So if we did not have crop insurance and we were not able to make it and keep going from one year to the next, it would be a major economic hit for the industry. The ag industry as a whole, not just counting the citrus industry.”

Having started out as a small farming operation, Fisher understands the value of farms of all sizes. According to Fisher, their original operation began with just 30 acres and he attributes their expansion to the hard work of four generations.

“We are fortunate enough to grow in volume, to help supply the world with food,” Fisher explained. “And good quality food. If we didn’t have crop insurance, and if it wasn’t as affordable as it is, it drives our costs up and we’re no longer competitive.”

No matter the size of their farm or the products they are growing, Fisher also wants the public to know his family’s operation has not changed the way they conduct their business due to the purchasing of crop insurance. At the end of the day, good farming practices have to be completed and hard work has to be put forth to help feed a growing population.

“Crop insurance strictly protects you from devastation,” Fisher concluded. “And we still have to get up and run our wind machines. We spend a tremendous amount of money on frost protection. We’re running wind machines, running water, (putting forth) labor…we never stop fighting this cold weather because even if you think you’ve lost the battle, in the middle of it, you have to keep going. We are so much better off trying to save our fruit and take it to market than we are just relying on crop insurance.”

Steve Murray, Arvin, California

Frozen Cherries

Steve Murray is a fifth generation farmer in California’s Central Valley, located in Arvin, just east of Bakersfield. Murray explained that this portion of the United States is the most productive fruit and vegetable farmland in the world, as well as one of the earliest farming districts. These factors help his business, Murray Family Farms, thrive, selling over 200 varieties of fruit.

“Half of that fruit is cherries,” Murray explained. “So cherries are a commercial crop for us that we grow for wholesale business and then all of the other crops we grow for direct market. We have two roadside stands and we go to 25 different farmers markets.”

Due to the large amounts of cherries his operation produces, Murray expressed he is comforted by the fact his business is protected with the number one farm safety net, crop insurance. Having had personal experience with unexpected disasters affecting his farm, he said he understands the benefits of crop insurance first-hand.

“The crop insurance we have on our cherries has really been critical for our survival and our ability to operate,” Murray stated. “We started growing cherries back in 1989 and in 2006 we had a statewide freeze. I went to a cherry meeting up in Stockton and it was a 4 ½ hour drive. The thermometer was at 19 degrees the whole way. Normally in February, you think the buds would close and be protected. But the 19 degrees froze the flowers and the buds and there was a statewide disaster. We had a block of cherries that historically has produced about $1.5 million and that year it dropped down to $90,000.”

steve murray 2At that given time crop insurance for cherries was not offered in the area where Murray Family Farms is located. Murray said he lost a bank in the process, received a loan from another bank and relied on help from the FSA to barely stay afloat.

“Once I was able to get crop insurance, I was able to get financing,” Murray said. “We went six years without any agricultural loans, which is hard to cash flow a crop that comes in once a year and be able to survive. So with crop insurance, it has allowed us to be able to have a floor. Whereas before, we had no floor.”

Murray expressed that a second freeze without crop insurance would ultimately put him and his farms out of business.

“With crop insurance it’s a decision that you have to make, that anybody in business, they know that most good businesses make maybe a 10 percent net margin off of their gross and, for us and our cherry crop insurance it costs us about eight percent of our gross,” Murray added. “But it is the thing that allows us to survive.”

Putting the importance of crop insurance in perspective, Murray explained that food is an important commodity to the United States and that one farm affects more than just one business owner.

“Farmers are one of the few producers,” Murray said. “Food is one of the only exports this country has where we export more than we import. And if you take a look at this valley we’re in, half of all of the fruits and vegetables grown in the United States are grown in this valley. In our operation, when we had the disaster, we diversified after that. And part of that diversification was going into direct market with the roadside stands and the fruit stands. If we were just growing mono crops, we would have maybe six employees working on the farm, but because of our diversification we have 80 employees today. So there’s 80 families that are getting the subsistence.”

