Members of Congress Share Support for Crop Insurance

Congress recently heard loud and clear from America’s farmers that they must do no harm to crop insurance as they consider programs to support rural America.

Farmers representing a diverse range of commodities testified last week before a House Agriculture Subcommittee hearing called by Subcommittee Chairwoman Cheri Bustos (D-Ill.) to share their experience with the farm safety net.

“We’ve heard time and again how critical crop insurance is as a risk management tool for farmers,” Chairwoman Bustos said in her opening remarks.

Growers spoke to the effectiveness of the crop insurance program and its irreplaceable role in the farm safety net. Each of the farmers had been personally affected by either weather disasters, market volatility, or the pandemic. Sometimes even all three.

No matter the challenge, crop insurance was there to help them manage their risks and keep growing another season.

Their messages of support for crop insurance were quickly echoed by several of the members of Congress in attendance, including Congressman GT Thompson (R-Pa.), Ranking Member of the full committee:

“Rather than wait for an act of Congress, farmers need reliable assistance that only a standing program can provide and there is no better example of a program that responds quickly when needed than crop insurance. Above all else, we must first do no harm to the existing safety net.”

Several farmers underscored Congressman Thompson’s message on the timeliness of crop insurance assistance. The crop insurance program utilizes a unique public-private partnership to deliver indemnity checks in just days or weeks – not months, or even years, as can be the case when relying on ad hoc disaster assistance.

Congresswoman Angie Craig (D-Minn.) noted that the testimony before the subcommittee and conversations with her constituents had made it clear that “risk management tools like crop insurance are more important than ever. Federal crop insurance has been a success story because it’s actuarially sound and consistently works for farmers.”

Crop insurance is popular and trusted by farmers because it is affordable, widely available, and economically viable. It gives farmers the tools they need to tackle the challenges of today – and tomorrow.

Agricultural Coalition Sends Letters Urging Federal Leaders to Protect Crop Insurance

With a new Administration taking control in Washington, D.C., and many new members joining Congress, it’s more important than ever to remind elected leaders the crucial role crop insurance plays in protecting farmers, ranchers, and rural communities.

That’s why a group of 58 farming, banking, and conservation organizations sent letters last week to House and Senate budget and appropriations committees, as well as to Secretary of Agriculture Tom Vilsack and leaders at the Office of Management and Budget, asking them to protect crop insurance and avoid any harmful budgetary reductions.

The letters, which arrived in the respective chambers just as leaders turn to the FY2022 budget, highlight the fact that the past several years have been incredibly challenging for farmers and ranchers because of drastic weather extremes, the disruption of international markets, the COVID-19 pandemic and numerous other unforeseen challenges.

“Even in good years, farmers need access to a strong and secure Federal crop insurance program,” the letter states. “The strength and predictability of the program is only more critical given uncertainty that characterizes the production agriculture sector. USDA and Congress have taken extraordinary ad hoc measures over the past three years to ensure the financial security of rural America.

“It would only serve to undercut these efforts to propose harmful changes to a crop insurance program that provides predictable, within-budget assistance to farmers in a way that helps lenders continue to support America’s farmers and ranchers. It is the certainty of the crop insurance program that provides critical reassurance to lenders.”

The letters, which were signed by groups ranging from the American Farm Bureau Federation to the National Association of State Departments of Agriculture to the National Farmers Union, close by asking lawmakers to continue supporting farmers’ most important risk management tool.

Crop Insurance Receives Bipartisan Praise

Autumn is here and most of America’s farmers are in the full swing of harvest. As farmers are working long hours in the field, legislators on Capitol Hill are tackling a different kind of challenge: implementation of the 2018 Farm Bill.

The 2018 Farm Bill was passed last December and included key provisions to strengthen crop insurance and solidify its position as the most important risk management tool for farmers.

The Senate Agriculture, Nutrition, and Forestry Committee recently held a hearing where Deputy Secretary of Agriculture Stephen Censky provided an update to senators on the USDA’s progress on implementation of the legislation.

With crop insurance being a critical program for rural America, it is no surprise that it received praise from both sides of the aisle during the hearing.

During his opening statement, Censky applauded the federal crop insurance program, saying that it “has been a vital part of the farm safety net.”

Censky also noted “key provisions related to veteran farmers and ranchers have been implemented that made crop insurance more affordable and with more robust coverage.”

National Crop Insurance Services previously commended Congress for including provisions in the Farm Bill to expand crop insurance to veteran farmers. This will help expand the farm safety net to traditionally underserved communities and give veterans the tools they need to effectively manage their farming risks.

Committee Chairman Senator Pat Roberts (R-KS), also touted the crop insurance program, particularly during what has been a difficult year for farming.

“This fall, as producers are trying to harvest their crops, challenges have continued just this past week,” Roberts said. “The 2018 Farm Bill does provide important risk management tools such as crop insurance to mitigate the risk and losses from these unpredictable weather-related events.”

Ranking member Senator Debbie Stabenow (D-MI) joined in the bipartisan praise, noting that the 2018 Farm Bill “recognizes the diversity of American agriculture” and expands access to the federal crop insurance program for new crops and types of production.

All told, the crop insurance program provides a dependable risk management tool for a wide variety of crops and farmers of all sizes. More than one million crop insurance policies protect 90 percent of farmland. It also covers more than 100 crops, a fact that was cited by Senator John Boozman (R-AR) during his line of questioning.

“Crop insurance is certainly a cornerstone of reform policy, provides crucial risk management tools for producers and covers well over 100 crops,” Boozman said.

With such high praise, it’s easy to see why Congress strengthened crop insurance in the 2018 Farm Bill.

As America’s farmers harvest this year’s crop and prepare to sow again in the spring, they know that they can depend on the affordable and reliable safety net provided by crop insurance.

House Crop Insurance Caucus Shares Importance of Farm Safety Net

Congressional staff filled a hearing room on Capitol Hill last week for the official launch of the bipartisan House Crop Insurance Caucus, hosted by co-chairs Cheri Bustos (D-Ill.) and Glenn “GT” Thompson (R-Pa.).

The House Crop Insurance Caucus will work to share with lawmakers the benefits of crop insurance and demonstrate how this program helps our farmers endure hardship by mitigating their risks.

Bustos has seen first-hand how crop insurance can be a lifeline for farmers devastated by unexpected weather events. Her Illinois district was hit hard by the extreme weather that inundated the Midwest this spring. “Our growers and producers are hurting,” she said. “Our family farmers are hurting.”

“This bipartisan Crop Insurance Caucus will work arm-in-arm to educate other members about the importance of a strong farm safety net and agricultural economy,” Bustos said.

Thompson made it clear what’s at stake when it comes to protecting the Federal crop insurance program. “Having crop insurance is incredibly important,” Thompson said. “We know that agriculture is really about food security. And food security is really about national security.”

This briefing was just the first of many, as the caucus hopes to be an accessible resource for Congress and an avenue to encourage bipartisan collaboration to strengthen the Federal crop insurance program.

“This caucus aims to educate our colleagues and educate the general public on the importance and value of crop insurance.” Thompson explained. “It all starts today.”

Farmers and agriculture lenders also spoke alongside the members of Congress, sharing their personal experiences with crop insurance.

