Michigan Crop Insurance Adjusters, Agents Play Key Role in Food Supply

Larry Westerhoven knows apples.

As a crop insurance adjuster in Michigan, it’s his job to say what a crop is worth after hail or frost.

“If a guy has problems with his crop, I go out and appraise it,” he said. “I put a value on that crop. Most of these guys around here raise apples for the grocery stores, bagged apples or tray packs or this and that. So, I’ll make an appraisal on that and put a grade on the apples and then they make a decision what they want to do with it.”

Larry was one of several crop insurance adjusters and agents National Crop Insurance Services visited on our recent trip to Michigan.

Scott Colville’s family has been selling crop insurance since 1967. He takes pride in helping farmers stay in business after weather disasters.

“The reason crop insurance even exists is to help the American people and keep the food prices down,” he said. “And you can only do that if the farming community is able to farm and continue farming in a bad year. I would like to see Congress protect what we have in crop insurance and expand it.”

Colton Geiger, a field marketing representative, enjoys working with insurance agents to make sure they understand the latest products and the changes in the industry. He comes from a farming family.

“I think the work really matters in terms of working with farmers and making sure that they can keep farming for years to come,” he said. “Something that I grew up with, you know, in my family, just carrying that farming tradition on down the line.”

Back on the apple farm, Larry said its gratifying to help a farmer make a good decision about a crop because the margins have become so slim.

He hopes Congress will maintain and expand crop insurance in the next Farm Bill.

“Well, I just ask Congress, do they want to eat?” he said. “You want to put these guys out of business or we don’t grow food in this nation anymore? You know, we’re still a leader in food production. I’d like to see us stay there.”

Watch these stories and more at CropInsuranceInAmerica.org.

Celebrating America’s Farmers & the Policies that Protect Them

Brett Anderson walked the rows on his Michigan farm and inspected a strong crop of apples. He grabbed one and looked closer at a small indentation with an eye informed by 100 years of family experience.

The little indentation probably won’t mean much by harvest. Brett has seen hailstorms that beat and bruised his apples to the point where the value dropped to a quarter of what this crop may bring.

“Thankfully, this year we’ve been really blessed,” he said.

Brett’s family farm is just one of approximately two million farms in the United States. On National Farmer’s Day, we celebrate the incredible contributions of American farmers, just like Brett, and the important work that they do to feed, clothe, and fuel our nation.

Each of America’s two million farms is unique, requiring a personalized risk management tool. Thankfully, crop insurance allows America’s farmers and ranchers to create a risk management plan tailored to their needs. Crop insurance insures farms in all 50 states.

“Crop insurance has become so vital…no matter what happens in this coming crop season, I will have the ability to pay my bills, to keep my workers employed, and to be able to continue this this family farm that has been here for over 100 years,” Brett told National Crop Insurance Services on a recent trip to Michigan.

Brett was just one of several farms that we visited to capture the Real Stories of America’s farmers and crop insurance agent and adjusters.

Shelly Hartmann enjoyed a handful of ripe blueberries while inspecting the bushes on her farm.

“The thing I love about blueberries is that, you know, it’s nature’s perfect fruit. There’s no waste, it’s 100 percent consumable,” she said.

Shelly believes Congress should maintain crop insurance as an affordable and available risk management tool in the next Farm Bill. She relies on it at her farm. “Crop insurance is really a big tool that we use here to help us offset any unexpected weather events, production losses, market loss as well,” she said.

Vegetable farmer Travis Horkey pulled the tractor forward as his crew harvested big green bell peppers, loading them bucket by bucket into the cart. Crop insurance is an important tool in helping him with the challenges of farming.

“You never know what’s going to come at us,” Travis said. “We could have a drought all spring and summer followed by a flood in the fall just before harvest. And that would be devastating to our business and also affect our employees and our customers, our suppliers, our community.”

“I like the seasonality of farming,” he continued. “I like the challenge of just bringing all the ends together and getting the job done.”

To farmers from Michigan to Mississippi, Maine to Montana, and every state in between: thank you for getting the job done, every single day.

“The Most Successful Thing We’ve Done in Agriculture”

Former Minnesota congressman Collin Peterson knows farm policy. As Chairman of the House Agriculture Committee, Peterson played a key role in several Farm Bills. Peterson recently spoke at an Agri-Pulse event about the critical role crop insurance plays in the farm safety net.

“The most successful thing we’ve done in agriculture, and clearly during my career was crop insurance,” Peterson said.

As farm disasters have threatened farms in recent years, Peterson also urged Congress to utilize the next Farm Bill to improve crop insurance and expand coverage where needed, rather than create a separate new permanent disaster program. Peterson warned that a permanent disaster program would “undermine crop insurance.”

Policy experts and politicians aren’t the only ones speaking out in support of crop insurance. We’ve spent the year talking to farmers on the ground about how crop insurance helps them manage their risks and gives them the tools to improve resiliency.

  • “[Crop insurance has] been a tremendous help. It is a very affordable tool that allows you to minimize or manage some risk and have a small return if the weather goes against you.” – Gayle Smith, North Carolina rancher
  • “We use crop insurance for the fact that if something bad happens, we don’t want to lose our livelihood.” – Jim Carroll, fourth-generation Arkansas farmer
  • “Crop insurance helps me relieve the stress knowing that if something happened, disaster happened on the farm, I do have something to fall back on. That I won’t… lose everything.” – Michael Moore, third-generation North Carolina farmer
  • “Crop insurance basically ensures that the growers are going to be farming next year.” – Landrum Weathers, fifth-generation South Carolina farmer and crop insurance agent
  • “Without crop insurance… this farm would not still be here. It would be gone.” – Brian McClam, seventh-generation South Carolina farmer
  • “We put so much money into the crop that we can’t afford to miss a crop. Or not to have a safety net if we do.” – Scott Flowers, Mississippi farmer

These testimonials represent the immense trust that farmers place in crop insurance. Crop insurance is the cornerstone of the farm safety net, insuring 445 million acres in 2021.

It is critical that crop insurance remain affordable, effective, viable, and adaptable. This ensures that farmers have a risk management plan to prepare for the unexpected and the confidence to plant again after disaster.

“It’s going to give us more backstop against the ups and downs of agriculture,” Peterson said. “And that’s always going to be there. You know, it’s just a dangerous business.”

Crop Insurance Basics: Specialty Crops

When you think of farming, you might first think of fields of corn sprawled across the Midwest. But America’s farmers grow many different types of fruits and vegetables, requiring a crop insurance program that is as diverse as the crops it protects.

Crop insurance is a customizable tool that allows America’s farmers and ranchers to create a risk management plan tailored to their needs. That means growers can be covered:

Crop insurance has become the cornerstone of the farm safety net and provides every farmer with access to an affordable risk management tool. A new report from the Economic Research Service (ERS) at the U.S. Department of Agriculture found that over the past two decades, the value of specialty crops protected by crop insurance has tripled. Total specialty crop liabilities have grown from $7 billion in 2000 to $21 billion in 2020. As ERS points out in their report, all farmers face risks, “but the nature of specialty crop production and marketing may heighten exposure to some of these risks.”

Crop insurance has expanded and improved over time, particularly for specialty crops or growers not adequately served by other risk management tools. For example, the 2014 Farm Bill included a new policy specifically meant to expand coverage options for diversified farming operations: Whole-Farm Revenue Protection. The introduction of Whole-Farm Revenue Protection offers diversified farmers – such as fruit and vegetable growers, and organic growers – more flexible, affordable risk management options.

Brian Campbell is a diversified produce farmer in Pennsylvania who credits crop insurance and the protection afforded by Whole-Farm Revenue Protection for his success. “If it wasn’t for whole farm revenue protection today, you know, I may not be at the size that I am,” Brian told National Crop Insurance Services.

Across the country, Lupe Guzman in California also relies on crop insurance to protect his family farming operation, which includes 1,300 acres of certified organic crops, such as avocados, lemons, mandarins, and Valencia oranges.

“By having the crop insurance, we’re able to guarantee that if for some reason we do have a bad freeze, we’ll be able to fall back on that insurance so that we can keep farming the following years,” Lupe said.

Another organic grower, Michael Sahr in Michigan, agrees that crop insurance is important to protecting his farm and our food supply. “Without crop insurance, we’d have so much devastation that the farmers would go out of business, and you would be paying a lot more money for your food,” he said.

“You could have a beautiful crop one day, and the next day, a big weather event happens, and you don’t have that anymore,” Michigan blueberry grower Shelly Hartmann said. “Crop insurance is really a big tool that we use here to help us offset any unexpected weather events.”

An untimely freeze, for example, can destroy a crop of table grapes growing at the Kirschenmann Brothers Farming Company in California. “Crop insurance gives us a little safety net,” Kenneth Kirschenmann said. “It doesn’t solve all the problems if we had a 100 percent wipeout, but it does keep us in business.”

California grower Devon Yurosek farms several tree crops, including pistachios, cherries, and pomegranates. The nature of these crops means that Devon and his family have one shot to make a good crop each year, stay in business, and keep their workers employed.

“We have to be able to pay the bills. In bad years, it’s difficult to do if you don’t have a crop on the trees. That’s where crop insurance has been a huge help to us,” Devon explained.

Produce and other specialty crops aren’t the only non-traditional crop that is covered by crop insurance. Pasture, rangeland, and forage (PRF) insurance helps farmers when they don’t receive the expected rainfall needed to keep their pastures productive for feeding livestock.

Pennsylvania farmer John Ligo turned to his PRF policy when a drought reduced his grass yield on the acres he uses to help feed his 600 head of cattle. “One of those things that we can do to manage crop production risk is crop insurance,” he said.

Farmers trust crop insurance to help them manage the highly specialized risks of farming they face today.

Farmers Praise Crop Insurance at Field Hearings

The House Agriculture Committee recently handed farmers in Minnesota and Ohio the microphone to ask them what rural America would like to see in the next Farm Bill. A common refrain? Protect crop insurance.

We’ve compiled several highlights from these field hearings – check them out below.

Growers in both states stated that a strong crop insurance program is key in the next Farm Bill. It was named as the top Farm Bill priority for the Minnesota Corn Growers Association, the National Corn Growers Association, and the Ohio Corn and Wheat Growers Association.

As the cornerstone of the farm safety net, it’s clear that crop insurance has earned the overwhelming trust of America’s farmers.

“Crop insurance has demonstrated itself to be an invaluable tool for wheat farmers in Ohio and across the country where we see more frequent weather disruptions and unprecedented increase in prices for inputs,” Ohio farmer Paul Herringshaw said.

The uncertainty of the current farm economy and the financial stress of high input prices were common themes in the hearings.

“High fuel, high crop inputs, economy-wide inflationary pressures, these are all chipping away at margins. Given this, the Farm Bill safety net and crop insurance are… very key to creating a predictable operating environment for these farmers,” explained KC Graner, the Senior Vice President of Agronomy at Central Farm Service, headquartered in Minnesota.

Minnesota’s hosting farmer, Bruce Peterson, cited a number of reasons why crop insurance is important, including the premium discount provided for young farmers. This additional discount for young farmers not only makes crop insurance affordable, but it also allows them to secure an operating loan.

“Once they can take that that crop insurance coverage to their lender, that’s a key point and especially important now with our costs continuing to ratchet higher, much more expensive to put a crop in now than many years ago,” Peterson explained.

Eric Hokanson deals with both sides of the farm and finance equation, growing soybeans in Minnesota while working at farm credit cooperative Compeer Financial. “[Crop insurance] is vital to all sizes and scopes of farms here in the U.S. This allows farmers to hedge their risks and market their crops. This is especially important to young farmers like myself to be able to have a guaranteed source of repayment when disaster strikes or Mother Nature decides to not cooperate,” he testified.

Congress also heard from organic farmers, including Ohio grower Eli Dean, who praised the individualized and responsive nature of crop insurance. “[Crop insurance] works great for our farm. It works great for our communities… if we have a disaster, we are compensated for it quickly.”

We appreciate Congress taking the time to travel the country to hear directly from America’s farmers. Want to learn more about crop insurance? Visit CropInsuranceInAmerica.org to watch more Real Stories from America’s heartland.

Crop Insurance Keeps Farmers Fighting

Weather is one of a farmers’ top concerns. Just enough sun and rain will power a plant, resulting in a good yield. But too much sun and not enough rain, or too much rain and not enough sun, and a farmer might soon be counting his losses.

