Crop Insurance Supports Farmers, Farmers Support Crop Insurance

It was late summer when we visited Sumner Country, Kansas, where Phil White farms with his father and brother. All three farmers understand that once they put their crop in the ground, it’s out of their hands – but they also know they can rely on Federal crop insurance to get them through unplanned events or disasters.

“Crop insurance is an important safety net and an important part of our risk management toolbox because it lets us know the minimum amount of revenue we’re going to have coming to our operation in any particular year,” said Phil.

Importantly, crop insurance doesn’t just benefit Phil and his family farm. It also benefits the small communities he supports, as well as the nation as a whole.

“Having a plentiful and affordable food supply as a nation is vital to our national security,” said Phil. “[It keeps] people on our farms working [and keeps] our small communities afloat. It’s just vital.”

Over in Syracuse, Kansas, crop insurance also protects farmer Keith Brown, who grows winter wheat and sorghum on his farm. Like Phil, Keith is no stranger to the perils of farming, some years even ending up with zero crops to harvest because of severe weather. For him, crop insurance is a real game changer.

“[Crop insurance] is life changing,” said Keith. “The fact that you don’t have to worry if you’re going to be here next year. You can go to bed at night and know if you don’t have a crop, you’re still going to be here.”

Without farmers and the crop insurance policies that ensure farmers have the protection they need to grow crops year after year, communities throughout America – and the world – wouldn’t have the safe, secure, and dependable food supply they rely on to feed their families.

Craig Gigstad, a farmer in Jefferson County, Kansas who grows corn and soybeans, explains that farming isn’t just about growing the crops. It also involves navigating the challenges of agriculture and making the best choices for the land and the people who depend on him.

“The world needs our grain,” said Craig. “We’re trying to do the best job on the farm to be sustainable [and] to give our future generations opportunities to stay on the farm and produce food to feed the world.”

Bottom line: Farmers need crop insurance to feel secure in their operations. And we need farmers to feel secure in the food we eat.

Celebrating 100 Years of Crop Insurance Research

Did you know this year marks 100 years of crop insurance-sponsored agricultural research? That’s right – crop insurance has supported American farmers for the last century, helping them manage risk and overcome obstacles, keeping our food supply safe and secure.

In fact, over the past 100 years, National Crop Insurance Services (NCIS) and its predecessor organizations have conducted more than 400 research projects in 35 states resulting in the development and refinement of loss adjustment procedures for 54 crops ranging from alfalfa to wild rice.

A mule-drawn cultivating team in the 1910’s. Around the time this photo was taken, the crop insurance industry started the agronomic research program that is still working today to understand the impact of nature’s perils on crops.A mule-drawn cultivating team in the 1910’s. Around the time this photo was taken, the crop insurance industry started the agronomic research program that is still working today to understand the impact of nature’s perils on crops.


Simulating hail with an ice blowing machine. The crop insurance industry funded the development of these machines in the 1980’s to simulate realistic crop damage for loss adjuster schools. They are still in use today.Simulating hail with an ice blowing machine. The crop insurance industry funded the development of these machines in the 1980’s to simulate realistic crop damage for loss adjuster schools. They are still in use today.


NCIS conducts research across the country. North Dakota is a favorite research location because it is the northernmost location for a diversity of insured crops. In the late 1970’s and early 1980’s, sunflower research was prolific in North Dakota!NCIS conducts research across the country. North Dakota is a favorite research location because it is the northernmost location for a diversity of insured crops. In the late 1970’s and early 1980’s, sunflower research was prolific in North Dakota!


Farming in 2023 is very different from farming 100 years ago, but crop insurance is continuing to adapt to best serve farmers. Over the years, the crop insurance industry has invested millions in new technology and precision data to better serve America’s farmers.

NCIS’ agronomic research has also grown with the rise of Land-Grant University research, keeping abreast with new farming practices, changing weather patterns, and technological advances that often change how crops respond to plant damage.

In fact, the ability of crop insurance to adapt to the changing climate is one of its core strengths.

Crop insurance is the cornerstone of the farm safety net. That is why we are committed to helping farmers make the best decisions for their farms while maintaining the integrity and actuarial soundness of crop insurance.

Science is at the core of agriculture. And agriculture is at the heart of America.

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.

Responding to Drought: Crop Insurance’s Proven Track Record

As America’s farmers and ranchers face severe drought conditions, we’ve been reflecting on the historic drought that swept across American farmland in 2012. That disaster showed just how efficiently the Federal crop insurance program can deliver aid when everything is on the line for America’s farmers.