Illinois farmer Ron Moore discussed how the impact of crop insurance extends beyond individual farmers to the local economies that rely on the income generated by agriculture. “Crop insurance is a valuable tool that we have as farmers. It’s imperative that we continue to preserve that tool because it not only helps me as a farmer, but it also helps my community,” Moore said.

Heather Greenwalt, Assistant Vice President at Farm Credit Illinois, remembered the 2012 drought and the role crop insurance played in preserving family farms across the Midwest. It was a beautiful spring and all of the local farmers were so proud of what they were able to accomplish in the field, she recalled. Until one day it just stopped raining. It was the worst drought since the Dust Bowl.

But the farm safety net worked as it was designed. Private crop insurance companies worked efficiently to deliver aid to farmers, saving tens of thousands of jobs along with taxpayer money.

“Crop insurance in 2012 was the difference in people staying in the agriculture industry in 2013,” Greenwalt said. “And crop insurance is again in 2019 going to be a major and crucial risk management tool for many farmers and producers.”

Risk is an intrinsic part of farming and producers are always calculating the variables that can impact crop production or their herd. But Greenwalt knows that when disaster strikes, the farmers she serves can find comfort in knowing that crop insurance gives them options for relief.

Greenwalt added, “As an agent and as a farmer, a strong crop insurance program means for a strong rural economy and a strong food supply for our nation.”

Learn more about how the Federal crop insurance program works by watching our brand new Crop Insurance 101 video or visiting CropInsurance101.org.

Congressional Testimony Touts Benefits of Crop Insurance

Farmers across the country know first-hand the critical role the federal crop insurance program plays in protecting our nation’s supply of food and fiber. It’s an important risk management tool that supports both America’s farming communities and the rural economies that rely on them.

Michael Davenport, COO of Rain and Hail and Chairman of the American Association of Crop Insurers, brought this positive message to Capitol Hill today when he testified before the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management.

Davenport’s testimony highlighted the unique public-private partnership that allows crop insurance to be flexible, affordable, available, and predictable.

By offering a variety of insurance products, federal crop insurance provides growers with dependable coverage options that fit the requirements of their individual farm. And with new investments in technology and a continuous focus on high-quality customer service, private crop insurers can quickly process claims while keeping costs manageable.

The 2018 Farm Bill helped strengthen the federal crop insurance program, and Davenport thanked the committee for investing in the American farmer.

“With the continued bipartisan support for the public-private partnership crop insurance provides, farmers are able to receive a reliable and cost-efficient safety net to protect both themselves and the future of farming,” Davenport testified.

The overwhelming success of crop insurance has made it the cornerstone of the federal farm safety net. More than 1 million federal crop insurance policies provide more than $100 billion in coverage across 300 million acres of farmland in all 50 states.

“The bottom line is that the crop insurance program is successfully meeting the needs of thousands of farmers who can tailor their risk management needs to serve them best with the help of a local agent,” Davenport said.

And as farmers face significant challenges this year, Davenport emphasized to the committee that the private crop insurance industry is standing ready to provide timely assistance and “fulfill the promises of the Federal Crop Insurance Program to each and every farmer who purchased a policy.”

Farming can be unpredictable. But the federal crop insurance program provides a reliable safety net that benefits farmers and taxpayers alike.

Farm Groups Defend Crop Insurance Budget

Farmers and legislators celebrated the end of 2018 with the passage of a bipartisan Farm Bill that preserves the farm safety net and provides farmers with the tools they need to manage the unique risks of farming.

As Congress begins the annual appropriations and budget process, America’s agricultural community joined forces to ensure that the crop insurance program receives the full funding that it requires to be successful.

Sixty organizations, ranging from farm groups to conservation organizations and lenders, sent a letter yesterday to the House and Senate Budget Committees, as well as Agriculture Secretary Sonny Perdue, urging them to protect crop insurance during the budget process in recognition of its central importance to farmers and the rural economy.

Trying to balance the federal budget on the backs of farmers and ranchers would be a mistake, they wrote, with disastrous consequences for America’s heartland.

USDA has projected that 2018 farm profitability will be lower than it has been in over a decade, and farm income dropped more than 45% in five years. An over-reliance on budget savings from the agriculture community and from crop insurance will unquestionably undermine rural economies.  It’s also important to note that in a time of uncertainty in the farming and ranching community – from natural disasters to trade disputes to government shutdowns – the public-private partnership that is crop insurance has been a consistent and reliable risk management tool.  The certainty of federal crop insurance also offers lenders the assurances they need to continue to provide capital to America’s hard-working farmers and ranchers….

Cuts to crop insurance during this difficult time for rural America should be avoided.  Farmers and lawmakers agree that crop insurance is a linchpin of the farm safety net and is crucial to the economic and food security of rural America. The importance of crop insurance was just reaffirmed less than two months ago with the passage and signing of the 2018 Farm Bill, and we urge you to oppose cuts to crop insurance during this year’s budget process. 

Crop insurers and their allies in agriculture have been successful in fending off past attempts to weaken the farm safety net by harming this vital risk management tool. The overwhelming support crop insurance received during the 2018 Farm Bill debate is a testament to how popular the program has become – covering a record 334 million acres.

New Farm Bill with Strong Crop Insurance Becomes Law

President Donald Trump today officially signed the 2018 Farm Bill, making the five-year bill a law.

The American Association of Crop Insurers, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Independent Insurance Agents and Brokers of America, National Association of Professional Insurance Agents, and National Crop Insurance Services issued the following joint statement in response:

 It’s been a difficult year for farmers and ranchers from coast to coast, but rural America is ending 2018 on a high note with this farm bill. The new law keeps crop insurance affordable and widely available for agriculture, and it provides much-needed certainty heading into 2019.

 President Trump and Secretary Sonny Perdue have been vocal champions of the farm safety net and crop insurance, and they helped deliver in a big way for farmers and ranchers with this new law. Likewise, congressional leaders from both parties should be commended for their dedication in passing a bipartisan bill that provides the tools farmers need to manage their unique risks.

Senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI), and Congressmen Mike Conaway (R-TX) and Collin Peterson (D-MN) worked tirelessly throughout this farm bill process to make U.S. agriculture stronger. On behalf of the entire crop insurance industry and the customers we serve, thank you.

 Crop insurance, which is delivered by the private sector, has become a key component of U.S. farm policy. Each year, farmers spend between $3.5 and $4 billion to purchase protection on the crops they grow, ensuring taxpayers are not shouldering all the risk. When disaster strikes, insurance aid is distributed quickly to help farmers pick up the pieces and plant again.

This year, 1.1 million crop insurance policies provided $106 billion in protection on more than 130 types of crops covering 311 million acres.

Efforts by farm policy critics to weaken agriculture’s primary risk management tool were soundly rejected by Congress, which heeded farmers’ advice to “Do no harm to crop insurance.”

Crop Insurers Comment on Farm Bill Conference Report

Leaders from the House and Senate Agriculture Committees yesterday released details of the 2018 Farm Bill compromise.