The challenges presented by weather volatility was something that we heard repeatedly from farmers in hurricane-prone South Carolina. Fifth-generation farmer Landrum Weathers said that “every year that we don’t get a named storm that hits here is a good year.”

Landrum farms corn, peanuts, soybeans and cotton while also working as a crop insurance agent with the Agriliance Insurance Group. He said choosing to purchase crop insurance is not a difficult decision. It helps sustain his farm, so he can keep producing food and fiber.

“Crop insurance basically ensures that the growers are going to be farming next year. That means that our country doesn’t have to call somebody else, I don’t care who, to get food,” Landrum said.

J.C. Carroll, who founded Agriliance Insurance Group alongside Ben Tillman, echoed Landrum’s comments on food security, explaining “it’s important for farmers to protect themselves with crop insurance. I think that crop insurance is our best safety net… It gives us food security.”

Weather was also top of mind for Johnny Watts, a fourth-generation farmer who grows corn and soybeans and raises cattle. “Every time a storm makes up out in the Atlantic, you kind of hold your breath and, you know, is this going to be it.”

Each storm brings with it a feeling of hopelessness. Farmers can prepare for every scenario, but they can’t hold back Mother Nature.

“You could have a great crop today. Tomorrow, you may not,” Johnny said.

“No farmer wants to have a loss,” explained Brian McClam, a seventh-generation farmer. Brian grows cotton, soybeans, and corn, and has had a couple close calls when it comes to natural disasters.

“Without crop insurance… this farm would not still be here. It would be gone,” Brian said.

Several years ago, seventh-generation farmer Neal Baxley watched as a foot and a half of rain washed away the crops he was about to harvest. An entire growing season, and the expenses and inputs and time that went into that season, gone.

Crop insurance helped soften the blow. Neal said there is a misconception that crop insurance covers a farmer’s entire loss. “It’s not going to make him completely whole but it’s a tool that can try to help him get him through to the next year.”

As Johnny Watts said, “You live to fight another day because of crop insurance.”

Watch these stories and more at CropInsuranceInAmerica.org.

American Farmers Feed the World

“If you really want to get in the weeds or, in a lot of cases, in the dirt with crop insurance, you need to go out to the field.”

National Crop Insurance Services recently did just that, traveling to North Carolina to capture the real stories of both the farmers who rely on crop insurance and the people who provide coverage advice. That’s where we met Ruth Fulford, a crop risk advisor and care consultant with Flatlands Insurance Group.

Ruth, who was the recipient of the 2022 Crop Insurance Outstanding Service Award for outreach to limited resource and socially disadvantaged farmers, is one of the many agents who write crop insurance policies in North Carolina. These policies protect crops such as corn, soybeans, wheat, sorghum, cabbage, sweet potatoes, sage, peanuts, produce and more. Collectively, crop insurance protects 3.5 million acres and more than $2.1 billion worth of crops in North Carolina.

Farmers across the state trust crop insurance to help them manage their risks. Farmers like Rena Eure, who owns a family farm with her husband and son. “What I love about farming is just being able to be out in nature and put a seed in the ground and watch it grow.”

The work of farming is the easy part, Rena told us. It’s the weather risks, financial stress, and supply chain challenges that make farming difficult. And there is a lot riding on the line.

“If we don’t have farmers, we don’t have food or the fiber you know, for the world basically,” Rena said.

Cattle rancher Gayle Smith pointed out that farmers do what they do because they love it. “We feel good about what we do because we provide a quality product for a world, and we willingly make those sacrifices.”

Even though she raises livestock, Gayle considers herself a grass farmer, first and foremost, with the cattle acting as large lawnmowers. But when Mother Nature doesn’t cooperate, and Gayle doesn’t have enough grass or hay to feed her cattle, that’s when she turns to crop insurance.

“It’s been a tremendous help. It is a very affordable tool that allows you to minimize or manage some risk and have a small return if it if the weather goes against you,” Gayle said.

This message was echoed by Charlotte Vick, who grows row crops alongside her parents on the farm they started with just 25 acres in 1975. “That’s really the main reason that we carry the crop insurance. To try to protect against the weather because you know, we’re at the mercy of Mother Nature.”

America’s farmers and ranchers are the foundation of our food supply and critical drivers to the farm economy. The Moore family understands this better than most. Michael is a third-generation family while Antoine is a branch loan officer at AgCarolina Farm Credit and farms with his father.

“Crop insurance helps me relieve the stress knowing that if something happened, disaster happened on the farm, I do have something to fall back on. That I won’t lose, completely, lose everything,” Michael said.

Antoine, on the other hand, pointed out that having a solid risk management plan is a critical consideration for lenders, giving them more certainty when approving farm loans. “Certainly, that makes a huge impact, not just on that farmer, but also on that rural community that relies on that farmer to produce a crop,” Antoine said.

Watch these stories and more at CropInsuranceInAmerica.org.

A Farm Disaster – Now What?

The unthinkable has happened and torrential rain has prevented a farmer from planting, or an unexpected hailstorm has destroyed a growing crop. Now what?

Unlike other farm aid programs, crop insurance provides assistance as determined by an individual farmer’s actual loss, not by the severity of the overall disaster event. So, following a disaster, private-sector crop insurance claims adjusters quickly and accurately assess damages and calculate losses. Delivering aid based on actual losses protects farmers, ranchers, and taxpayers while adhering to one of the key principles for an effective farm safety net.

When a farmer files a claim with their agent, its first stop might be the desk of Danny Thomas, a claims supervisor with Crop Risk Services. Danny joked that although he loves helping his farmers, he always hopes that he doesn’t have to see them a second time.

“Our job’s not only to get the indemnity paid correctly, but to give the insured peace of mind that everything is done correctly on time and that they’re taken care of,” Danny said.

The helping hand provided by adjusters is critical to helping farmers navigate the stress that comes with a crop loss.

“As adjusters, we can try our best to give them peace of mind and we try to let them know that it’s going to be okay,” said Kelsey Eskrigge, an adjuster in Proctor, Arkansas.

“Farmers will tell you I have crop insurance for a peace of mind, you know, farming is a gamble and it’s part of their risk management and helps them sleep at night. So, I think it’s very vital to keep U.S. agriculture in a stable and safe place,” Kelsey added.

Jeff Ray, a regional claims manager, has a long history in agriculture and he wasted no time in explaining just how vital crop insurance is to the farmers that he serves.

“The Federal crop insurance program is a must with the high cost of inputs, the uncertainty of the markets, the uncertainty of the weather. These farmers have got to have risk protection and a risk plan in place for them to be sustainable.”

Thanks to the unique public-private partnership that is the foundation of crop insurance, agents, adjusters, and crop insurance companies work together with the federal government to quickly deliver aid to America’s farmers. This is important when you consider the high-stakes nature of farming and the incredible investment that farmers put into growing our food and fiber.

That’s why crop insurance must remain affordable, widely available, economically viable, and adaptable to the changes of tomorrow.

Watch these stories and more at CropInsuranceInAmerica.org.

Farmers, Congress Agree: Crop Insurance Works

Members of the House Agriculture Committee gathered yesterday to hear from farmers, crop insurance agents, and industry representatives about the key role that crop insurance plays in the farm safety net. Crop insurance is built on a unique public-private partnership between the federal government and the private sector, making the program efficient, affordable, and adaptable to farmers’ needs.

Each witness spoke to the strengths of crop insurance, and how it works to protect farmers and ranchers.

  • “Uncertainty and volatility are probably two words that describe the countryside right now… Crop insurance is one thing that can give us some stability, some predictability. That’s why it’s really important now, more than ever.” – Lee Cromley, 6th generation farmer, National Cotton Council and American Cotton Producers
  • “Federal crop insurance is a major pillar of risk management for the vast majority of corn growers.” – Tom Haag, 4th generation farmer, First Vice President of the National Corn Growers Association
  • “Crop insurance is one of the best tools available to farmers to protect against Mother Nature because crop insurance is a rapid response solution to disasters.” – Bob Haney, Executive Chairman of Agri-Sompo North America
  • “Crop insurance does more than just cover losses, it enables the producer to secure credit, to better market their crops, and to make the needed investments to improve their farm and ranch and build their soils.” – Kathy Fowler, independent crop insurance agent, Crop Insurance Professionals Association
  • “Crop insurance today is a critical part of the agricultural safety net. It’s relied on by farmers, by lenders, and by rural businesses in every part of the country. No USDA program reaches more farmers, and more crops, and more counties than crop insurance.” – Alex Offerdahl, Watts and Associates, Inc.

With a Farm Bill on the horizon, members of Congress from both sides of the aisle also praised the crop insurance program.

  • “Throughout the last two Farm Bill reauthorization processes, the message I heard loud and clearly was ‘do no harm’ to crop insurance. The program has been, and continues to be, central to risk management for producers across the country and it has continued to grow and evolve to address the challenges and risk our producers are feeling.” – Rep. Cheri Bustos (D-Ill.)
  • “I’ve heard firsthand from numerous farmers how crop insurance saved them from bankruptcy following a disaster. But its purpose goes well beyond helping producers in the wake of a loss, crop insurance provides a base level of reliable risk management that [helps keep] the economic engine of rural America running in good years, and quite frankly, in bad.” – Rep. GT Thompson (R-Pa.)
  • “By leveraging the private sector and incentivizing competition among companies, producers now have access to a dynamic system that provides our producers with the highest level of service.” – Rep. Austin Scott (R-Ga.)
  • “Federal crop insurance is an incredibly successful public-private partnership that stands as the primary safety net for U.S. producers.” – Rep. Al Lawson (D-Fla.)
  • “It’s a successful public-private partnership that I would argue to my last breath to anyone is good for producers, it’s good for rural communities, it’s also good for consumers to have a constant food supply all over this country.” – Rep. Tracey Mann (R-Kan.)

 From Congress to the countryside, the message is clear: crop insurance works.

Crop Insurance Protects Farmers from Sea to Shining Sea

As we celebrate America’s independence this weekend, let’s also take a moment to celebrate the incredible farmers and ranchers who feed America. Farmers are key to maintaining our freedom and our food security. 

That is why we work hard to ensure that all farmers have the tools they need to manage their risks and grow the crops that feed, fuel and clothe America. Crop insurance provides an invaluable safety net for farmers in all 50 states – from sea to shining sea. 

How does crop insurance protect your state? Visit CropInsuranceInMyState.org to explore 50 brand-new fact sheets highlighting the state-by-state economic impact of agriculture and the importance of crop insurance.

In total, crop insurance protects more than 440 million acres of American farmland. Each of these acres represent a farming family: some are continuing a long legacy of agriculture, while others are the first generation to farm. Each farm is an integral part of our nation’s food supply and our economy.

We’re proud that crop insurance keeps America growing.

Visit CropInsuranceInMyState.org to download a fact sheet for your state

A Safety Net for our Food Supply and the Farm Economy

Crop insurance is the cornerstone of the American farm safety net. It protects the farmers who grow our food and fiber as well as the rural communities that rely on a thriving farm economy.

Mike Chappell bought his first tractor when he was still in college. Now, he farms in McCrory, Arkansas, and takes pride in growing the crops that feed America.

“I feel like that we bring a good product for people. It feels good to know that, you know, people are consuming our product and we’re working hard,” Mike said. “It’s a lot involved. And I’m just one little spoke in the wheel.”

Farming comes with many challenges, and Mike has experienced some big storms, big floods and big freezes that have become family legend. Each time, he’s turned to crop insurance to keep him growing.

“Crop insurance kind of takes a few bumps out of the road,” he said. “It’s not going to make you prosperous, but it might keep you alive.”

Learn more about the people behind the policies.

Agriculture provides jobs for tens of thousands of people in Arkansas and supports the small businesses that rely on this income. Matthew Marsh in England, Arkansas, grew up farming and understands the immense responsibility of taking care of his employees.

Yet, increasingly severe weather is making it harder for farmers like Matthew. That’s where crop insurance comes in.

“If Mother Nature throws us just a big curveball, we may have something, some way to stay in business and keep our community and all our employees going forward to another year,” Matthew explained.

Just across the mighty Mississippi, agriculture anchors the small town of Clarksdale, Mississippi. The Mississippi Blues Trail winds through Clarksdale, too, and the intersection of farming and folk music give farmer Scott Flowers hope that this community will survive through tough times.

Scott farms cotton, soybeans, corn, and wheat with his brother. When we spoke with him in mid-April, they hadn’t been able to get into the fields to plant nearly half their acres due to the rain. When weather is unpredictable, crop insurance provides a predictable safety net.