According to Murray, half of all the jobs in his county are “interrelated in agriculture.” This translates into 175,000 jobs in one county alone. Murray stated that these positions are directly affected by natural disasters and economic hardships, such as the current California drought which is why crop insurance is of great importance to the agricultural industry.

“We’re coming off probably the worst production year we’ve had,” Murray concluded. “We had a 90 percent crop loss this year. It is my crop insurance this year that is going to allow me to survive. Without it, I’d just be done. The diversity of the farming operation we have would be converted to almonds and there would be six employees instead of 80.”

Crop Insurance in Action: Kenneth Kirschenmann, Shafter, California

GrapesShafter, California is home to 17,197 people and Shafter native, Kenneth Kirschenmann, said that farming is what keeps his community economically sound. Listing just a few ways farming helps his community, Kirschenmann said, “We affect chemical companies that employ a lot of people. We affect the railroad who hauls our products to the East Coast (and the) trucking companies that handle our grapes.”

Originally established in 1919 by his grandfather, Kenneth’s family farm has since grown into what is now known as the Kirschenmann Brothers Farming Company. He said the company has expanded to cover almost 1,000 acres and now produces table grapes, potatoes, cotton, almonds and alfalfa. As Kirschenmann gave National Crop Insurance Services (NCIS) a tour of his grape vineyard, he reflected on the importance of Mother Nature, as well as crop insurance to keep his harvests growing.

“This is a Mother Nature crop,” Kirschenmann stated. “The good Lord gives us everything we’ve got to do to make the grapes. But we also have some untimely storms, rains, freezes and frost that can destroy these crops. Crop insurance gives us a little safety net. It doesn’t solve all the problems if we had a 100 percent wipeout, but it does keep us in business.”

Kirschenmann’s company employs over 250 individuals throughout the year. All of which take pride in providing consumers with a quality product at the prices they can afford.

“We take endless amounts of joy in our work and day-to-day things to give consumers that table grape, or that cotton plant, or that potato, or that almond,” Kirschenmann said. “All the right things that it takes to get to the consumers’ shelves, wherever the end product is; and the least expensive for them also.”

Ken KirschenmannWhile Kirschenmann enjoys providing consumers with the food and materials he produces, he said that his farming operation, like other farms all over the country, has experienced some untimely weather events.

“Our input costs are high because of the drought in California,” Kirschenmann said. “Labor is getting to be an issue we are dealing with. So we’re trying to fight all the costs and crop insurance is a very economical thing that we look at on a monthly or yearly basis when we do our crop plans and our financial plans.”

Whether the community is experiencing a drought or a frost, crop insurance helps keep the Kirschenmann Brothers Farming Company and other farming operations in the community up and running. Kirschenmann restated that in the end, in order to keep Shafter farming, crop insurance is a must.

“We’ve got to keep a good, strong crop insurance program going,” Kirschenmann concluded. “We need it. We have a great relationship with our crop insurance people. We’ve been through some disasters and the system has worked. I know insurance can’t handle every issue and I’m not asking it to. But rain and frost, those are the things that I buy the insurance for.”

Crop Insurance in Action: Greg Wegis, Bakersfield, California

Greg Wegis edited 2Greg Wegis’ great-grandfather established their multi-generational farm in the early 1900s and the have been farming in Bakersfield, California ever since. Wegis grows almonds, pistachios, tomatoes, corn, wheat, alfalfa and cherries and he plans to start growing table grapes in the near future.

“I have a passion for what I do,” Wegis said. “Being raised around my grandfather and my dad, just talking about it. It’s a lifestyle; producing food for people to eat and nourish their bodies. It’s a good feeling and an occupation I think that’s very noble.”

Today Wegis’ farm employs 80 people full-time to keep everything running smoothly. Wegis said he prides himself on being a family-oriented business, knowing each one of his employees and their family.

“We take care of our people, because they take care of us,” Wegis said. “They take care of our land and we treat them as an extension of our family. I think that is unique in the multi-generational family farming business; you don’t find that in a lot of other industries.”