The American Association of Crop Insurers, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Independent Insurance Agents and Brokers of America, National Association of Professional Insurance Agents, and National Crop Insurance Services issued the following joint statement in response:

Farmers and ranchers have seen their fair share of challenges in 2018 – from hurricanes, drought and wildfires to depressed commodity prices. The farm bill conference committee took a huge step today in helping them cope with these challenges by releasing a bipartisan package. We urge Congress to pass the farm bill immediately.

The 2018 Farm Bill maintains a strong crop insurance system because lawmakers knew that agriculture’s top risk management tool would be needed during these difficult times. They ensured that private-sector crop insurance would remain affordable and widely available for producers despite attempts by opponents of crop insurance to weaken this critical component of the farm safety net.

We applaud the leaders and members of the House and Senate Agriculture Committees, and the farm bill conferees, for crafting a comprehensive piece of legislation that has earned the backing of the agricultural community. We also thank our customers, who told lawmakers from Day 1 that protecting crop insurance was a top priority throughout this process.

Once Congress passes the new farm bill, we ask that the president quickly sign it into law, so America’s farmers and ranchers will have some certainty heading into the new year.

Both chambers of Congress will now vote on the pending conference report. If it passes, the 2018 Farm Bill will be sent to the White House for President Trump’s signature.

Farm Bill Conferees Speak out for Crop Insurance

Farm Bill conferees from the House and the Senate got together yesterday for a public meeting, and the 56 legislators in attendance were each given three minutes to discuss their priorities.

In the hours of testimony that followed, not a single negative word about crop insurance was uttered.  But, there were plenty of accolades.

Below is a collection of some of what was said about crop insurance.

 “We can all agree that our farmers should have robust risk management tools, including strong crop insurance assistance and new tools for our dairy farmers who’ve been struggling. … I do not believe these critical programs should be targeted for cuts.”

-Ranking Member Debbie Stabenow (D-MI)

 

 “We both start out recognizing that crop insurance is number one, right? So we maintain crop insurance. That’s our number one risk management tool for our farmers on the safety net.”

-Sen. John Hoeven (R-ND)

 

 “We’ve protected a strong safety net by maintaining a crop insurance program that will allow producers to stay competitive and be more innovative.”

-Sen. Joni Ernst (R-IA)

 

 “Farm country needs a multi-year bill that protects crop insurance, tightens the safety net, opens markets, and makes responsible investments in our communities.”

-Rep. Roger Marshall (R-KS)

 

The House and Senate bills both maintain “the highest priority of our farmers and that is the maintenance of a good crop insurance program. I heard it at every town hall, every forum, and every conversation with a farmer.”

-Rep. Kevin Cramer (R-ND)

 

“As a member of the House Ag committee, I also understand the necessity of this bill in strengthening several key provisions. This includes protecting crop insurance….”

-Rep. Cheri Bustos (D-IL)

Crop Insurers Send House Ag Committee a Letter of Support

One day prior to the House Agriculture Committee’s scheduled mark-up of the 2018 Farm Bill, crop insurers and agents sent Committee leaders a letter of support.  That letter can be read in its entirety below:

April 17, 2018

The Honorable Mike Conaway
The Honorable Collin Peterson
House Committee on Agriculture
1301 Longworth House Office Building
Washington, DC  20515

Dear Chairman Conaway and Ranking Member Peterson:

Over the past three years, Committee members have heard from hundreds of farmers spanning all corners of the country during field hearings and listening sessions.  One common refrain has reverberated throughout rural America: Crop insurance is a top Farm Bill priority.

Support has been widespread, from the Texas farmer who explained, “Crop insurance is indispensable,” to the Illinois grower who left a lasting impression by saying, “Crop insurance is working; don’t screw it up.”

H.R. 2, the Agriculture and Nutrition Act of 2018, took these recommendations to heart and maintained a strong crop insurance system.  We applaud the Committee’s continued support of crop insurance, and we look forward to working with you both to get a Farm Bill with a strong crop insurance title across the finish line this year.

Unfortunately, some farm policy critics are targeting crop insurance for harmful cuts and changes.  Legislative proposals to limit farmer participation and make private-sector delivery less viable would have devastating effects as rural America deals with a depressed economy and farmers cope with the aftermath of weather disasters.

As you continue to work to oppose these harmful crop insurance proposals on the House floor, rest assured that America’s crop insurers and agents will be there to assist in any way needed.

Sincerely,

American Association of Crop Insurers
Crop Insurance and Reinsurance Bureau
Crop Insurance Professionals Association
Independent Insurance Agents and Brokers of America
National Association of Professional Insurance Agents
National Crop Insurance Services

Republicans Tout Crop Insurance During D.C. Forum

Before Congress’ spring recess, several Republican members of the House Agriculture Committee participated in a Farm Bill discussion hosted by the Washington Examiner.

And one thing became very clear during the conversation: Members are united in keeping crop insurance strong during the upcoming debate.

This support is not surprising.  Crop insurance is delivered by the private sector, which helps maximize efficiency, and farmers pay for protection so taxpayers aren’t left holding the entire bag after disaster strikes.

Today, it covers more than 130 different kinds of crops and protects a record 311 million acres of ranch and farmland – an area the size of California, Texas and New York combined.

Forum participants said that efforts to weaken the crop insurance system, like using a means test to exclude some farms from protection, will only make crop insurance more expensive for remaining farmers.

“The backbone of the safety net is crop insurance. And it is a risk management tool. We don’t, we should not, means-test risk management,” said Committee Chairman Mike Conaway of Texas. “Doing things to…force premiums higher and higher make no sense whatsoever.”

Rep. Ted Yoho, a Committee member from Florida, agreed, noting that instead of weakening the system Congress should look to provide even more protection to more crops.

Weakening crop insurance “would create more uncertainty, especially at a time when our farm income is at a 12-year low,” he said.

Missouri Rep. Vicky Hartzler echoed Yoho’s support during the panel discussion and called preserving crop insurance her “number one priority” during the Farm Bill.

“Because it is a very, very important risk management tool for farms and it’s also important for creditors,” she said.

Hartzler, who owns and operates a farm, explained to the audience that farming is capital intensive and that farmers must borrow money each year to plant – sums that can total more than most Americans borrow to buy a home.

Insurance gives banks confidence to extend those loans, she said, because it helps farmers manage their business’ unique risks and avoid bankruptcy after floods and droughts.

Congressman Rodney Davis said keeping crop insurance is also about being fiscally responsible while providing some certainty for the Illinois farmers he represents.

“The old way we used to do things with disaster declarations, was not budgeted,” he said, using the 2012 drought as an example of how the new system works.

Damage predictions were close to $40 billion during that drought, he noted, but aid delivered to farmers was closer to $17 billion because of the public-private partnership and because farmers help fund the system by paying premiums and shouldering losses through deductibles.

“We have to have a crop insurance program,” Davis concluded.  “It’s saving money for American taxpayers.”

Chairman Conaway Vows to Defend Successful Crop Insurance System

The House Agriculture Committee is diligently working on a new Farm Bill, which Committee Chairman Mike Conaway (R-TX) hopes will receive a vote in the House of Representatives before the end of March.

Conaway, who addressed the crop insurance industry’s annual convention yesterday, said that would leave plenty of time to work out differences with the Senate version of the bill and ensure new legislation is finalized before the Farm Bill expires at the end of September.