Weather isn’t the only risk. Input costs, such as the cost for fertilizer, fuel, and animal feed, are also rising and squeezing already thin farm profits.

“We couldn’t make it without crop insurance,” Scott said. “I mean, we put so much money into the crop that we can’t afford to miss a crop. Or not to have a safety net if we do.”

Watch these stories and more at CropInsuranceInAmerica.org.

Crop Insurance Keeps Family Farms Alive

Jim Carroll, a fourth-generation farmer in Brinkley, Arkansas, is no stranger to the “bad times” that come with farming. Some years, it feels like he’s just trying to survive.

That’s why Jim invests in crop insurance. “We use crop insurance for the fact that if something bad happens, we don’t want to lose our livelihood, not being smart enough to take a little crop insurance out,” he explained in a new video.

Crop insurance helps Jim manage his risks and protect the farm in the hopes that one day, his grandson will take over as the fifth generation. “My hope is he’ll like this because there’s something unique about being able to put a seed in the ground and watch it come up and develop.”

National Crop Insurance Services is dedicated to sharing the stories of the people behind crop insurance policies. Each one is important, whether it’s the farmers who rely on crop insurance to keep growing after disaster or the agents and adjusters who are dedicated to preserving a strong agricultural economy.

Watch more Real Stories here.

Our most recent trip to the field took us to the rich farmland of Arkansas and Mississippi. Tim Ralston in Atkins, Arkansas, farms rice, soybeans, and corn while raising cattle. The jasmine rice he grows is so fragrant, he said “you can actually smell it when you pull into the field.”

Tim recalled a 500-year flood that threatened his farm and damaged his rice. His crop insurance policy quickly delivered aid to help cover his losses.

“Crop insurance kind of provides a safety net to where you know what the minimum return is going to be. And if you can live with that minimum return and then, you know, you can survive and go forward,” Tim said.

“With [crop insurance], you know it was devastating as it was, but without it, it would have been catastrophic.”

Watch these stories and more at CropInsuranceInAmerica.org.

Heard from the Field: Michigan Farmers Share Insights with Senate

Last week, the Senate Agriculture Committee held its first field hearing in preparation for the 2023 Farm Bill. Chairwoman Debbie Stabenow (D-Mich.) and Ranking Member John Boozman (R-Ark.) traveled to Sen. Stabenow’s home state of Michigan to hear from local farmers and other key stakeholders about the farm policies that are key to keeping their farms running and their local communities fed. It is no surprise that crop insurance was a common topic in several of these testimonies.

That’s because farmers are facing many risks, especially as climate-driven loss events increase. Juliette King McAvoy, who grows tart cherries and other specialty crops at King Orchards in Northern Michigan, said that crop insurance helps their family farm deal with the threats posed by volatile spring weather.

“Crop insurance absolutely helps us manage risk,” McAvoy said. “We’ve had increased frequency of crop loss and I cannot imagine trying to survive without it. There are not many business models that can withstand the kind of volatility that we are experiencing.”

McAvoy also said that crop insurance gives her the certainty and the confidence to continue her family’s long-term investment in their orchard. “The crop insurance plans do not make us whole (typical plans insure 60% of a crop), but they are so important to ensure that we can keep the orchards maintained and make it to another season,” she wrote in her submitted testimony.

Allyson Maxwell, co-owner of Peter Maxwell Farms, shared similar sentiments about the importance of a strong crop insurance program.

“The safety net provided by crop insurance is vital to maintaining the agriculture industry in this country, especially in the face of increasingly unpredictable disasters like drought, flood, and extreme weather,” Maxwell said. “It’s a really, really important risk tool that we have…and we’re really grateful for it and the fact that it is protected by our Farm Bill.”

She recalled watching her aunt and uncle almost lose their Missouri farm in the 1980s because they did not have crop insurance. Thankfully, their farm survived, and today, they also rely on crop insurance.

Jake Isley, a 6th generation farmer and soybean grower at Stewardship Farms, stressed to the committee that crop insurance must remain affordable in the 2023 Farm Bill.

“Our risk management program on which soybean farmers and our lenders rely on heavily is crop insurance. We must continue to have an affordable crop insurance program. With input costs higher in every area of my operation, I cannot afford to have the crop insurance premium subsidy reduced in this next Farm Bill,” Isley said.

We’re proud that crop insurance has earned the trust and confidence of Michigan farmers, as Sen. Stabenow noted as well.

“One of the things that came up over and over again is crop insurance, which is so critical, particularly in these times with weather getting worse and worse and worse,” Stabenow said. “Our farmers, they’re not asking for a handout. They want help to make sure there’s a backstop that helps them with their risk.”

The testimony from Michigan’s farmers has made it clear that Congress must continue to support a strong crop insurance program in the 2023 Farm Bill.

Principles for an Effective Farm Safety Net

Crop insurance is the cornerstone of the farm safety net. But why is crop insurance such an effective tool for farmers to manage their risks and recover from crop losses?

Modern crop insurance brings together the efficiencies of a private-sector delivery system with the regulatory oversight and financial support of the government.

Following the farm crisis of the 1980s, a government report prepared for the House Agriculture Committee outlined several principles for an effective farm safety net. Since this report was published, the crop insurance industry and Congress have worked together to strengthen crop insurance and ensure the program meets these principles.

  • Crop insurance provides timely financial assistance to help farmers withstand and recover from crop loss weather events. The public-private partnership between the Federal government and private crop insurers increases efficiency and ensures that aid is delivered quickly. Farmers receive help in just days or weeks.
  • Crop insurance is consistently available to give farmers certainty for long-range planning. When farmers purchase a crop insurance policy, they and their bankers know that they can count on timely assistance should they need it. The U.S. Department of Agriculture (USDA) sets rates and rules for the plans that can be sold by private insurance agents, and farmers purchase the appropriate crop insurance policy for their individual risk.
  • Crop insurance provides assistance as determined by an individual farmer’s actual loss, not by the severity of the overall disaster event. Following a weather disaster, private-sector claims adjusters quickly and accurately assess damages and calculate losses. Delivering aid based on actual losses protects farmers, ranchers, and taxpayers alike.
  • Crop insurance requires that farmers invest in their own protection, ensuring farmers are receiving assistance commensurate with the verified amount of their losses. The Federal crop insurance program requires farmers to invest in their own protection and share in the risk. Last year, America’s farmers collectively paid $5 billion to purchase crop insurance premiums and shouldered losses through deductibles.
  • Crop insurance does not create incentives to encourage farming practices that increase the likelihood and extent of losses. In fact, just the opposite. Following Good Farming Practices is a requirement of each crop insurance policy. These practices are based on sound data, science, and are constantly evolving to keep pace with new technologies and changes in the market, weather, and land management.
  • Crop insurance has predictable costs and is required to be actuarily sound. By law, the amount of money in the crop insurance system over time must be sufficient to meet the cost of paying claims when disasters strike. In other words, the math must work.
  • Crop insurance works efficiently to meet its purpose of improving the economic stability of agriculture while maintaining high levels of program integrity. Working closely with USDA, America’s crop insurers have made program integrity a top priority. Crop insurers have invested millions in data collection, education and training, and new research and technology to better serve America’s farmers.

By consistently fulfilling these principles of an effective farm safety net, crop insurance has given our farmers stability. They overwhelmingly trust crop insurance to help them manage their risks.

Let’s fulfill our promises to America’s farmers by ensuring that crop insurance remains available and affordable. Do no harm to the farm safety net.

Risk Management Discussion Shines Spotlight on Crop Insurance

“I can honestly say I would not be sitting here if it was not for crop insurance,” wheat grower Nicole Berg recently told an audience in Washington, DC.

Last year, Berg turned to crop insurance when she was only able to harvest a third of her farm due to drought and arid conditions. Crop insurance provided a vital safety net.

Preserving and strengthening that safety net for all farm producers was a key topic at the annual Ag & Food Policy Summit, hosted by Agri-Pulse. Berg, who is President of the National Association of Wheat Growers, spoke on a panel that focused on managing risks and crop losses on the farm.

“All farmers want to do is stay in business another year,” she said.

The Ag & Food Policy Summit brought together policymakers, farm leaders, and commodity experts for policy discussions that will help shape the 2023 Farm Bill. Crop insurance is expected to remain farmers’ number one risk management tool.

“Our farmers say: crop insurance is a cornerstone of the Farm Bill. Don’t mess with it, just make it better,” said Zippy Duvall, president of the American Farm Bureau Federation.

Duvall noted that the Farm Bill should reflect the importance of farmers to our national security. That means protecting the farmers who maintain our abundant food supply. Unlike ad hoc disaster programs, which can sometimes take years to deliver assistance, arriving too late to save the family farm after disaster, crop insurance can provide timely assistance to farmers who face unforeseen challenges.

The strengths of crop insurance have made it the ideal risk management tool, said Tom Zacharias, President of National Crop Insurance Services.

  • Its public-private partnership increases efficiency and strengthens program integrity;
  • Its adaptability allows crop insurance to adjust for future risks;
  • Risks and costs are shared between taxpayers, insurers and the government, and;
  • Farmers receive help in just days or weeks, allowing them to count on the predictability of crop insurance to deliver assistance when they need it most.

America’s farmers overwhelmingly trust crop insurance to help them manage their risks. Today, crop insurance provides protection for more than 130 different commodities and covers farmers in all 50 states. Last year, crop insurance insured a record 462 million acres, providing $137 billion dollars in protection. That’s more than 90 percent of major crop insurable farmland in America.

Still, crop insurers and the U.S. Department of Agriculture’s (USDA) Risk Management Agency are continually working together to improve crop insurance to better protect farmers. In the next Farm Bill, that will mean giving USDA the tools it needs to expand affordable coverage for specialty crop producers.

“Roughly $90 billion a year in specialty crops are planted in the United States, and about $19-20 billion of those specialty crops are covered by crop insurance. The delta is not small, but it has been closing, and that’s a positive,” said Kam Quarles, CEO of the National Potato Council and a member of the Specialty Crop Farm Bill Alliance.

Quarles noted that there are more than 300 specialty crops, and each is grown differently, requiring USDA to analyze a significant amount of data. “It has an impact on how those products are priced, how they’re constructed. That’s an ongoing discussion as we look at this Farm Bill: how do we sit down with USDA and the industry, develop better data to make more affordable, useful products,” Quarles said.

As Congress considers next year’s Farm Bill, leaders encouraged farmers to speak out about how crop insurance gives farmers the certainty they need to keep farming.

President’s Budget Recognizes Crop Insurance is Key to Farm Safety Net

The President this week released his proposed Fiscal Year (FY) 2023 budget that fully funds the federal crop insurance program in recognition of the indispensable role that crop insurance plays in the farm safety net.

The release of the FY 2023 Budget follows a letter sent to OMB and the Secretary of Agriculture by 55 farming, banking, and conservation organizations asking that the administration protect crop insurance from harmful budget cuts.

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 released the following joint statement:

“America’s farmers and ranchers feed our nation, grow the fibers that clothe us, and provide an important economic driver for our rural communities. Over the past several years, crop insurance has helped farmers navigate the challenges posed by weather disasters, supply chain disruptions, and uncertain markets. The Administration has recognized the importance of crop insurance as a critical risk management tool by fully funding crop insurance in its FY 2023 budget.

“The crop insurance program works for farmers and taxpayers alike:

  • By delivering aid quickly and efficiently, crop insurance continues to earn the trust of America’s farmers, protecting more than 90 percent of America’s planted crop land acres.
  • Farmers invest in their own protection. Last year, farmers spent $5 billion to purchase crop insurance and then shouldered a significant portion of losses through deductibles.
  • Crop insurance complements farmers’ efforts to invest in conservation and climate-smart farming practices.
  • The federal government spends less than a quarter of 1% of its budget on the farm safety net, including crop insurance, making this a worthwhile investment to protect the world’s most affordable and safe food and fiber supply.

“We appreciate this Administration for fully funding crop insurance in its proposed budget. We urge Congress to follow suit by protecting and strengthening crop insurance.”

What Farmers Are Telling Congress About Crop Insurance

Yesterday, the House Agriculture Committee invited various commodity groups to testify before the committee on Title I programs in the Farm Bill. This hearing kicked off the committee’s examination of the Farm Bill programs that help provide stability to America’s farmers, ranchers, and rural communities as they do the hard work of feeding, fueling, and clothing our nation.