Not only does Wegis feel his employees deserve credit for the hard work they provide, but he further recognized that his farming operation wouldn’t be possible without all of the supporting companies that aid them in their day-to-day operations. This includes companies who help with tractor and machinery parts, processing and manufacturing, sales, bankers, insurance agents, fuel, transportation companies and “the list goes on and on.”

According to Wegis, farm income in California is a $47 billion industry. The county he resides in, Kern County, is responsible for providing a little over $6 billion.  Translating that into the amount of jobs agriculture provides within Kern County, Wegis said it’s “somewhere around 70,000 jobs.”

“Just the almond industry alone, employs about 110,000 individuals in the Central Valley,” Wegis explained. “And we’re connected. So whatever happens to us, in turn affects them, either in food prices or food availability.”

Minus a great winter in 2002 and 2011, the area Wegis resides in has been in a drought for over four years. To combat this issue, Wegis said their farming operations rely on two separate solutions to stay sustainable and in business.

“With our farm, we have around 10,000 acre-feet of water that we’ve contracted for. My grandfather and his generation helped build the Central Valley Project and the State Water Project, (bringing) us water from Northern California to help us be more sustainable south of the Delta Area.”

In order to take part in the Central Valley Project and the State Water Project, farmers in the California region must pay a set amount of money regardless if they receive the designated amount of water or not (water supply levels rely on what is available each year in the area’s designated reservoir, which could lead to the possible shortages). By doing this, Wegis said it has helped “replenish the aquifers” that were once depleted and helps keep farms in the region sustainable.

“We’re the breadbasket of the world here in Central Valley, as far as fruits, vegetables, nuts and milk,” Wegis concluded. “The United States relies heavily on us to produce that food. If we have to reduce our footprint, we cannot farm the acres we used to, and that’s definitely going to affect everyone. And that’s the message we’re trying to [get] everybody [to] understand.”

Wegis said he insures their crops to protect them against natural disasters, diseases or insects that they have little control over. “Without crop insurance it would not allow us to farm.” In the end, Wegis attributes crop insurance as a vital tool in agricultural risk management. “It’s just a crucial tool to circumvent the ups and downs of Mother Nature and agriculture,” Wegis expressed.

Crop Insurance in Action: Stanley Wilson, Shafter, California

stanley wilsonAlmost 100 years ago Stanley Wilson’s ancestors settled in Shafter, California to start their family farm. Since then, the farm has been passed down to Wilson who continues to farm to this very day with the help of his two sons, a son-in-law and several grandchildren. Their operation produces cotton, potatoes, carrots, beans, alfalfa, almonds and raisin grapes.

Knowing the ins and outs of farming, like the back of his hand, Wilson said he chooses to purchase crop insurance so he can properly protect his crops and operation from unexpected perils.

“Crop insurance gives us a bottom line protection, in the case of various farm disasters,” Wilson said. “Anyone who has been in farming knows production is not consistent. Many times we have problems caused by climate, insects or diseases, and we need protection against those things to (prevent) a complete wipeout. Just something to give us a bottom line so we can go another year.”

Due to the protection crop insurance can provide, Wilson can sleep easier knowing if a disaster hits, he’ll be able to farm the following year. With the expense that farming can cost producers, Wilson said he is grateful crop insurance can help in times of need.

“Farming is a very expensive operation compared to what it was when I first started farming,” Wilson explained. “We’re looking at costs 10 times what they were 50 years ago… And so the protection we get from crop insurance is very important.”

Another point Wilson made was that crop insurance can be timelier than governmental alternatives and this aspect is what keeps farming operations, including his own, in business after a natural disaster or economic hardship.

“You don’t wait for Congress to enact legislation when you have an emergency because it takes them years (to act),” Wilson stated. “A good example of that is they have done nothing with passing any legislation to help the California drought and we’re in our fourth year of that. Maybe four years down the road, after we get flooded, they’ll think about actually enacting something. So you have to have something in place if you’re trying to protect from disasters.”

Wilson concluded that in his case there are “not any more crop subsidy payments” through the Federal government so crop insurance is the only way the government is really helping his farm. And as long as Wilson can keep his operation protected and in business, he said he is happy.