“We will have difficult decisions to make,” he said, noting that there is “no reason to put it off just because [the debate] will be hard.”

Conaway said the bill leaving his committee will include a strong crop insurance component, and he will work to fight off attempts to weaken crop insurance.

“Our mantra is ‘don’t screw up crop insurance,’” he explained.

Conaway’s support was music to the ears of crop insurers, who believe their track record under the current Farm Bill is noteworthy.  Tom Zacharias, president of National Crop Insurance Services, outlined these successes during his opening remarks at the meeting.

“Farmers have spent nearly $15 billion in premiums since 2014,” Zacharias said.  “They’ve also shouldered more than $30 billion in deductibles.”

Because farmers help pay into the system, taxpayers aren’t left footing the whole bill after a disaster strikes.  That helps explain why crop insurance costs are below budget.

Congressional Budget Office projections for crop insurance are down nearly $10 billion since the 2014 Farm Bill was enacted.

Zacharias said the industry has also invested heavily in improving efficiency and stamping out waste under the current Farm Bill.

Crop Insurance Takes Center Stage at Senate Farm Bill Hearing

Crop insurance industry leaders testified this week before the U.S. Senate, touting the benefits of the program to our nation’s farmers and ranchers.

But they were far from the only ones promoting crop insurance in what was the Committee on Agriculture, Nutrition and Forestry’s largest Farm Bill hearing to date.

Committee Chairman Pat Roberts (R-KS), an architect of the modern crop insurance system, sang the program’s praises in his opening statement.

“When producers put seeds in the ground, they do not expect a hail storm to hit right as they are ready to harvest their crops,” said Roberts. “They would much rather reap the benefits of their hard work in the marketplace than receive an indemnity. The last Farm Bill made significant changes, and unlike previous policies, today’s commodity programs — like crop insurance — are triggered only when there is a loss.”

Michigan Senator Debbie Stabenow, the ranking Democrat on the Committee, explained some of the improvements to crop insurance she’s championed and noted her continued support.

“I have fought to expand and strengthen crop insurance for all farmers, from expanding coverage to specialty crop growers, organic producers, and beginning farmers, to providing a whole-farm option for diversified farms,” she explained.

Their efforts were lauded by the witnesses who appeared during three panels to describe their priorities for the next Farm Bill.

Bruce Rohwer, National Corn Growers Association board member, told the Committee that crop insurance has been critical to helping farmers survive sustained low commodity prices, and should be maintained.

“Without crop insurance and commodity title payments, the financial wherewithal of [family] farms would likely face serious erosion in the current environment,” Rohwer said.

Soybean farmer Kevin Scott said the American Soybean Association also strongly supported crop insurance and called on lawmakers to curb any attempts to put caps on the program, pointing to recent research that demonstrates such caps would reduce participation and have a significant impact on family farms.

Rohwer agreed, explaining, “A shrunken risk pool in insurance is not good for anybody. That would make crop insurance less effective, which would … make access to credit more difficult.”

David Schemm, president of the National Association of Wheat Growers, likewise stressed the importance of keeping the crop insurance program intact, highlighting the program’s low improper payment rates, which is about half that of the government average.

“The federal crop insurance program has been and continues to be farmers’ most important risk management tool. A farmer might go many years paying premiums for a policy and rarely get an indemnity,” Schemm said. “And they would much rather get a return from the market than become eligible for an indemnity.”

During the final panel of the hearing, Roger Johnson, president of the National Farmers Union (NFU), and Mark Haney, president of the Kentucky Farm Bureau Federation, weighed in and explained the importance of maintaining a strong safety net in today’s difficult economic climate.

“We continue to witness pressure in the countryside as commodity prices remain low and farmers and ranchers struggle to adjust,” Johnson said. “Given this scenario, NFU believes that the Farm Bill safety net should provide meaningful assistance in two fundamental circumstances: when disaster strikes and when prices are low and remain below the cost of production for extended periods of time. These two scenarios have separate solutions, the first is crop insurance and the second is commodity programs.”

To view this hearing, “Commodities, Credit, and Crop Insurance: Perspectives on Risk Management Tools and Trends for the 2018 Farm Bill,” click here.

Industry Leaders Tout Crop Insurance Benefits at Senate Hearing

Crop insurance industry leaders testified today before U.S. Senators, stressing the vital role crop insurance plays in providing risk management to farmers across the country.

Their testimony was part of the Senate on Agriculture, Nutrition and Forestry hearing, “Commodities, Credit, and Crop Insurance: Perspectives on Risk Management Tools and Trends for the 2018 Farm Bill.”

Ron Rutledge, president and CEO of Farmers Mutual Hail Insurance Company of Iowa, emphasized the breadth of the protection that is provided by crop insurance in his testimony, noting that protection is available on more than 100 different crops in all 50 states, including rapid growth among specialty crops.

Rutledge reminded the Committee that crop insurance policies must be purchased by farmers and only pay an indemnity when producers face a verifiable loss above and beyond their deductible. Yet, despite the critical role crop insurance plays in providing fiscally responsible protection to farmers, crop insurance will face attacks during the 2018 Farm Bill process.

“I would like to point out, however, that on average over the last five years, 54 percent of Farmers Mutual Hail’s customers paid premiums out of their own pockets and received zero indemnity payments…That’s how insurance is supposed to work,” Rutledge told lawmakers.

Rutledge called on the Committee to continue their support for the private-sector delivery of crop insurance and for affordable and effective crop insurance for producers of all sizes, crops and regions.

Specifically, he asked that Congress oppose efforts to harm crop insurance in the 2018 Farm Bill, including cuts to the private-sector delivery of crop insurance, reductions to premium discounts, and arbitrary means testing participation.

William Cole, chairman of Crop Insurance Professionals Association, also testified before the Committee, applauding the work of the Committee Chairman Pat Roberts (R-KS), who authored the Agricultural Risk Protection Act of 2000. Since then, participation in crop insurance has doubled and costly, un-budgeted disaster bills have become a thing of the past.

“The Chairman’s work is largely responsible for the success story of federal crop insurance, which today insures 90 percent of all U.S. planted acres, 290 million acres in all, with $100 billion in liability protection in force today. Thank you, Mr. Chairman, for all you have done for America’s farmers and ranchers by ensuring that they have access to something as basic as insurance, which most Americans simply take for granted,” Cole testified.

Cole noted that in addition to benefitting farmers and taxpayers, crop insurance has consistently come in under budget. Since the 2008 Farm Bill, crop insurance has yielded $17 billion in savings and is on target to save taxpayers another $6.7 billion over the next 10 years, he said.

Cole asked lawmakers to consider three key principles while debating the 2018 Farm Bill: that the current Farm Bill is below budget; that crop insurance is critical and gives taxpayers a big bang for the buck; and that farmers have a strong “Title 1,” or non-insurance components of the safety net, for times of depressed markets.

In addition to Rutledge and Cole’s oral testimonies, The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”), the nation’s oldest and largest national trade association of independent insurance agents, provided a written statement to the Committee.