While crop insurance was not the focus of this hearing, it was no surprise that the importance of the crop insurance program was reiterated time and time again. That’s because crop insurance is the cornerstone of the farm safety net and trusted by farmers to protect more than 90 percent of insurable farmland in America.

Commodity leaders from across the country, representing tens of thousands of farmers growing a diverse range of crops, praised the crop insurance program, speaking at times about their personal farming experience. In their own words, here’s what they had to say about crop insurance:

“ASA must share for the record the high importance of crop insurance to soybean farmers. Soybean farmers consistently communicate that this is the most effective component of the farm safety net when viewed more broadly… Crop insurance must remain affordable for producers.” – Brad Doyle, American Soybean Association

“Last year, I didn’t harvest a third of my farm. And so, I had to utilize the safety net of crop insurance, and it was there, and I’d have to say, it’s kept the family farm in business.” – Nicole Berg, National Association of Wheat Growers

“We know that agricultural markets are cyclical, and an effective safety net is imperative for the inevitable times of low prices. The combination of commodity program options and crop insurance gives farmers as well as their lenders the confidence entering planting season knowing that downside risk is mitigated in periods of steep price decline or a significant loss of production.” – Jaclyn Ford, National Cotton Council

“Crop insurance is #1. It is our #1 best risk-management tool, and we need to continue with that. It is a vital piece.” – Chris Edgington, National Corn Growers Association

“As we are seeing continuous erratic weather patterns – longer and more extreme droughts in some regions and more frequent flooding in other areas – the farm safety net and robust crop insurance program that helps farmers adequately mitigate risk and volatility becomes vital to the sustainability and continuation of family farms.” – Verity Ulibarri, National Sorghum Producers

“I hope that the stability and certainty of the farm safety net that the Title I and crop insurance programs represent will remain the top priority and driving force in the timely reauthorization of a bipartisan Farm Bill in 2023. Farmers, as well as consumers that rely on the food we produce, are facing a lot of challenges and uncertainty. Additional instability and uncertainty in the fam safety net and our food production system is the last thing we need.” –  Clark Coleman, National Sunflower Association, National Barley Growers Association, U.S. Canola Association, and the USA Dry Pea and Lentil Council

The message to Congress was loud and clear: to best serve America’s farmer and ranchers, crop insurance must be protected and strengthened in the next Farm Bill.

For America’s Farmers, Crop Insurance is First Line of Defense Against Climate Change

As farmers face increasing challenges due to climate change, the safety net provided by crop insurance is their first line of defense. This was one of the messages delivered last week at a panel discussion on mitigating the risks of climate change during the U.S. Department of Agriculture’s (USDA) 2022 Agricultural Outlook Forum.

National Crop Insurance Services President Tom Zacharias was among the stakeholders who spoke on the need to provide predictable risk management tools to America’s farmers.

“Their success depends on a healthy environment. One weather disaster can drive a family farm out of business,” Zacharias explained.

America’s farmers overwhelmingly turn to crop insurance to manage their risks. In 2021, crop insurance insured more than 460 million acres, providing $137 billion dollars in protection. Farmers invested more than $5 billion of their own money to protect the crops that supply Americans with food and fiber.

“As rural America confronts climate change, it is critical that crop insurance remain just as dynamic as the farmers it protects. To accomplish this, crop insurance needs to be widely available, affordable, financially viable, and adaptable,” Zacharias said.

Crop insurance not only works to protect farmers when disaster strikes, but it also complements efforts to incentivize the voluntary adoption of climate-smart farming practices.  Congress, USDA’s Risk Management Agency (RMA), and crop insurers have worked together to improve the voluntary adoption of farming practices that increase resiliency, improve conservation, and support a healthy environment.

David Zanoni, Senior Underwriter at RMA, discussed several of the improvements RMA has already made to accommodate new farming practices, including the requirement that farmers adhere to approved conservation plans to protect highly erodible land and wetlands as well as the use of Good Farming Practices, such as cover crops.

Zanoni noted that as agriculture continues to innovate, crop insurance will, too. “It will be a constant evolution of the product line to deal with the challenges of the day,” he said.

Lance Griff, a third-generation farmer from Twin Falls, Idaho, provided a grower perspective, sharing with the audience how he transitioned to utilizing no-till and cover crops in 2013.

“I wanted to leave healthier soil for my kids if they want to farm,” Griff said. “I also wanted our soil to have more resiliency, to endure weather challenges.”

Crop insurance has earned the trust of farmers like Griff, and it is an important part of their risk management plans.

“Crop insurance is a vital tool we employ to help us plan for the upcoming year and mitigate crop production risks that are inherent to farming. These tools help us to be optimistic and resilient in confronting the challenges that face farmers in the 21st century,” Griff said.

Dr. Julia Borman from Verisk Extreme Event Solutions spoke to the highly unpredictable nature of extreme weather and how probabilistic models can help insurers address the challenge of insufficient historical events. “Unlike events such as fire or theft, which are not highly correlated, weather events such as hurricanes are a low frequency and usually high-cost event, there is a strong correlation, and it’s hard to predict the frequency of claims that are going to happen.”

Weather as a driver of crop failure, as well as long-term climate trends, will continue to be a concern for farmers, insurers, and policymakers, Borman said. “One of the major concerns for the insurance industry is balancing that short-term versus long-term perspective,” she said.

Zacharias concluded his remarks by noting that crop insurance must remain affordable, effective, viable, and adaptable to help America’s farmers secure a more sustainable future.

“Looking forward, we know agriculture has an important role to play in the mission to protect our environment and advance climate-smart policies. And we know that a strong and resilient supply of food and fiber is critical for our economy and for our citizens,” he said.

Vilsack: USDA ‘Laser Focused’ on Crop Insurance Access

The U.S. Department of Agriculture (USDA) is committed to affordable and flexible crop insurance for the nation’s farmers, ranchers, and producers, according to Secretary Tom Vilsack.

He made his pre-recorded remarks on the second day of the crop insurance industry’s annual convention in California.

“Your work is critical to helping America’s farmers, ranchers, and producers manage the risky, but necessary, business of producing our food, fuel, and fiber that so many take for granted,” he said.

Vilsack said he’s seen historic droughts, hurricanes, floods, wildfires, and many other disasters in his time as USDA secretary. He said the farmers, ranchers, and producers who had crop insurance told him it gave them the confidence to rebuild and make it to the next growing season.

“They knew that one bad year, one lost crop, wouldn’t mean losing the family farm or ranch that had been in the family for generations because they had that insurance product, that didn’t necessarily make them whole, but did keep them in the game,” he said.

Before, during, and after disasters, agents, and adjusters help deliver for agriculture. America’s farm policy is the envy of the world, he said.

“And the public-private partnership of Federal crop insurance is one of its key components,” he said.

More and more farmers are choosing to invest in crop insurance, in part, because payments are fast but also because the program continues to innovate. He noted the growth in coverage options for different crops and production systems.

He said USDA is working to help producers effectively manage risk through crop insurance with programs including row crop, whole farm revenue protection, rainfall index programs for forage and dairy safety net services to protect against market fluctuations.

USDA is innovating with new insurance options for small producers who sell locally through the micro farm policy that simplifies record keeping and covers post-production costs. It is also working to make cover crops more affordable.

Data from crop insurance is helping to streamline the process and reduce the burden on producers.

“You all have basically helped provide opportunities and hope to our farm families,” he said.

The agency sees its partnership with crop insurance as the path forward to securing the nation’s food supply.

“At USDA, we are laser focused on making sure that every farmer, rancher, and producer of food, fuel and fiber can access the needed crop insurance tools to manage their operating risk,” he said.

Growers, Lenders, Conservationists Call on Congress to Back Crop Insurance in Farm Bill

Crop insurance is a vital risk management tool that should be maintained and strengthened in the next Farm Bill, according to a panel of commodity growers, lenders, and conservationists.

The panel was part of the Monday presentations at the crop insurance industry’s annual conference in California.

“Crop insurance is one of our most important tools for our growers in terms of protecting their yields as well as their revenue,” said Jake Westlin of the National Association of Wheat Growers.

Wayne Stoskopf, of National Corn Growers Association, said crop insurance has been the cornerstone of the farm safety net for the majority of corn growers.

“It works really well,” he said. “I don’t expect that to change at all. They are continuing to innovate and look at things like the post application coverage endorsement (PACE) as something that our growers identified as a need for split nitrogen practices and wanted to continue to see advancements and innovations there.”

Robbie Minnich, of National Cotton Council, said crop insurance is very important to cotton growers.

“As you all well know almost every acre of cotton gets some level of crop insurance,” he said. “So, we want to make sure crop insurance is there, it’s available, it’s affordable and we can do whatever we can do to support the industry.”

Ben Mosely, of USA Rice Federation, said innovations in crop insurance are making it more attractive to rice growers.

“Obviously there’s a lot of new crop insurance policies and endorsements that have come on in the last 10 plus years that are very attractive to us,” he said. “We are taking on more crop insurance acreage every year. It’s been a great program.”

Skylar Sowder, of Farm Credit Council, said crop insurance is hugely important to lenders.

“It is a vital risk management tool,” she said. “Additionally, a lot of our farm credit associations also provide crop insurance as a service to their customers.”

Kellis Moss, of Ducks Unlimited, said his group is a proud to partner with the crop insurance industry.

“We’d like to see as many acres in production have crop insurance on their farms as possible,” he said. “And we couldn’t be prouder of our partnership, or relationship. We think it’s great. It’s continuing in a good direction.”

Crop Insurance Continues to Earn the Trust of America’s Farmers and Ranchers

As agriculture faces new challenges and a changing climate, crop insurance remains the number one risk management tool for America’s farmers and ranchers, according to the chair of National Crop Insurance Services (NCIS). Last year, crop insurance protected a record 460 million acres of farmland and more than $137 billion in food, fiber, and fuel.

Kendall Jones, chair of NCIS and president and CEO of ProAg, made her remarks at the start of the industry’s annual meeting in California.

“The scale and size of crop insurance further demonstrate that farmers have come to rely upon our industry when the going gets tough,” she said. “We need to build on that credibility as the environment farmers operate in continues to evolve. We are in position to continue to modernize and improve – adapting risk management tools to the risk.”

Farmers invested $5 billion dollars of their own money through premiums in 2021 to protect their crops. Jones said the increasing popularity of crop insurance should come as no surprise.

“The crop insurance industry has established credibility with farmers and policymakers. It all starts with trust,” she said. “The American farmers and ranchers rely on the crop insurance industry to be there when they need us as they set up their operating loans, in times of natural weather disasters or during financial distress from market pressure.”

Among the most highly discussed topics of the conference was how the industry is improving to meet the changing needs of agriculture. Jones praised the data-driven nature of crop insurance, explaining that it has made crop insurance uniquely adept at helping America’s farmers respond to climate change.

“As farmers deal with new challenges, it is important to maintain the integrity and credibility of the Federal crop insurance program, but we need to acknowledge it will not stay the same,” she said.

Jones pointed to the work that the crop insurance industry has done alongside the U.S. Department of Agriculture to facilitate the voluntary adoption of climate-smart agriculture and champion more diversity and equity within agriculture.

She set the stage for the upcoming Farm Bill debate by noting the large percentages of new members in both the Senate and House agriculture committees along with changes in leadership in both committees.

Recently, a diverse coalition representing 55 farming, banking, and conservation organizations called on government officials to oppose cuts to crop insurance in the Farm Bill. The coalition delivered letters to the House and Senate budget and appropriations committees, as well as to the Secretary of Agriculture and Acting Director of the Office of Management and Budget, emphasizing the importance of crop insurance as a risk management tool.

“There are always new ideas from new voices to be heard in the Farm Bill discussion,” she said. “How we share our collective story and listen to their perspectives will help influence the process.”

Soybean Leadership Gives Crop Insurance High Marks

Farmers are counting on Congress to maintain risk management as a top priority in the new Farm Bill, the American Soybean Association’s president, Brad Doyle, said recently on Agri-Pulse’s Open Mic.

Congress could begin debate on the 2023 Farm Bill as early as this month. Doyle’s association represents 500,000 U.S. soy farmers on domestic and international policy issues and is surveying members this winter on farm bill topics. It plans to share with Congress a list of priorities.

“Risk management, I believe, if you look at crop insurance, is used on about 90 percent of the soybean acres in the United States. That would be devastating to take that tool away. It is a great program. It gives us financial security when disaster happens, such as a tornado or a large weather event or flooding even. So, we are going to stand by the risk management tools that we have, such as crop insurance.”