“Even though I am of retirement age, farmers never seem to be able to quit farming because they love doing it,” Wilson expressed. “And I want to see my kids continue doing what I have enjoyed all these years.”

Crop Insurance in Action: Todd Snider, Crop Insurance Agent with Personal Ag Management Services LLC.

Crop Insurance in Action: Todd Snider

Todd Snider works as a crop insurance agent at Personal Ag Management Services LLC., in Bakersfield, California, and has been working hard to provide crop insurance to farmers in California’s Central Valley for more than 13 years. According to Snider, the two main industries within his county are agriculture and oil.

“There are about 170,000 jobs that are directly related to agriculture in Kern County,” Snider said. “And I would say that’s probably multiplied eight times with all the support industry personnel that come into place, whether you’re a fertilizer salesman, crop insurance, tractors, fuel, parts and on down the line. Even the clothing we wear are made of commodities grown down here in the Central Valley.”

Snider added that a lot of the crops grown in California are categorized as specialty crops, which are not the “average soybeans, corn or wheat.” He noted that specialty growers have much higher inputs than more common crops do and due to the higher inputs, and unpredictability of weather, as well as economic circumstances, crop insurance is something worth budgeting for.

“It’s a lot harder to budget for a zero revenue if you have a severe situation,” Snider said. “With crop insurance at least you know your worst case scenario. You know if you had a freeze that you’d be able to at least cover your costs, pay your employees and keep them employed for the next coming season.”

Another aspect Snider noted is that farmers are competing for labor. If a disaster strikes and the producer cannot pay his employees, it is likely that they will move on to an employer who can. This being said, crop insurance not only helps support the farmer’s crops but it also helps support the entire farming operation.

Within his position, Snider is able to see “the growers protect their legacy and pass it on to the next generation.” One of Snider’s favorite parts about being a crop insurance agent is having the chance to work with a grandfather or father and seeing them pass the family farm onto their next of kin.

“I want to be working with that next generation,” Snider conveyed. “I don’t want to see it be passed to an overseas corporation that can come in and buy out the property just as an investment tool and then move out of it if it’s not a good investment for them. I want to see it stay as a family generational farm.”

Currently, Snider is working alongside other agents to help explain and educate local farmers on Whole Farm Revenue Protection. Snider stated that if a farmer is unaware or not educated on policies that are available to them, they will be less likely to participate in something that could really benefit them and their farm.

“We do our best to interpret the information that is given to us,” Snider added. “And we do our best to educate the grower.”

Putting the concept of crop insurance into simpler terms, Snider explained that insurance as a whole is a “pool.” He referenced homeowners insurance to best explain the importance. Snider stressed that whether you own a large or small house, both houses still need to be insured. “Maybe you have 20 small homes in a flood area that get wiped out and 10 large homes that are up on the mountainside. If you allow just the small homes to be insured, then there wouldn’t be enough money in the pool to pay for those houses wiped out in the flood. We need the money from the large homes (as well); we need that premium in the pool to pay for losses. Maybe the next year you have the large homes that are wiped out by a landslide on top of the side of the hill.”

After explaining this analogy, Snider applied this back to insuring our nation’s crops. “We need to have a pool of money from large farms and small farms. These growers are contributing this money into the pool and they might go 10 years without a loss. The Midwest may have a loss and then two years later the West Coast, California specialty crop growers might suffer a loss or a drought. We need to have some sort of premiums paid by both types of growers, small and large.”

Snider further added that, “we shouldn’t discriminate against a large farmer for being successful or discriminate against a small farmer for deciding to be a small family farm. Just because you have 1,000 acres or 100 acres doesn’t mean you’re any different. I think it’s economies of scale and some commodities you have to have more acreage to earn a living.”

In the end, Snider said he only wants the best for his county. “As you can tell I’m passionate about agriculture. I’m a Farm Bureau board member as well, here in Kern County. I just want to keep Kern County in the ag industry. I want to keep Kern County competitive. Hopefully it rains for us and we don’t have to talk about the drought long-term, and we can get some more water storage, and we can get back to the hay-day of agriculture.”