IIABA urged Congress not only to reject any attempts to cut or cap the budget for crop insurance, but to expand the role of the federal crop insurance program, and to continue its commitment to farmers and ranchers across the country.

Ag Secretary, Lawmakers Discuss Crop Insurance

Secretary of Agriculture Sonny Perdue recognized crop insurance as an important part of the farm safety net and said the program is critical to the country’s food security during recent Senate testimony about the proposed United States Department of Agriculture (USDA) budget.

Committee members from both sides of the aisle also voiced support.

Sen. John Hoeven (R-ND) described crop insurance as “the number-one risk management tool for our producers,” adding, “particularly as we look at a drought year and low commodity prices, it is vitally important.”

Sen. Jon Tester (D-MT) meanwhile made it clear that farmers don’t make money off crop insurance and would rather plant a successful crop than receive an indemnity payment.

Tester’s comment was aimed at a recent controversial statement Secretary Perdue made in the Senator’s home state, when the Secretary implied some farmers may buy insurance hoping it will pay out on a lost crop. The Secretary has since asked that these remarks not be misinterpreted as no farmer hopes to lose a crop.

The numbers bear that out, proving that crop insurance helps farmers pick up the pieces after disaster, not profit. Over the past five years, the cumulative nationwide loss ratio has averaged 0.91 (any number below 1.0 means that insurance premiums paid were greater than what farmers received in indemnities).

In fact, one of the reasons that crop insurance is so popular on Capitol Hill is its structure that promotes accountability and reduces waste. Crop insurance requires all losses to be verified by a trained, independent third party, and farmers have “skin in the game” by paying premiums and shouldering a portion of losses.

Even in the aftermath of the historic 2012 drought, America’s farmers did not make money off crop insurance, but used it to survive losses and plant again the following year.  In fact, farmers paid more than $4 billion in premiums and shouldered approximately $13 billion in losses before their policies kicked in.

Furthermore, since crop insurance providers have dollars at risk on every policy, they are financially incentivized to eliminate wrongful claims.  That is why companies have invested millions in new technology and training and education efforts.

The efforts have paid off, with instances of improper crop insurance payments in 2016 at just 2.02%, down from 2.2% in 2015, according to the Office of Management and Budget.  This is significantly lower than the government-wide improper payment rates of 4.67% in 2016 and 4.39% in 2015.

As budget discussions continue—one thing is very clear. Crop insurance is an excellent taxpayer investment and is working to constantly improve.

Sen. Grassley Sets Stage for New Farm Bill, Calls Crop Insurance His Top Priority

220px-sen_chuck_grassley_officialIowa Republican Senator Chuck Grassley says his top Farm Bill priority in the 115th Congress is to preserve a vigorous crop insurance program, noting there is no safety net more valuable to farmers and taxpayers.

“It not only saves the taxpayers money, because obviously if we didn’t have crop insurance and you had disasters in agriculture, the taxpayers would be 100 percent of it,” Sen. Grassley, a member of the Senate Agriculture Committee, noted in a press conference last week. “In addition to saving the taxpayers money, we also are encouraging farmers to plan ahead and to manage risk…95 percent of the farmers in Iowa do that.”

This is not the first time that Sen. Grassley has taken to the airwaves to tout crop insurance’s importance. In September, he was outspoken in an Iowa Agribusiness Radio Network interview about the importance of crop insurance as eastern Iowa began rebuilding in the wake of severe flooding.

And just two months later, he joined Committee Chairman Pat Roberts (R-Kan.) in an interview with KIOW News and, again, emphasized that the policy works well for both farmers and taxpayers.

Grassley added in his recent press conference that Farm Bill discussions are set to begin soon with hearings in the Agriculture Committee

Sens. Grassley and Roberts: Crop Insurance is the #1 Issue for Farmers

With discussions around the next Farm Bill right around the corner, Senators Chuck Grassley (R-Iowa), and Pat Roberts (R-Kan.) are passionately touting crop insurance as an essential risk management tool.

The two Senators recently addressed the issue in an interview with KIOW News Director A. J. Taylor.

“This is the Number One issue that farmers talk to (Sen. Grassley) and to myself about…all throughout farm country…all of us know…we have to protect crop insurance—it’s the Number One tool in the risk management toolbox that farmers must have,” said Sen. Roberts. “It’s a great program and it’s terribly important.”

Sen. Grassley, who has been outspoken about the importance of crop insurance to eastern Iowa in the wake of severe flooding, noted that with crop insurance, which is partially funded by farmers and delivered by the private sector, works for both farmers and taxpayers.

“If you have a hurricane, a flood, tornadoes—all the natural disasters you can have—when the federal government comes in…it’s 100% paid by taxpayers.  But with crop insurance, the farmers are paying into it, and you are buying ahead and you are trying to manage your risk,” said Sen. Grassley. “It’s such a smarter way to do it than going back to the old [ad hoc disaster] system.”

To listen to the interview in its entirety, click here.

New Congressional Ag Leaders Pledge to Protect & Strengthen Crop Insurance, Encourage Teamwork to Address Challenges Ahead

The new leaders of the agriculture committees in Congress addressed crop insurers during the annual meeting in Bonita Springs, Fla., of the American Association of Crop Insurers and the National Crop Insurance Services and pledged to protect and strengthen this public-private partnership.

In separate taped videos, Sen. Pat Roberts, the chairman of the Senate Committee on Agriculture, Nutrition and Forestry, and Rep. K. Michael Conaway, the chairman of the House Committee on Agriculture, delivered parallel messages explaining how the 2014 Farm Bill made crop insurance the key risk management tool available to farmers.

“Crop insurance is the cornerstone of the farm safety net,” said Roberts.  “You have my word to continue to protect, preserve, and improve the number one risk management tool in every farmer’s toolbox.”

They also warned about the challenges ahead and stressed the need to work as a team to stave off attacks.

“The critics of farm policy and crop insurance are not going to go away,” explained Conaway. “Despite some $17 billion in cuts to crop insurance, some are pushing for even more.  They bill it as reform, but we all know their real end game is to kill crop insurance.”

Roberts added, “Together we must be ready and willing to tell stories of the great successes” of crop insurance.

Congressional Leaders, Administration Officials and Farm Groups Praise Crop Insurance

“Over the last 15 years, crop insurance is where we have been trying to help move farmers in terms of taking advantage of risk management tools for their crops,” House Majority Leader John Boehner told Agri-Pulse during a taped interview. The leader’s comments came as both the House and Senate began hearings on the next Farm Bill and would be debating the future of farm safety net programs.

Boehner assured listeners that crop insurance would remain as a centerpiece for managing risks on the farm. “It is still the central focus of where we think farmers ought to be able to have easy access to insure their crops and insure some type of revenue out of it. It makes the most sense to me and always has,” he noted.

Crop insurance enjoys strong support in the Obama Administration as well. USDA Under Secretary Michael Scuse told attendees at the 2013 crop insurance annual conference that recent weather disasters have put the nation’s crop insurance system to the test, and the popular public-private partnership had met the challenge. “To this day, I have yet to have a single producer call me with a complaint about crop insurance,” he said. “That is a testament to just how well your agents, your adjusters, the companies, and Risk Management Agency (RMA) worked together in one of the worst droughts in the history of this nation.”