In addition to his remarks on risk management and crop insurance, Doyle spoke about the inability to find adequate inputs such as fertilizers and herbicides and how that could impact growers in 2022. He also mentioned that trade, rising inflation and labor shortages continue to be concerns for farmers across the country. You can listen to Doyle’s interview on Agri-Pulse’s Open Mic here.

Crop insurance stands ready to help farmers and ranchers during these challenging times. We thank the American Soybean Association for its support of proven risk management tools like crop insurance.

Crop Insurance Basics: Historic Drought Loss

It has been an exceptionally difficult crop year for many of America’s farmers and ranchers as drought conditions in the West and northern Plains have distressed crops and grazing lands. Approximately 210 million acres of crops are experiencing some level of drought conditions.

Millions of farmers trust crop insurance to help manage their risks, including drought, and farmers have already spoken out about the importance of the farm safety net and crop insurance during years like these.

“Many of our risk management programs, like crop insurance, will be vitally important this year for those producers,” National Association of Wheat Growers Executive Director Chandler Goule said after touring drought-stricken wheat fields in the Dakotas and Minnesota. “Most of the producers we’ve talked to…I’m not going to say they were optimistic but very thankful they had crop insurance programs.”

While the full extent of drought damage is yet to be revealed, crop insurers are already engaged with farmers and ranchers on the ground to help them navigate this historic drought. Currently, more than 90 percent of America’s row crop farmland is protected by crop insurance, and we stand at the ready to keep America growing – no matter the size or scope of the disaster.

So, how does crop insurance respond to a historic drought? We don’t need to look very far back in the history books to find the answer.

In 2012, drought gripped America’s heartland, leaving most of the country reeling from at least some level of drought. It was one of the worst disasters to hit American agriculture in decades.

“Going out in the fields… is a thoroughly depressing experience,” Illinois farmer David Andris told National Crop Insurance Services at the time. “If we didn’t have crop insurance…this year might be the end of it for me.”

The decrease in corn production per acre in 2012 was the largest caused by a drought since 1988.

Farmer Robert Geddes emphasized the importance of having crop insurance during 2012 for the “nasty years like this.” Growers in his area had invested a lot into growing the best crop possible, only to see it lost to drought. If farmers didn’t have the safety net provided by crop insurance, “they’d truly be hurting.”

Thankfully, crop insurance performed extremely well. It quickly and efficiently delivered aid to rural America – exactly as Congress designed.

The public-private partnership of crop insurance meant that farmers weren’t left waiting for years for some form of ad-hoc disaster assistance. Private-sector insurance adjusters quickly assessed damage in the field and crop insurance companies worked swiftly to finalize more than one million claims. This gave farmers the certainty to plan for the next planting season.

Not only did crop insurance help farmers and ranchers weather the drought of 2012, ensuring the security of our food and fiber supply, but crop insurance had a positive impact throughout the rural economy.

An economic study commissioned by Farm Credit Services of America found that in Iowa, Nebraska, South Dakota, and Wyoming alone, crop insurance indemnities from the 2012 drought generated enough off-farm income to save 20,900 non-farming jobs.

Our thoughts are with the farmers and ranchers who are currently dealing with this devastating drought. But history shows us that we will face this challenge together – just as we have before.

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.

Farmers Emphasize to Congress Importance of Crop Insurance

Farmers from across the country testified last week before a House Agriculture Subcommittee hearing examining the efficacy of the farm safety net.

While each grower had a unique story to share, a common thread quickly became clear: America’s farmers depend on the Federal crop insurance program.

Read in their own words what crop insurance means to America’s farmers:

“Crop insurance is a vital tool for farmers, and Congress must not do anything to undermine it.” – Wes Shannon, peanut and cotton farmer in Georgia

“Crop insurance is a cornerstone of my operation. Our ability to market our grain, manage our risks and financially survive depends on crop insurance. Hundreds of thousands of dollars are invested in a growing crop that can be wiped out in one weather event. And there are broader impacts on the ag economy. Considering what farmers spend on ag inputs, machinery, equipment, and crop protection, we must be successful for everyone else. That’s why crop insurance is so critical for our entire industry.” – Jeff Kirwan, corn and soybean farmer in Illinois

“Federal crop insurance is an absolute mainstay to rural Minnesota and farm families like mine. If Washington does anything on farm policy, it should first do no harm to crop insurance.” – Rob Tate, farmer, crop insurance agent, and crop revenue consultant in Minnesota

“I view the Federal crop insurance program to be a fundamental element of the safety net that secures the survival of domestic food production, which I consider to be of critical national importance for all Americans.” – Brian Talley, specialty crop farmer in California

These testimonies reflect the key role that crop insurance plays in the farm safety net. More than 1.1 million Federal crop insurance policies provide more than $100 billion in coverage across more than 380 million acres of farmland in all 50 states. It’s available to farmers of all sizes and more than 130 commodities.

Throughout the hearing, the growers shared their personal experiences with crop insurance and outlined the strengths of the Federal crop insurance program.

Unlike ad hoc disaster bills, which can take years before help arrives, crop insurance delivers assistance for covered losses in just days or weeks. That’s because crop insurance is built on a unique private-public partnership that draws on the efficiency of the private sector to quickly assess damages and determine losses when Mother Nature strikes.

The crop insurance program also gives farmers predictable tools to manage their unique risks. Farmers invest in crop insurance before a disaster – sharing in the risk – and they know how the rules of their policy will help them recover.

Rob Tate also testified that as an agent, he’s seen how important crop insurance is not only for established farmers, but also beginning and socially disadvantaged farmers who need to secure credit and manage their risks.

It’s no wonder that when everything is on the line, America’s farmers turn to crop insurance. Congress must continue to strengthen the crop insurance program and preserve this vital part of the farm safety net.

Crop Insurance Protects YOUR State

The past year has instilled in many of us a deeper appreciation for America’s farmers and ranchers – and the daily challenges they face to keep America supplied with a bounty of food and fiber.

From sea to shining sea, America’s crop insurance providers are proud to stand beside our farmers and ranchers and provide them with the risk management tools that they need to weather any storm.

In fact, crop insurance protects farmers in all 50 states, covering nearly 400 million acres across America.

How does crop insurance protect your state?

Visit CropInsuranceInMyState.org to explore 50 fact sheets highlighting the importance of agriculture and demonstrating how crop insurance keeps your state growing.

From small produce farms to large row crop operations, crop insurance is available to all farmers, no matter their size or what they choose to grow. It covers more than 130 different commodities

Both cranberry growers in Massachusetts and corn farmers in Texas count on the safety net provided by crop insurance to help make these two very different crops among the top crops in their states.

And a thriving agricultural economy contributes to the economic health of each state, underscoring the important role that crop insurance plays in supporting our communities.

Each fact sheet also highlights one of the most unique aspects of the crop insurance program: the private-public partnership that requires both farmers and private insurers to invest into the crop insurance system. Farmers and ranchers collectively pay between $3.5 billion and $4 billion a year out of their own pockets in crop insurance premiums.

Farmers and ranchers continue to invest in crop insurance because not only is it affordable and widely available, but they also know they can count on crop insurance to deliver aid quickly when disaster strikes.

Check out your state’s fact sheet at CropInsuranceInMyState.org and share why crop insurance matters to you on social media using the hashtag #InsureMyState.

Crop Insurance Basics: Risk Mitigation and Risk Management

Risk mitigation and risk management are two sides of the same coin when it comes to improving agricultural outcomes and promoting climate-smart decisions.

On the front of the coin, we have risk mitigation. This side represents all the steps farmers and ranchers take to reduce the amount of risk they face. For example, farmers utilizing precision ag technology, new seed varieties, or conservation practices like reduced tillage and cover cropping can increase their resiliency by improving yields and soil health.

On the back of the coin, we have risk management. This side represents all the steps farmers and ranchers take to manage the costs and impacts of the many uncontrolled risks they still face. Agriculture’s primary risk management tool is crop insurance, which is delivered by private-sector insurers and is partially funded by farmers through premiums.

For optimal effectiveness, these two sides should work in concert, not conflict, to encourage conservation while ensuring the ability of farmers and ranchers to continue operating after a disaster.

Crop insurance must be flexible enough to embrace the newest tools, technologies, and techniques being used to improve the land, conserve resources, increase operating efficiencies, and mitigate risk. Conversely, new conservation efforts must be consistent with the economics that underpin crop insurance’s widely successful risk management strategy.

These facts were reinforced by a recent study published in the renowned peer-reviewed Journal of Environmental Management. It noted that crop insurance is not a barrier to the adoption of conservation practices and is key to helping farmers maintain healthy soil.

The public-private partnership of crop insurance has evolved over the years to become the cornerstone of America’s farm safety net policy. And it has stood the test of time because of built-in flexibility responding to any situation that Mother Nature presents.

Specifically, the system is built on constant data analysis, up-to-date good farming practices, and actuarial soundness, which means premiums for coverage generally cover expected indemnities over the long term.

Crop insurance encourages smart farming practices on the most productive land through a self-correcting premium rating and underwriting system. In short, farmers who have a strong Actual Production History (APH) get better premium rates and thus lower premiums relative to their higher yields. Lower premiums motivate farmers to mitigate risk and build strong production histories with higher yields.

Crop insurance is also constantly improving, which is imperative as farmers deal with the ill effects of extreme weather. Section 508(h) of the Federal Crop Insurance Act allows for the private submission of crop insurance policy ideas and sets forth clear criteria for policy approvals by the Federal Crop Insurance Corporation Board of Directors.

The U.S. Department of Agriculture also works to continually improve crop insurance through the development of new policies. For example, the new Hurricane Insurance Protection – Wind Index Endorsement coverage arrived just in time to help offset devastating losses from the string of hurricanes that occurred during 2020. This new option was quickly added to fill a need in the agricultural community, and in its first year of implementation, it helped farmers rebound from eight significant wind events.

The new hurricane program – just like insurance products covering more than 130 crops in this country – works because it is rooted in sound science and economic principles.  These fundamentals of actuarial soundness will be essential as policymakers look for ways to encourage farmers to adopt more and more conservation practices. Policymakers must not lower insurance premium rates without proper justification – to do so would only place the entire risk management system in jeopardy and arbitrarily punish the farmers it serves.

Instead, incentives should reward farmers for their actions without upending actuarial soundness. State governments in Iowa, Indiana, and Illinois have found a way to do this with local programs that help offset a portion of farmers’ insurance costs.

In other words, the two sides of the coin must continue working together as they are designed to do.

Crop Insurance 101

Crop insurance is a critical program for maintaining our nation’s supply of food, fuel and fiber. It helps farmers and ranchers navigate the risks of farming and plant again after a disaster while providing them the necessary stability to continue investing in long-term conservation practices.

But with terms like “Actual Production History” or “Whole-Farm Revenue Protection,” it might sometimes feel like you need to be an insurance whiz to fully understand how this public-private partnership works.

That’s why National Crop Insurance Services (NCIS) put together CropInsurance101.org.

There, the public and policymakers can learn more about the history of crop insurance and how it works today to protect farmers and ranchers.

We’ve recently added a wealth of new content:

  • Links to the entire “Crop Insurance Basics” series, which explores crop insurance concepts in an easy-to-understand way.
  • Information on a peer-reviewed study in the Journal of Environmental Management which found that crop insurance is not a barrier to the adoption of conservation practices and plays a role in helping farmers maintain healthy soil.
  • New glossary definitions, including important program elements like Good Farming Practices and Section 508(h) submissions.
  • Farmer testimonials sharing how crop insurance is an indispensable part of their risk management toolkit.

Over the past year, farmers and ranchers have faced untold challenges, ranging from a global pandemic to devastating weather events. Looking forward, they’re building on decades of best farming practices to protect the soil, air and water that nurture their crops.

Rural America is resilient. But they can’t do it alone.

The strength of crop insurance has made it the cornerstone of the farm safety net. Last year a record nearly 400 million acres across America were protected by crop insurance.

Learn more about crop insurance keeps America growing by visiting CropInsurance101.org or following NCIS on Facebook and Twitter.

Crop Insurance Basics: Good Farming Practices

Suppose you’re a homeowner who intentionally neglects your property, refusing to make basic repairs and even creating unsafe conditions like exposed wires or leaky pipes. Now suppose your house, not surprisingly, is damaged from a resulting fire or flood.

Are you entitled to a full homeowner’s insurance payout?

Of course not. A homeowner’s policy has exclusions and conditions to ensure the homeowner acts responsibly and is not neglectful. Otherwise, fraud could become more commonplace and responsible homeowners would wind up paying more in premiums to offset others’ losses.