Just days after those comments were made, a coalition of more than 40 commodity groups, lending organizations, input suppliers and other agricultural industry stakeholders sent a letter to members of the House and Senate Agriculture Committees in support of meaningful and affordable crop insurance.

The letter reminded elected officials that in agriculture, risk is always present and that crop loss will occur in some part of the United States each year.

“The significant, widespread crop losses of 2011 and 2012 have clearly demonstrated the need for crop insurance protection and the public-private partnership of program delivery,” the letter stated.

The signatories noted that crop insurance is the cornerstone of most farmers’ risk management portfolios, and that farmers pay a premium to enjoy its protection. “Federal crop insurance provides and effective risk management tool to farmers and ranchers of all sizes when they are facing losses beyond their control, reduces taxpayer risk exposure, makes hedging possible to help mitigate market volatility and provides lenders with greater certainty that loans to producers will be repaid,” the letter stated.

House Marks Up, Senate Passes Farm Bill

The House Agriculture Committee marked up its Farm Bill on July 11, sending the package to the full House for consideration. The current Farm Bill expires on September 30. Overall, the bill would cut Agriculture Department spending by $35 billion over 10 years, or $12 billion more than the Senate. Almost all the additional cuts come from food stamps.

The bill, known as the Federal Agriculture Reform and Risk Management Act (FARRM) maintains crop insurance as the primary risk management tool for farmers and ranchers. In a press statement, Chairman Frank Lucas of Oklahoma and Ranking Member Collin Peterson of Minnesota called FARRM “a bipartisan bill that saves taxpayers billions, reduces the nation’s deficit, and repeals outdated policies while reforming, streamlining, and consolidating others.”

The bill is awaiting floor time and an eventual vote in the House of Representatives.

The Senate approved the bi-partisan 2012 Farm Bill on June 21 with an overwhelming majority vote — 64 to 35. The bill passed by the Senate contains two controversial crop insurance amendments that lack widespread support from most farm and ranch groups.

One amendment, sponsored by Senators Tom Coburn (R-OK) and Dick Durbin (D-IL) would apply income caps for farmers and ranchers who wish to purchase crop insurance. The other amendment, sponsored by Senator Saxby Chambliss (R-GA) would require mandatory farmers purchasing crop insurance to comply with strict soil conservation erosion standards.

In its coverage of the passage of the two amendments, DTN noted that in both cases, a majority of the Senate Agriculture Committee voted against the provisions, including both Chairman Stabenow and Committee Ranking Member Roberts. DTN speculated that the lack of support for both amendments is “a strong indication that without similar language coming out of the House, Coburn-Durbin is unlikely to make the cut” in the final bill that will come out of conference committee.

In a letter to Senator Stabenow following passage of the bill, a large number of national farm groups and lending institutions expressed their opposition to “amendments that will limit participation in crop insurance by producers, including efforts to impose means testing and limit premium support, and those that threaten efficient and effective private sector delivery.”

The American Association of Crop Insurers (AACI) and the Crop Insurance and Reinsurance Bureau (CIRB) applauded the passage of the bill, noting “farmers from across the country, agribusinesses, and the nation’s lending community sent a unified message to Congress this year: Do no harm to crop insurance.”

Both organizations also pointed out the critical role crop insurance played in 2011 while also underscoring the $12 billion in budget cuts the policy has endured since 2008. “As crop insurance takes a more prominent role in risk management strategies for farmers and ranchers, Congress should look for ways to strengthen crop insurance, not weaken it.”

Farmers Tell House Ag Committee: “Do No Harm” to Crop Insurance

Illinois farmer John Williams told the House Agriculture Committee that he firmly believed the number one goal of the 2012 Farm Bill should be to “do no harm to federal crop insurance,” during his testimony at the second of four field hearings held across the country throughout March and April to gather input in advance of writing the 2012 Farm Bill. The hearing was held on March 23, 2012 at Carl Sandburg College in Galesburg, Illinois.

Williams told the panel that crop insurance was not only an indispensible risk management tool, but an important component of his business marketing plan. “Crop insurance is a safety net in a time of disaster but it also is an integral part of my overall marketing strategy,” he said. “Because of revenue protection insurance, I can market aggressively and still be protected against market shifts.”

Members of the committee listened to testimony from two panels of Midwest producers of corn, rice, soybeans, wheat, sorghum, specialty crops and beef. Several of the witnesses underscored the importance of developing policy that appreciates and recognizes the risks involved with growing food and fiber. They stressed the need for an effective safety net and a choice of risk management tools so farmers can continue to produce a stable food supply and compete in the global marketplace.

Minnesota corn and soybean farmer John Mages told the committee, “first and foremost, please do no harm to federal crop insurance, which should be preserved, protected, and strengthened.” Mages, who is also president of the Minnesota Corn Growers Association, added, “we strongly oppose any further legislative or administrative cuts to federal crop insurance, and we oppose carrying conservation compliance or other rules applicable to the Farm Bill over to this critical risk management tool that we as producers help pay for.”

Fourth-generation southern Ohio farmer Craig Adams, told the committee that he was the only Wilmington College agriculture graduate of 1979 still engaged in full time agriculture “because of the 1980’s farm crises, poor yields,18 percent interest, and no functional crop insurance,” at the time. Adams told the committee that “crop insurance in its current form is the most effective answer to short crop years,” and that “any producer who desires an effective risk management tool can purchase crop insurance.”

House Agriculture Committee Chairman Frank Lucas (R-OK) underscored the importance of the field hearings and the role they will play in writing the 2012 Farm Bill. “The field hearings give Members of this Committee a chance to hear how programs are working for our agricultural producers. There’s no better way to accomplish this than to visit with folks in the countryside. It’s important to understand how we can write policy that works for all of agriculture,” he said.

During the committee’s third field hearing focusing on major farm issues in the southeast, held on Friday, March 30, 2012 at Arkansas State University’s Fowler Center, some of the same messages continued to be heard. Chairman Lucas said, “Now, I know that crop insurance—while a valuable tool for many producers—doesn’t work as well for producers down here. That’s why offering an array of programs is important and why we must work with the Risk Management Agency to improve crop insurance products for rice, peanuts and other crops that do not have higher buy-up levels.”

Georgia farmer Tim Burch, who grows cotton and peanuts, and serves on the Georgia Peanut Commission, urged Congress to pass a five-year farm bill and when doing so, to not undermine crop insurance. He commented that while he hopes Congress makes improvements to crop insurance so that its coverage can include other crops, he also urged Congress to “not harm crop insurance products.”

The last hearing will be held on Friday, April 20, at theMagouirk Conference Center in Dodge City, Kansas.

As World Population Hits 7 Billion, Agriculture Feels The Pressure

October 31, 2011 will mark the first time in history that seven billion humans will populate the planet, according to a recent United Nations report. The Executive Director of the UN’s Population Fund called the prediction “both a challenge and an opportunity,” noting that “globally, people are living longer, healthier lives and choosing to have smaller families.”

Commodity markets were already feeling pressure far in advance of the announcement as China placed record orders for feed grains to meet the demands of growing domestic protein consumption. The U.S. Grains Council projects that China will need to import 5-10 million tons of corn for the 2011/12 season, a huge increase from USDA’s estimate of 2 million tons for that period.