Crop insurance is no different and requires responsible stewardship. A farmer who starves a crop of nutrients and water, plants late, or farms in a manner that jeopardizes the insured property would be ineligible for indemnities when the crop fails.

Fortunately, America’s farmers are the most efficient and productive in the world. They are honest and determined to take care of the land that takes care of them. And they do the job right.

Doing the job right in agriculture is officially known as Good Farming Practices, which are defined by the USDA’s Risk Management Agency and required as a condition of insurance.

Good Farming Practices, or GFPs, are constantly evolving to keep pace with new technologies and changes in the market, weather, and land management. These practices are rooted in science and data and are based on regional research. In other words, GFPs must be proven to work.

GFPs are the production methods that farmers follow to cultivate a crop and allow it to make normal progress to maturity, ranging from the timing of planting and harvest to using the best crop rotations, crop inputs, and farming techniques in the area.

Farmers follow GFPs when they choose the right variety of seeds to grow a good crop with high yield potential and a good market price. GFPs also include properly preparing the field, irrigating, fertilizing, and weeding during the growth period. Finally, GFPs mean collecting the mature crop from the field with harvesting methods that maximize output and minimize damage.

GFPs help ensure that production methods do not adversely affect the quantity or quality of production, and to keep up with the latest science and technology, they continually are monitored and improved. Local researchers, agronomists, and USDA extension agents are the keys to helping farmers keep pace with the latest and greatest in their area.

The GFP known as no-till is a great example.

The technique – which leaves crop residue in the field after harvest and a new crop planted using a drill or planter instead of first tilling the ground – is used on more than 65 million acres of farmland today. But it was rarely used until the late 1980s because farmers had long believed that tilling improved yields.

As more and more research showed the production and environmental benefits of no-till, including carbon sequestration and soil health, farmers were encouraged to change the way they farmed.

No-till is just one example. Other environmentally beneficial GFPs that have been adopted by agriculture and embraced by crop insurance in recent years include recognition of new drought-resistant seed varieties, more efficient irrigation systems, buffer strips, cover crops, and precision agricultural technology and equipment.

The flexibility within the insurance system helps expand the list of GFPs as farmers look to new proven technologies and techniques to tackle climate change, improve conservation practices, land management, soil health, water conservation, and any challenge tomorrow brings.

New Study Highlights Crop Insurance’s Role in Maintaining Healthy Soil

Crop insurance is not acting as a barrier to the adoption of conservation practices and has a role in helping farmers maintain healthy soil. That’s according to a new peer-reviewed study in the renowned Journal of Environmental Management.

During the study, researchers from Purdue University, Arizona State University, and the Nature Conservancy used interviews and a multi-state survey to determine if crop insurance requirements limited cover crops and conservation tillage for corn producers in the Midwest.

“Questionnaire responses indicate that crop insurance was not limiting conservation adoption,” according to the study. “When given a list of potential limiting factors for conservation adoption, including cost and time/labor required, crop insurance was perceived as the least limiting, in comparison to all other factors, for both conservation tillage and cover crops.”

Conservation tillage and cover crops were specifically studied because, according to the researchers, these practices reduce soil erosion, improve water quality, and promote soil health.

The study noted that the federal Risk Management Agency, in the 2018 Farm Bill, designated cover crops planted in 2020 and later as a Good Farming Practice – a distinction that should help further promote the conservation practice.

Among the notable findings reported by the Journal of Environmental Management:

  • Fewer than 6 percent of farmers believed crop insurance was limiting conservation adoption.
  • Respondents were already using both crop insurance and conservation on their farms. 90 percent were enrolled in crop insurance, 60 percent used conservation tillage, and 25 percent planted cover crops.
  • Adoption rates of conservation practices were higher among respondents enrolled in crop insurance than those not using crop insurance.
  • Both crop insurance and conservation were credited by farmers as being important and complementary tools to their risk management strategies.

Despite the clear evidence that crop insurance requirements are not barriers to conservation, researchers lamented the fact that some members of the agricultural media are perpetuating a myth that crop insurance and cover crops are mutually exclusive.

“Posing these two behaviors as incompatible is misleading and unrepresentative of the broader agricultural population,” the researchers concluded.

Wheat Growers Count on Crop Insurance

This year, America’s farmers and ranchers have faced one challenge after another. For wheat farmers in the west and Midwest, their crop is now threatened by severe drought conditions that could contribute to yield reductions or total crop loss.

Thankfully, more than 90 percent of insurable planted acres are protected by crop insurance, including many of America’s more than 47 million acres of wheat.

Without crop insurance, “producers in these drought-stricken areas could lose their crops without any risk protection, which could drive those farming operations out of business,” wrote Dave Milligan, president of the National Association of Wheat Growers, in a recent op-ed for the High Plains Journal.

One wheat farmer in Kansas reported less than one and a half inches of rain in the last year. Others worry about the increased threat from wildfires.

Milligan is a Michigan wheat farmer himself and very familiar with the inherent dangers of farming and the nature of disasters like drought. He wrote that producers need to have reliable access to crop insurance to effectively manage their risks.

Farming is a risky business, and crop insurance is one of the most important policy tools that is relied on to mitigate risk…

As a crucial component for protecting producers and the feasibility of farming, crop insurance provides a risk management tool for unpredictable weather and assists producers in qualifying for the necessary operating loans to produce a crop. With this in consideration, any cuts or reduced access to crop insurance programs could be detrimental to farmers who rely on it to stay in business when disaster strikes.

Crop insurance has been so successful because it relies on a unique partnership between the federal government and the private crop insurance industry. This allows crop insurance to utilize private-sector efficiency to process claims and deliver payments quickly.

As Milligan makes a point of noting, farmers invest their own money into crop insurance:

Crop insurance is such an important policy tool for farmers that they invest their own money to purchase this protection. Farmers spend $3.5 to $4 billion per year to purchase crop insurance and bearing a significant portion of losses through deductibles. The federal government spends less than a quarter of 1% of its budget on farm safety net programs, making this a worthwhile investment to protect the world’s most affordable and safe food supply. Adequate funding of crop insurance should be a high priority for policymakers as agriculture is being hit with low prices, the effects of COVID-19, and other unpredictable disasters.

Milligan also cites the critical role that crop insurance plays in supporting the rural economies that depend on the income generated by farmers and ranchers. Because if America’s farms fail, their communities will be likely to crumble.

We hope that America’s wheat growers experiencing drought will soon see the rain they need. But no matter the storm – or the drought – crop insurance is here for America’s farmers and ranchers.

Crop Insurers: Proposed OMB Budget Undermines Farm Safety Net

The Office of Management and Budget (OMB) today released a proposed Fiscal Year 2021 budget that includes steep cuts to the Department of Agriculture and federal crop insurance.

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 released the following joint statement in response:

“Last year brought unprecedented challenges for rural America. Even now, farmers and ranchers across the country are dealing with the lingering consequences of weather events that destroyed fields and ruined crops. And there looks to be no reprieve from the ongoing rural recession: The USDA estimates that farm cash flow will tighten this year, dropping more than $10 billion, or 9 percent, from 2019.

“The federal crop insurance program reacted quickly and efficiently to keep many farmers afloat during this difficult time. It’s no wonder then that the nation’s farm organizations teamed up in late 2019 to ask Congress to reject any attempts to cut crop insurance and weaken the farm safety net when it’s needed most.

“It’s inexplicable as to why OMB would target such a critical risk-management tool for budget cuts. The proposed cuts will make crop insurance unaffordable and unavailable for farmers, seriously undermining the farm safety net.

“The crop insurance program works for farmers and taxpayers alike:

  • Crop insurance protects more than 90 percent of America’s planted crop land acres.
  • Farmers invest in their own protection by spending $3.5 to $4 billion per year to purchase crop insurance and bearing a significant portion of losses through deductibles.
  • Crop insurance policies provide critical collateral to farm bank and credit lenders who assist farmers through operating loans, especially during a time of low commodity prices.
  • The federal government spends less than a quarter of 1% of its budget on the farm safety net, including crop insurance, making this a worthwhile investment to protect the world’s most affordable and safe food and fiber supply.

“Thankfully, for the sake of America’s struggling farmers and ranchers, OMB’s budget is sure to be rejected by Congress. We urge the White House and Congress to support America’s farmers and ranchers by protecting and strengthening crop insurance.”

How Does Crop Insurance Impact Your State?

Crop insurance is a cornerstone of U.S. farm policy.

But what does that really mean for America’s farmers?

To put it all into perspective, National Crop Insurance Services has highlighted the state-by-state impacts of crop insurance at CropInsuranceInMyState.org.

There you can find individual fact sheets that illustrate the unique significance of agriculture in each state.

It’s probably to be expected that oranges are a staple in Florida, but did you know that New Jersey can thank tomatoes for being the largest agricultural contributor to the Garden State’s economy? Idaho might be famous for their potatoes, but potatoes lead the list of top crops for Maine as well.

And the federal crop insurance program helps these crops drive the economy by providing an invaluable safety net for those farmers and ranchers harvesting oranges, tomatoes, potatoes and the more than 100 additional covered crops.

Everything is bigger in Texas, and with 38 million acres protected by crop insurance, they come in at number one in acres covered. But corn-production powerhouse Iowa can boast the highest value of crops covered by federal crop insurance, with nearly $12 billion in protection.

And because crop insurance requires farmers, private insurance companies, and the federal government to share the burden of risk, each fact sheet outlines how much farmers and insurers invested into the federal crop insurance program through premiums and indemnities.

In total, federal crop insurance protects more than $100 billion worth of crops across more than 300 million acres in all 50 states.

Visit CropInsuranceInMyState.org to download a fact sheet for your state and view first-hand testimonials from the farmers and ranchers who rely on this valuable risk management tool.

Pennsylvania Farmers Consider Crop Insurance a Must-Have Tool

Brian Campbell always knew he wanted to be a farmer. He started a produce stand when he was just 14 years old. Now, his Pennsylvania farm produces mostly vegetables, including broccoli, sweet corn, lettuce and pumpkins.

But weather can be unpredictable in the Northeast, and his farm has seen challenges. In 2011, a severe flood wiped out approximately 50 percent of his expected revenue for that year. Banks no longer wanted to do business with him and he had to dig deep to recover.

Thankfully, the introduction of the Whole Farm Revenue Protection program with the passage of the 2014 Farm Bill allowed Campbell to adequately insure his diverse crops against risk.  

National Crop Insurance Services visited Brian Campbell Farms as part of our mission to tell the first-hand stories of the farmers and ranchers who rely on the safety net provided by the federal crop insurance program.

Campbell credits crop insurance for his growing success, saying, “If it wasn’t for whole farm revenue protection today, you know, I may not be at the size that I am.”  

And he’s always looking forward to the next year, “I love what I do. It’s a passion. I really enjoy it.”

For family farmer Dave Clark, farming is also a passion that he just couldn’t shake. He briefly tried working off the farm but returned to his roots in 2001 when he and his wife purchased the family farm in Huntingdon County, Pennsylvania.

“I always say it’s in your blood. I love farming,” Clark says.

Clark considers crop insurance a must-have business tool. He relies on crop insurance to help protect his farm against the inherent risks that come with putting your faith in weather to grow your crops and a favorable market in which to sell them.

As John Ligo says, “Risk in farming is part of the landscape. The risks that we face, some are controllable, and some are not.” But he emphasizes that one way to help mitigate these risks is to purchase crop insurance.

His farm in Grove City, Pennsylvania is home to approximately 600 head of cattle and he grows about 400 acres of corn alongside 600 acres of grass and rangeland.

Last year, Ligo’s farm saw 40 inches of rain and by early June he was short 100 acres of what he intended to plant. Crop insurance helped his farm survive. During those years when drought hindered grass production, crop insurance helped him then, too.

“It does change the way I farm, knowing that my risks are at least covered to a certain extent,” Ligo says.

Third-generation dairy farmer Billy Smith feels deeply connected to his family legacy of farming.  

“I feel that it’s our God-given right here to take care of this land,” he says. “I feel that we’ve been blessed in many ways. You know, it’s our livelihood.”

He’s had to file a couple of crop insurance claims. But knowing that this valuable federal program exists helps ease the worries that come with farming. By reducing some of the risks that can arise on his farm, crop insurance allows him to better plan for the future.

“It’s always there to back us up whenever we need it.”

View more stories from across the country at cropinsuranceinmystate.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.

New to Crop Insurance? Here’s How it Works

Every day, farmers spend long hours working the land and caring for livestock so they can provide high-quality food at an affordable price for all Americans across the nation.

This amazing feat would not be possible, however, without the critical safety net that crop insurance provides.

Farming presents a unique set of risks and a farmer’s financial well-being relies on factors as unpredictable and varied as changes in weather, the spread of disease, or the rapid fluctuation of market conditions.

With such a wide variety of potential risks and the likelihood that any particular event is geographically concentrated – an entire county could see their growing season ruined within mere moments by a tornado or freeze – the traditional private industry insurance model simply would not work for crop insurance.

The government developed the public-private partnership of federal crop insurance in order to protect and support farmers and thereby helping to stabilize the economies of the rural communities that rely on agriculture, without leaving taxpayers solely on the hook financially.

Under this successful model, farmers contract with any one of the 15 private insurance companies authorized to sell crop insurance by the United States Department of Agriculture’s Risk Management Agency, paying a premium in order to protect their crops. These insurance companies, or Approved Insurance Providers (AIP), work hand-in-hand with the federal government to help manage costs that would otherwise make coverage unattainable for the average farmer.

While the government sets rates and rules for the plans that can be sold and provides program oversight, it is the responsibility of the AIPs to write policies, as well as adjust and process claims. That means when disaster strikes, private industry can react quickly to assess damages and issue payments due, providing farmers and the communities who rely on their income with relative stability.

This public-private partnership requires farmers, private insurance companies, and the federal government to share the burden of risk and incentivizes private companies to reduce fraud, waste, and abuse.

Today, federal crop insurance protects more than 130 types of crops covering more than 330 million acres in all 50 states. So, from clams to cranberries, soybeans to sunflowers, our farmers can rest a bit easier knowing that this safety net exists.

And while farms and agriculture-related industries add over $900 billion annually to the American economy and create work for 21 million Americans, the cost for federal crop insurance represents just one quarter of one percent of the federal budget.

This seems like a worthwhile investment to ensure our farmers can continue providing food and fiber for our nation.

New Study: ‘Efforts to Limit HPO Would Increase Risks to Farmers’

Just before the U.S. House of Representatives was set to vote on a Farm Bill amendment that would’ve crippled crop insurance, a Kansas State University economist sent key policymakers a note alerting them to a new study that shed light on the negative impact of reducing revenue insurance coverage.

The study he circulated was not produced by Kansas State, but its contents were so timely and so significant, that he felt compelled to help its authors at the University of Illinois spread the word.

That paper, by Illinois professors Gary Schnitkey and Jonathan Coppess, examined how farmers use revenue crop insurance tools like the Harvest Price Option (HPO) to help them forward contract their commodities.

“Recent criticism of crop insurance suggests that amendments could be placed in the Farm Bill to curtail HPO coverage,” the authors wrote.  “As a result, understanding farmers pre-harvest hedging activities is important.”

Very little information existed about how farmers use these kinds of techniques, so Schnitkey and Coppess began their work with a survey of Midwest growers.

“Survey results indicate that farmers use what can be termed prudent hedging strategies prior to harvest for marketing their crops,” the authors explained.  In fact, the survey found that 84% of Midwest farmers hedged a portion of their anticipated crop.

The study succinctly explained how it works:

Pursuant to a forward contract, a farmer agrees to deliver grain to a country elevator or processor at some point in the future, often near harvest time, but based on futures market prices at the time of the contract. This legally-binding contract locks in the price for the delivered grain as a hedge against lower prices at the time of delivery. While advantageous to the farmer in terms of protecting against lower prices, it also comes with risks that prices will increase, often as a result of lower yields for the crop nationally. In extreme situations, a farmer with significant yield losses may not have enough bushels to fulfill the contractual obligations and will need to purchase bushels to make delivery; bushels purchased in such a situation could well be at a higher price than the farmer contracted.

And that’s where HPO comes in.  Farmers pay more for the insurance option. It indemnifies losses at harvest-time prices rather than planting-time prices, enabling farmers to purchase enough commodity off the open market to fulfill their forward contract.

Without access to HPO, as some agricultural opponents are advocating, farmers would reduce pre-harvest hedging, the study found, and introduce even more risk into farming.  This is particularly troubling considering the survey also found that the farmers who most use these techniques also report to obtain the bulk of their families’ incomes from the farm.

“In other words, those impacted the most by this policy change (eliminating HPO) are those who most rely on farming for their family income,” the study concluded.  “Congressional efforts to limit HPO would increase risks to farmers.”

Lawmakers in the House overwhelmingly defeated the amendment designed to harm crop insurance, though it still needs to pass the Farm Bill.  The Senate is slated to begin its Farm Bill deliberations soon, where critics are again expected to attack HPO and other components of farmers’ primary risk management tool.

New Crop Insurance Study Provides Valuable Farm Bill Insight

U.S. taxpayers fare better when the government discounts farmers’ crop insurance premiums rather than relying on unbudgeted disaster aid packages.  That’s according to a recent peer-reviewed study that used a novel mathematical model to study an issue that has been difficult to analyze empirically.

The study, published in the Journal of Agricultural and Resource Economics (JARE), was recognized as the publication’s Outstanding Article of the Year for 2017.  It was authored by Dr. Harun Bulut, who holds a Ph.D. in economics from Iowa State University and currently serves as a senior economist with National Crop Insurance Services (NCIS).

Bulut’s work specifically focuses on the choice in government policy between crop insurance and ad hoc disaster relief as a way of addressing catastrophic risk in agriculture.  This is a choice lawmakers currently face as they debate the 2018 Farm Bill.

Federal crop insurance has become a pillar of U.S. farm policy in recent years and is being considered by policymakers around the world.  As it stands, farmers collectively spend $3.5 to $4 billion from their own pockets to purchase insurance protection a year.

Even though it has become the top choice for farmers in mitigating risks, some critics still pan the public’s cost in reducing insurance premiums and are targeting the policy for cuts.

Since crop insurance’s rise, annual disaster bills, which are fully funded by taxpayers and used to be the norm, have been largely reduced.  That’s been welcomed news for farmers since the disaster bills of the past were often politically motivated and were slow to deliver relief.

Prior research in this arena offered a variety of reasons for government support of crop insurance.  But the research did not take into account the underlying tradeoff between insurance use and ad hoc disaster aid in what economists refer to as an equilibrium model.  In particular, econometric evaluations of farmers’ demand response when premium rates rise and fall have been of limited value, as explained in the article.

With a unique approach using mathematical game theory, Bulut was able to demonstrate that policy proposals calling for reductions in premium support may be underestimating the resulting demand response for crop insurance and the increased pressure for disaster aid packages.

Bulut’s work offers a reason for underinsurance in the absence of premium support in that “both disaster aid expectations and overconfidence drive a wedge between the actuarially estimated price and the price that is ‘fair’ from the farmers’ point of view.”

In the mathematical model, the cost arising from insurance premium support is found to be much less than would-be cost from ad hoc disaster aid in the absence of a viable crop insurance option.  The findings also imply that disaster aid can be used at a much lower level in the future but may not be eliminated.

Bulut’s work suggests that it will be important for lawmakers to recognize the reduced insurance participation and increased likelihood for ad hoc assistance associated with the proposals being championed by farm policy critics during the ongoing Farm Bill debate.

Former RMA Administrator Opines on Crop Insurance Critics

Kenneth Ackerman, a former Administrator of the USDA’s Risk Management Agency, recently published an article entitled Top Priority for the 2018 Farm Bill: Protect Federal Crop Insurance.

We thought the piece summed up the current political debate surrounding crop insurance well, and wanted to share it more broadly.  Ackerman, who currently works at OFW Law, embodied the term “public-private partnership” when he worked for the government, and, as you can tell, is still a champion of a strong crop insurance system.

Crop insurance critics have a blind spot, seen in the recent CBO report…issued December 2017. At several points, CBO asks whether the cost to taxpayers for the current FCIC program is justified compared with the alternative, that is, simply protecting farmers against unusual disasters by providing what it calls “supplemental assistance,” or what used to be less-delicately labelled “ad hoc disaster bailouts.” CBO ultimately ducks the question. “It is not possible to know,” the report says, “nor are data available,” it argues, and “it is not possible to compare” the two. Here, they are wrong. Data does exist to compare the two approaches. All that’s required to access it is a memory.

Young farmers today probably don’t remember what it was like to be dependent for survival after a natural disaster almost entirely on politicians in Congress working feverishly to produce emergency one-time-only ad hoc rescue packages. These ad hoc bills have largely gone extinct since around 2011 as FCIC crop insurance has replaced them. This accomplishment is no small thing. Even the recent House-passed special emergency bill for 2017’s devastating Hurricanes Harvey, Irma, and Maria, which does provide aid for certain crop losses, links that aid directly to crop insurance participation.

But before 1994, FCIC crop insurance was a tiny program, with participation barely a fourth of modern levels and total guarantees barely a tenth. As a result, every farm disaster required an emergency ad hoc disaster bill. During the decade before 1994, these ad hoc disaster bills averaged about a billion dollars per year, peaking at $4 billion each following the monumental 1988 drought and 1993 flood. These disaster bills, in turn, discouraged farmers from buying coverage.

This was the system that modern crop insurance was designed to replace. The disaster bills at the time were necessary lifelines in the absence of other support, but they were also a nightmare: for farmers, for taxpayers, and for USDA staff trying to administer it. Beyond the sheer uncertainty, a parade of reports from GAO, the Washington Post and other newspapers, and Congressional oversight committees disclosed legions of mis-payments and program abuses, not the fault of farmers or agency staff but simply the fact that USDA was required to implement these bulky, multibillion-dollar programs with little notice and inadequate infrastructure, the result of being, in fact, ad hoc.

FCIC crop insurance, unlike disaster aid, is a business model that rewards farmers for being good managers and good businessmen. Claims are paid reliably in 30 days after being filed, based on stable, pre-set contracts. Farmers purchase their coverage, paying good money from their own pockets, yes at subsidized rates, but still large enough to force them to make serious choices about risk. Producers who keep good production records enjoy better guarantees, and those who incorporate crop insurance into business plans linked with credit, banking, precision agriculture, and related risk-management tools like forward contracting and futures and options, do even better. For farmers who pre-contract their crops to processors, FCIC policies are often designed to incorporate those contacts seamlessly with their coverages. No wonder that private lenders today routinely require crop insurance as a condition of extending credit, as do other rural businesses.

The “reforms” that claim to “fix” crop insurance, be it through means testing, eliminating coverages like the Harvest Price Option, or similar steps, all work against the program’s basic strength, its business basis reflected in established systems for underwriting and rating.

President Trump Wants an ‘On-Time’ Farm Bill with Crop Insurance

It’s been more than 25 years since a sitting U.S. President addressed the American Farm Bureau Federation.  But President Donald Trump made up for lost time with a rousing speech yesterday to the Farm Bureau convention in Nashville.

From tax and trade to immigration and infrastructure improvements, he touched on a myriad of important issues during a 35-minute speech.  Yet, it was his comments about farm policy and crop insurance that proved to be one of the afternoon’s biggest applause lines.

“I’m looking forward to working with Congress to pass the Farm Bill on time so that it delivers for all of you,” President Trump told the group of nearly 5,000. “And I support a bill that includes crop insurance.”

The President singled out Senator Roberts, a long-time champion for farm policy and for crop insurance, and praised his relentless efforts on behalf of agriculture.

“We are working hard on the Farm Bill, and I think it’s going to go well,” he noted.

President Trump’s support of a strong farm policy isn’t surprising, considering his opinion of America’s farm and ranch families.  The President opened his remarks with these observations:

We’ve been working every day to deliver for America’s farmers just as they work every single day to deliver for us.

 We know that our nation was founded by farmers.  Our independence was won by farmers.  Our continent was tamed by farmers, so true.  Our armies have been fed by farmers and made of farmers.  And, throughout our history, farmers have always, always, always led the way….

 The men and women in this room come from different backgrounds and from all across our land, but each of you carries the same title that’s been proudly borne by patriots and pioneers, inventers and entrepreneurs.  The title of, very proudly, American farmer.  Thank you very much.

He also explained, “Our farmers deserve a government that serves their interest and empowers them to do the hard work that they love to do so much.”

Assuming Congress agrees, rural America should expect a good Farm Bill sooner rather than later.

And that would provide lawmakers and President Trump the opportunity to take a victory lap next year.  He promised the group that he would be returning to help the Farm Bureau ring in their centennial convention next January.