About the same time, the UN also updated its grain supply forecasts, noting that world markets remained remarkably tight. So while it seems that the world will slide by with enough food to accommodate its seven billionth inhabitant, the world population is expected to increase by another third by the end of the century.

No respected authority is arguing whether or not we’ll need more food. That’s a certainty. But farmers in the U.S. might have been surprised that the very policy that is in place to help ensure that America’s food production system is efficient and effective – crop insurance – is again under the microscope and was recently targeted by the White House for an additional $8 billion in cuts in the next decade.

That suggestion received a chilly, bi-partisan reception on the Hill by crop insurance champions of all stripes. U.S. Representative Frank Lucas (R-OK), Chairman of the House Agriculture Committee, and U.S. Senator Pat Roberts (R-KS), Ranking Member of the Senate Agriculture Committee, responded quickly, noting that although agriculture has and will continue to do its part to help balance the budget, “The President’s policy priorities reveal a lack of knowledge of production agriculture and fail to recognize how wholesale changes to farm policy would impact the people who feed us.”

“For example,” they said, “cutting $8 billion from the crop insurance program puts the entire program at risk. We have heard again and again from producers that crop insurance is the best risk management tool available. In jeopardizing this program, the President turns a deaf ear to America’s farmers.”

South Dakota’s Senator John Thune (R) agreed and stressed the importance that agricultural budget-cutting decisions should be left to those who understand how each program works, urging that the cuts “can’t be tilted and weighed too heavily against our farmers.”

But Democrats had a lot to say about crop insurance as well. Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) reiterated the view of Roberts and Lucas in a recent statement. “Agriculture will do its fair share in helping to reduce the deficit, but as I’ve always said, decisions on where those cuts come from should be made by the Agriculture Committee, where we constantly receive input from farmers and others in the agriculture community,” she said. “Farmers across the country have made it very clear that maintaining crop insurance and responsible risk management tools are critical, especially as droughts, floods, and devastating storms have battered farms across the country.”

Arkansas Senator Mark Pryor (D) was even more blunt during his weekly conference call with reporters. “Rural America is going to take it on the chin, and that is what you see with the Obama plan,” Pryor said.

Rep. Collin Peterson (MN), the top Democrat on the House Agriculture Committee, was likewise critical, especially when it came to one component of farm policy, which he considers essential to rural America’s success. “I’m very opposed to cutting more from crop insurance,” Rep. Collin Peterson (D-MN) said, explaining that a program this important cannot withstand cuts of that magnitude again, the way it did in 2008.

Despite its broad coattails of political support, crop insurance is again under scrutiny. The question becomes how much more can the budget committee take before the policy itself becomes impotent when calamity strikes the farm?

And the answer to the question will hold serious ramifications, not just for the U.S. farmers and ranchers, but also for the growing number of hungry mouths to feed.

A Broad Spectrum of Voices from All Corners of Agriculture Sing the Praises of Crop Insurance

The recent Farm Bill hearing in Wichita, Kansas has been called “a crop insurance pep rally” by some who point to the fact that when a panel of farmers and producers were asked by Senate Ag Committee Chairman Debbie Stabenow (D-MI) what they thought was the most important farm policy, the answer was “crop insurance.”

This panel isn’t the exception but the rule. In fact, over the last six months, a large swath of rural America has praised the farm policy that has truly become rural America’s most cherished tool for hedging risk: crop insurance.

These quotes are just a sampling from the opinion pages, newswires and radio stations from coast to coast.

National Farmers Union President Roger Johnson explains in an Omaha World Herald op-ed on May 31, 2011 why crop insurance is so important in a time of tight budgets and serious fiscal constraints:
“Crop insurance — which is the most important component of the farm safety net for specialty crop producers and growers of most major crops — was specifically created to ensure that private insurance companies, not taxpayers, shoulder the burden of funding payouts following crises.”
In an op-ed appearing in The Hill on June 8, 2011, Congressman Larry Combest and reigning Miss America Teresa Scanlan spoke about the role of farm policy in shielding farmers from what is otherwise a very risky business:
“That is where our nation’s farm policy comes into play — to provide some stability for our farmers and for the country’s food and fiber supply while limiting taxpayer exposure. A good example of this is crop insurance. Farmers buy policies, made possible with government investment, to act as a cushion. When disaster strikes, private insurance companies cover the bulk of the losses, shielding taxpayers from tremendous risk exposure. But, without the public partnership, multiple peril insurance on a crop — something we take for granted on our cars and homes — would not be possible.”
During an interview on Agri-Pulse’s Open Mic on June 13, 2011, USDA’s Chief Economist Joseph Glauber notes the importance of crop insurance to the nation’s farmers:
“Most farmers now see [crop insurance] as a primary tool for risk management. An important tool for risk management.”
The Dallas Morning News recently featured an op-ed by Texas farmer Matt Huie that says lenders require the type of assurance found in strong farm policies to make loans to farmers, particularly young ones like him.
“Because of the many challenges, all young farmers depend on components contained in the 2008 Farm Bill—most notably crop insurance—to provide lenders with the confidence and collateral they need to extend loans. Politicians continue to put these components to the test, even though without crop insurance, farmers throughout the South, Midwest, and various other parts of the country, would have been left with no crop—and no starting point on which to rebuild—due to the range of floods, droughts, tornadoes and frosts, this year alone.”
Former Agriculture Secretary and Nebraska Senator Mike Johanns (R) recently told an agriculture policy group that although crop insurance has been cut by more than $12 billion in the last several years, there is no telling what policies will be slashed during the on-going budget discussions:
“Crop insurance is the real safety net,” he said. Johanns explained that with the government not having to make loan deficiency payments and counter-cyclical payments due to higher crop prices, the key component to the Farm Bill, especially as a safety net, is crop insurance. He added that,“the battleground here is to keep crop insurance in place and do everything we can to improve it.”
In an op-ed appearing in the Fargo Forum on April 24, 2011, Roger Widner, Chairman of American Crystal Sugar Co. in Minnesota discusses federal spending on farm policies and what Minnesota farmers rely on most for hedging their risk:
“Meanwhile, the policies in place to help the state’s corn, soybean and wheat growers hedge risk continue to operate under budget and represent less than one-quarter of 1 percent of federal spending. Then there’s arguably the most important tool to Minnesota farmers: crop insurance. Crop insurance was specifically designed to shield taxpayers from mega-payouts that could result from catastrophic situations such as commodity price collapses and weather disasters.”
The American Farm Bureau Federation’s Mary Kay Thatcher explains to radio listeners across the country on May 13, 2011, the value that farmers place in their crop insurance policies:
“It’s just a real good risk management tool. We’re able to have famers pay part of the premium and have government pay part of the premium to make it affordable and it just ensures that if we have tough weather – especially like we’re having now – lots of wildfires in Texas and a lot of flooding in the Midwest, that farmers are able to indeed get enough assistance that they can farm for another year.”
After touring a drought-ravaged part of his home state of Kansas, Sen. Pat Roberts commented about the need to ensure that the 2012 Farm Bill contains effective farm policies:
“If there is anything we want to preserve and strengthen, it is crop insurance.”
Alan Rosendahl, a Senior Vice President at Iowa State Bank and a farmer in Iowa wrote an op-ed in the July 13, 2011 edition of the Cedar Rapids Gazette which detailed the value that banks place on crop insurance when making loans to farmers:
“As a banker and a farmer, I can tell you that federal crop insurance is the only thing that makes it possible for us to loan money to small farmers in Iowa. Banks, like other businesses, need to turn a profit to stay in business. But loaning money to small and beginning farmers can be very risky, because they often have less net worth, and tighter cash flows. Coupled with the fact that small banks are inherently risk-averse, particularly after the banking implosion of 2008, and you can see the dilemma.”
A reporter with the Argus-Leader noted that at a regional meeting, South Dakota farmers told Senator John Thune (R) that access to reasonably priced crop insurance is their safety net and is necessary to safeguard their futures:
“It makes sense to make this the centerpiece of ag policy.”
USDA’s Risk Management Agency notes the importance of the crop insurance program to farmers on their website:
“More farmers and ranchers participate in and have more at stake in the crop insurance program than any other USDA program.”
As Mother Nature wreaks havoc on the U.S. this year, with hurricanes on the East Coast, droughts in the Southwest and floods throughout the heartland, it’s no wonder America’s leaders are speaking out about the importance of crop insurance. A plan to manage risk is something that farmers in the U.S., and everywhere else for that matter, will always need.