‘Don’t Mess with Crop Insurance’

“Don’t mess with crop insurance.”

The phrase has become a battle cry among farmers in the Midwest, especially as legislators headed out for listening sessions and town halls ahead of the next farm bill.

And so far, legislators are hearing the message.

That’s the opening of a recent Farm Futures article about crop insurance.

The piece points out that crop insurance has become the most popular safety net for farmers because it replaces the costly emergency disaster relief bills of the past. Back then, when a storm destroyed crops, farmers had to ask Congress for help. The system was expensive for taxpayers and inefficient for farmers because of slow government payments.

Today’s modern crop insurance – where farmers design their own policies, pay premiums, shoulder deductibles and only receive indemnities after losses are verified by trained adjusters – is easier to manage and more accountable. And, since farmers are paying into it, taxpayers aren’t left shouldering all of the cost when disaster strikes.

It’s no wonder, as the article notes, that 83 percent of farmers in a recent survey said crop insurance was a very important part of their risk management plans.

Unfortunately, 75 percent also said they were worried that the next farm bill won’t provide an adequate safety net, showing the angst in farm country over low commodity prices and increasing weather unpredictability.

Amazingly, some lawmakers are looking to weaken crop insurance and leave farmers even more vulnerable.  Art Barnaby of Kansas State University detailed why that would be such a mistake in a follow-up Farm Futures article.

Among the consequences, he found, of making crop insurance less affordable and less available:

  • Most farmers, including relatively small grain growers, would be affected if the Harvest Price Option were eliminated – a popular product similar to “replacement value” in other lines of insurance.
  • Proposed caps on premium assistance would be hit by numerous farms across the country, including specialty crop farms as small as 200 acres in some California counties.
  • Forcing farmers to pay more for insurance could affect coverage levels and weaken the system – an idea backed up by the Farm Futures survey, which found that 84 percent of farmers said they couldn’t afford adequate coverage without federal assistance.

Farm Futures also looked back at crop insurance data since the late ‘80s and found a system that is in balance and is providing high levels of protection.

“Since 1988, crop insurance policies have covered $15 trillion to guard against losses,” the publication noted.  “During the same period, total premiums paid were $136 billion and total indemnities paid to farmers came to $116 billion.”

In other words, crop insurance is working as designed and the consequences of weakening it could be dire.

“Don’t mess with crop insurance.”

University Researchers: Limiting Crop Insurance Cuts Deep

Crop insurance has been hailed by lawmakers and farmers alike as an essential risk management tool during recent House and Senate Agriculture Committee hearings. Despite the praise, there are still critics who hope to weaken farmers’ protection against natural disaster and wild swings in the market.

Farm policy opponents are specifically aiming to cap the discounts farmers receive on insurance premiums, eliminate a key revenue insurance product pegged to commodity prices, and exclude some growers from the system altogether based on their income.

Such proposals are meant to target America’s biggest farms, but recent work out of the University of Illinois and Kansas State University shows that the effects would be far wider, hitting many family farms, too.

To get a better idea of the impact of a proposal to limit premium discounts, Dr. Gary Schnitkey of the University of Illinois looked at the heart of corn belt in McLean County, Illinois. The area has prime growing conditions with deep and fertile soils.

There, he found, farmers with insurance coverage on 85 percent of their crops, the highest amount offered, would hit the proposed $40,000 premium discount limit after 2,944 acres – a large farm, but by no means a giant operation.

Meanwhile Illinois counties where land isn’t as fertile, like Saline County, would hit the cap at the same coverage level on just 884 acres – a mid-sized farm similar to most family farming operations. This cap would be hit even sooner by growers considered riskier because of past losses or bad yields.

It’s not just Illinois either. Drs. Art Barnaby and Mykel Taylor from Kansas State found similar results in other Midwest states. For example, nearly 15 percent of Kansas farms would hit the cap, they noted.

The pain grows exponentially, Barnaby and Taylor explained, if farm policy critics are successful in eliminating harvest price tools available for revenue coverage. These tools enable a grower to insure a crop at its harvest price rather than its price at the time planting in order to take advantage of forward contracting opportunities.

Eliminating it, the researchers found, would “reduce crop insurance protection for nearly 95% of Iowa’s crop farmers…[and] about 80% to 90% of the crop acres in many other states, including Kansas.”

Another anti-agriculture proposal to exclude farmers with incomes over $250,000 from crop insurance benefits would also hit ag country, and it may not just hit large farms.

“Such a policy would likely impact farms that had high levels of off-farm income from a spouse and or other business activities,” according to Barnaby and Taylor. Furthermore, because most farmers’ incomes are tied to crop prices, some growers could be ineligible in some years and eligible in others, creating a compliance nightmare for the USDA and farmers alike.

GAO Forgets Its Own Lesson in Proposing Crop Insurance Cuts

In the wake of weather disasters in 1983, 1984 and 1988, U.S. agriculture was struggling, and an unparalleled farm debt crisis was only compounding the problem.

Back then, the federal government responded differently to agricultural crises. There was no overall strategy to deal with recurring farming disasters, and responses were generally reactive and after-the-fact.

So, in 1989, the U.S. Government Accountability Office (whose name has since changed from the General Accounting Office) published a report that examined the role of USDA’s three main disaster programs: Ad hoc direct payments, disaster emergency loans, and crop insurance.

GAO compared the effectiveness of these three programs, using eight different criteria that weighed the ability of the programs to deliver at the lowest possible cost, provide a disincentive to risky operations and pay farmers for actual losses, among other points.

The report concluded that “crop insurance is a more equitable and efficient way to provide disaster assistance,” than both taxpayer-funded disaster payments and emergency loans.

GAO recommended strengthening crop insurance to ultimately serve as the primary program for providing farm disaster assistance. And in 1994, President Clinton signed the Federal Crop Insurance Reform Act, which restructured crop insurance to increase farmer participation, increase the private sector’s role, and enhance provisions of the crop insurance program for farmers.

The GAO’s report and the 1994 Act set the stage for the affordable and widely available crop insurance system we have today, with modern products like revenue coverage that help farmers plan for not only weather-related disasters but the massive price fluctuations in the global market.

And, instead of ad hoc disaster relief bills, farmers now help cost-share their own farm policy, paying $50 billion out of their own pockets in the last 17 years for insurance coverage. Farmers also absorb the first 25 percent, on average, of any loss before their coverage kicks in.

The system is also much more efficient and accountable than direct government payments because private insurance companies sell policies and pay indemnities only after verifiable losses.

Fast forward 28 years and it seems the GAO has forgotten its own lesson. The GAO, in a July report, recommended effectively dismantling the same crop insurance system that has become a cornerstone of America’s modern-day farm policy. Specifically, GAO proposes changes that would weaken the very private-sector delivery system that provides aid efficiently and reduces taxpayers’ risk exposure – a plan that would ultimately lead to more government dependence.

The recent GAO report, in essence, advocates a return to a prior era, back when farmers, lawmakers and taxpayers were equally frustrated with the way rural America received needed support.

Luckily, most lawmakers aren’t giving the recent GAO report the same warm reception its counterpart received decades ago.  It’s already been criticized by Senate Agriculture Committee Chairman Pat Roberts (KS), who said, “Now is not the time for additional cuts to a program that producers rely on.”

He’s exactly right.  A financially stable agricultural sector is fundamental to the well-being of our economy and society, and crop insurance is fundamental to agriculture’s success.

Farm Credit Services Report Touts Crop Insurance

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

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

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

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

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

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

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

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

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

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

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

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

Eliminating Farm Policy Punishes America and Rewards Foreign Competitors

 

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

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

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

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

Among their findings:

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

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

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

Put another way: Be careful what you wish for.

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

Praise in High Places for Crop Insurance

From South Dakota to Washington, D.C., crop insurance received praise in high places for its ability to help farmers and ranchers withstand the perils of growing food and fiber.

“Crop insurance provides protection against the one thing that even the most resilient farmer cannot defeat – the wrath of Mother Nature,” wrote Scott VanderWal, the president of the South Dakota Farm Bureau and the vice president of the American Farm Bureau Federation, in an editorial published this week in the Argus Leader.

Highlighting the importance of agriculture to both the nation’s economy and to South Dakota, VanderWal makes the case that crop insurance plays a vital role in ensuring a secure and affordable food supply by providing a safety net when the farm economy is hurting.

“It’s essential that we preserve S.D.’s farm economy, not just for our economic well-being, but for all Americans,” he explains.

Meanwhile, in another part of the country, Ken Ackerman, the former manager of the USDA’s Federal Crop Insurance Corporation, along with his partner at Washington D.C.’s OFW Law Firm, Marshall Matz, penned an opinion piece that examined the steady growth and improvements to crop insurance since it started nearly 80 years ago and the need to preserve the program going forward.

“Today’s modern crop insurance system is a vast improvement over what existed just a few decades ago,” they write. “Sheer numbers tell much of the story. Federal crop insurance today covers almost 300 million areas of American farmland, over 90 percent for major commodities and over 70 percent for specialty crops, representing over $100 billion in insurance guarantees.”

As Congress soon begins work to reauthorize a new farm bill it will be crucial to grow support for crop insurance and sound farm policy so we can maintain and build upon this success.

As VanderWal concludes, “Old-fashioned hard work, innovation, and smart farm policies like crop insurance…will secure a bright future for us all.”

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

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

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

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

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

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

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

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

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

A Secure Nation Begins with a Secure Food Supply

“I firmly believe that America’s first line of defense is our ability to feed and clothe the people,” Major General Darren G. Owens warned the House Committee on Agriculture during a recent hearing that focused on testimony from military leaders to highlight the link between agricultural production and national security.

Maj. General Owens continued to explain, “we would all be dependent on other nations” that would put our food security and national security at risk without strong agricultural production in this country.

These sentiments echo the beliefs of most Americans according to a recent national poll that the National Crop Insurance Services (NCIS) commissioned. By an 81 to 15 percent margin, voters polled said that, “a strong and thriving American farm industry is critical to American national security” with 92 percent of voters supporting federal spending to help farms and farmers.

In particular, Americans support crop insurance because it is a shared investment with a shared return for both farmers and taxpayers. Farmers purchase policies to protect their crops from catastrophic events and only receive an indemnity when they suffer a loss. The federal government discounts policy premiums to make policies affordable. Farmers have the peace of mind to know they can make it another year if a single hailstorm, flood, or drought destroys their crops. Taxpayers have assurances that they are not on the hook for costly, unbudgeted disaster assistance when calamity strikes.

“From my perspective, food security is first of all about ensuring that the plentiful supply of high quality food and agricultural products that we enjoy continues to be available,” said Major General James R. Sholar who also testified at the hearing.

Crop insurance ensures everyone has an affordable and secure food supply, which ultimately makes us a more secure nation.

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

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

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

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

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

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

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

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

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

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

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

NFU Concludes Convention Season in Style

The first quarter of the year is always busy in agricultural circles, with most farming organizations – including the National Crop Insurance Services – holding annual conventions to discuss the issues likely to face farmers in the upcoming year. The National Farmers Union’s show usually completes the pre-Spring meeting circuit, and this year they are doing it with a packed program that kicked off over the weekend. President Barack Obama addressed the group via video. Agriculture Secretary Tom Vilsack is there in person. And attendees will also hear from Minnesota Gov. Mark Dayton (D), U.S. Senators Al Franken (D-Minn.) and Amy Klobuchar (D-Minn.), and retired U.S. Army General Wesley Clark.

Amid these headliners will be one of crop insurance’s own, Jim Korin, the president of QBE NAU, who will tell the group why crop insurance must remain affordable, available, and economically viable to succeed in the future.

Crop insurers appreciate NFU’s invitation to address its members, and we certainly appreciate NFU’s support of a strong crop insurance system throughout the years. The organization was an essential component of the coalition that beat back legislative attempts last year to reopen the Farm Bill and weaken farmers’ primary risk management tool.

To say thanks, we wanted to spotlight a couple of great quotes from Farmers Union leaders:

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

Kent Wright, President Northwest Farmers Union
Capital Press, June 18, 2015

“With three consecutive negative farm income forecasts, we simply cannot afford to undercut the farm safety net. NFU urges Congress to reject…crop insurance cuts, as it has in years’ past.”

Roger Johnson, President, National Farmers Union
NFU Press Release, February 9, 2016

Thanks again for your continued support, NFU members. And have a great show as you close out the farm convention season in style.