Leading Lawmakers Laud Crop Insurance

As the recent budget deal is interpreted and the Farm Bill debate heats up, important members of the House Agriculture Committee are singing the praises of crop insurance and underscoring its prominence as a necessary risk management tool that helps farmers weather adversity.

Both the Chairman and top Democrat on the Subcommittee on General Farm Commodities & Risk Management – which has jurisdiction over farm policy and crop insurance – addressed the sugar industry’s annual conference – The International Sweetener Symposium – held July 29 until August 3 in Stowe, Vermont.

Chairman Mike Conaway (R-TX) outlined some key principles that should guide the writing of the 2012 Farm Bill. The first principle on his list was that the policy must not undermine federal crop insurance. “There is one thing besides faith in God that is keeping Texas producers afloat right now during the worst drought we have seen in years, and that is federal crop insurance. We cannot afford to mess that up,” he said.

The chairman went on to explain just how important a strong farm policy is right now. “Agriculture is the one bright spot in an otherwise grim economic picture,” he said. “We shouldn’t take it for granted and we certainly shouldn’t gamble with it. We need good farm policy. Good farm policy doesn’t cost a lot. However, what history teaches us is that bad farm policy costs too much.”

Congressman Leonard Boswell (IA), the top Democrat on the subcommittee, gave crop insurance his own boost in the arm. Boswell recounted that when he retired from the army and returned to Iowa to farm, he quickly realized that farming had really changed in the 20 years that he had been away. He explained that in the old days, in order to farm, a producer needed access to land and a place to buy and sell a product, like a co-op or an elevator.

“After surviving the farm crisis in the late ‘70s and early ‘80s, I realized the importance of a good crop insurance agent to help me manage my risk,” said Boswell. “I work closely with my agent to ensure that I will never be put in a position that I was during the 1980s farm crisis.”

Boswell echoed Conaway’s sentiment that farm policies are important to ensuring the health and vitality of the nation as a whole. “I share this because I understand the importance of crop insurance in the country and safety net programs across the country that enable producers to provide for their families and feed those across the nation,” he said.

Joining the leadership in speaking out about the importance of crop insurance was Ohio freshman member Bob Gibbs (R), who is a farmer and also a member of the House Agriculture Committee. “I believe that in this next farm bill, the vehicle to protect farmers from weather and price disruptions will be a viable crop insurance program,” he wrote in a recent op-ed in The Hill. “Crop insurance, along with other initiatives such as the ACRE program, can be tailored to reduce risk and protect the viability of our farming infrastructure,” he said.

Gibbs explained that in the next Farm Bill, Congress needs to ensure that risk management tools are in place to help farmers hedge their risks and in turn, ensures a stable food supply for U.S. consumers. “These programs provide farmers with some level of certainty and confidence as they make their management decisions to risk a tremendous amount of capital by putting that seed in the ground,” he said.

House Agriculture Committee ranking member and one of the lead architects of the 2008 Farm Bill, Collin Peterson (D-MN) recently said that there should be no changes to the crop insurance program in the upcoming Farm Bill. “I am against making any cuts in crop insurance…any changes in crop insurance,” he recently told a group of Minnesota farmers. He added that “crop insurance for me is the bottom line,” adding that he fears that at some point in time, it may be the only viable farm policy left.

USDA to Congress: “Crop insurance is a vital part of the farm safety net”

“Crop insurance is a vital part of the farm safety net and has become an integral part of business life for a large majority of American farmers and ranchers,” said USDA’s Risk Management Agency (RMA) Administrator William J. Murphy in testimony before the House Subcommittee on General Farm Commodities and Risk Management.

“[Farmers] would find it difficult to continue providing the United States and the world with an abundant supply of food, fiber and fuel without the protection provided by this part of the farm safety net,” he said in his June 24, 2011, appearance before Congress.

With droughts, floods and other disasters affecting crop production across many parts of the U.S., “this year is an excellent example of how important the farm safety net has become,” said Murphy. “Food security is important to this country. I’d hate to be put in a position where we don’t have these [crop insurance] programs and have widespread losses across the country.”

Murphy detailed the unique public-private partnership which makes the crop insurance program unique and how RMA works directly with its private partners—the 15 approved insurance companies—and the agents who deal directly with farmers and ranchers.

“Producers purchase Federal crop or livestock insurance from insurance agents operating in their communities, who sell the insurance on behalf of the 15 insurance companies,” he explained, noting that “this relationship leverages the respective strengths of the public and private sectors.”

Murphy also explained how participation in the crop insurance program has increased significantly, following changes enacted in 1994 by Congress when fewer than 100 million acres of farmland were insured under the program. “Today, over 250 million acres of farm and ranch lands are covered by Federal crop insurance, for an overall participation rate exceeding 80 percent for the major crops.”

“As the amount of insured acreage has increased, so too has the liability, or value of the insurance in force,” said Murphy. For example, in 1994, program liability was less than $14 billion, compared to the 2011 liability which is estimated to exceed $100 billion. But the program has seen sustained growth as demonstrated by the increasing proportion of acres insured at buy-up levels over the last decade. “Today, over 90 percent of all policyholders purchase buy-up levels of coverage,” he added.

Additionally, Murphy explained to Congress that one of the most important considerations for the Federal crop insurance program is the premium cost for producers. “If premium rates are too high, producers will not participate in the crop insurance program. If premium rates are too low, actuarial performance will deteriorate,” he added.

That is why government involvement is necessary. Without it, affordable and widely available coverage wouldn’t exist. And without crop insurance, farmers would be hard pressed to obtain necessary operating capital from lenders.

Murphy explained many lenders now require crop insurance coverage in order to make operating loans to crop and livestock producers, and many producers use crop insurance as collateral for the loans.