Former USDA Under Secretary Michael Scuse commended the crop insurance industry for its response to the 2012 drought saying, “To this day, I have yet to have a single producer call me with a complaint about crop insurance. That is a testament to just how well your agents, your adjusters, the companies, and the Risk Management Agency (RMA) worked together in one of the worst droughts in the history of this nation.”

Crop insurance stepped up then to provide timely claims service and indemnity payments to keep America growing, and we are once again ready to provide critical relief to our producers.

Over the past decade, members of Congress from both sides of the aisle have continued to strengthen the successful public-private partnership that defines the Federal crop insurance program. Farmers have come to count on the efficiency of the private sector, and crop insurance companies are continually making additional investments to process claims quickly and accurately.

As a result, more and more farmers have turned to crop insurance to help manage their risks. As the cornerstone of the farm safety net, crop insurance currently insures more than 440 million acres of American farmland. That’s over 157 million more acres protected by crop insurance when compared to the acres covered during the 2012 drought.

However, each of these acres is not affected equally by current drought conditions. While the 2012 drought was widespread across much of the country – affecting approximately 85 percent of corn production – the current drought is much more severe in the West and northern Plains. Fifteen states in the West, High Plains, and portions of the Midwest are experiencing extreme and/or exceptional drought.

“This is definitely the worst crop year we have had since we started farming 35 years ago,” Washington wheat farmer Marci Green recently told ABC News. “Years like this are the reason we have crop insurance.”

No matter where the damage happens, private-sector crop insurance companies are ready to deploy loss adjustment teams, determine losses, and quickly pay claims to growers. In fact, crop insurance adjusters have already been out in the fields for months, appraising crops and educating farmers on the specifics of their individual crop insurance policy.

One of the key strengths of crop insurance is that farmers share in the risk – and the cost – of crop insurance. That means American taxpayers will not be left 100 percent on the hook for the cost of the drought.

Farmers pay insurance premiums to purchase coverage before disaster strikes and, like other lines of insurance, shoulder a portion of losses through their deductible. Private crop insurance companies take on losses as well.

The Federal government plays a role, too. In 2012, the government fulfilled its role as a reinsurer under the terms of the Standard Reinsurance Agreement and stepped in to share in the severe and catastrophic losses.

Each component of the Federal crop insurance program worked together in 2012 to help American agriculture survive in the face of overwhelming disaster.

Now, as America’s farmers and ranchers face yet another historic drought, crop insurance is again working to help farmers on the road to recovery. The Federal crop insurance program has a proven track record of delivering for farmers and ranchers in challenging times, and we will continue to meet that call.

Eastern North Carolina farmers on long road to recovery after Hurricane Florence

WALLACE, NC – Justine Price was looking forward to a great soybean crop this fall. His beans were coming in strong, covering the fields of his eastern North Carolina farm in a lush green.

Mother Nature had other plans.

As Hurricane Florence approached the North Carolina coast, he moved his equipment to higher ground and prepared as best he could for what was expected to be a storm with Category 4 winds.

What he wasn’t expecting was the rain. The storm stalled once it made landfall and dumped almost 30 inches on his farm. The river flooded, and water rose to about 5 feet in his garage as Price and his wife moved their furniture to the second story of their home.

Today, piles of debris from the inside of gutted homes lines the street in his hometown of Wallace.

In his fields, brown and rotting soybeans are tangled. Old tires, a refrigerator, gas cans and wooden crates are strewn across another nearby field.

Price spends his time now trying to rebuild, helping his family and loading supplies at the fire department to help with the relief effort. His crops are a total loss.

“I had been smart in my decision making,” he says, “and carried crop insurance, which you know that’s not a salvation but it’s a help.”

Down the road in Mt. Olive, Reginald Strickland faces the same damage. His cotton crop is rotting in the fields and his tobacco is destroyed.

“Every dollar will help,” he says, “because we are going to be in the hole.”

And it’s not just this year. Eastern North Carolina has suffered hurricanes, droughts and low prices for several years running.

The damage left in Hurricane Florence’s wake is a reminder of the reason American agriculture needs a strong, affordable and widely available system of crop insurance. The adjusters will make their assessments and get payments to farmers here much faster than any ad hoc federal relief bill.

“Crop insurance is very important to all of Ag,” Strickland says. “We really need it. We have to have it. It is the only way we can continue to produce the food and fiber it takes to feed the world.”

Price says the payments won’t cover everything and they won’t provide him income until the next crop is harvested. But they will help him farm another season.

For now, he is putting his faith in a higher power.

“Just trust in the Lord,” he says. “That’s the biggest thing.”

Watch these stories and more at

Record Yields, Fewer Claims in 2016

Favorable growing conditions and record yields for corn and soybean marked 2016 along with fewer losses, according to a report in the latest edition of Crop Insurance Today magazine.

Only seven states – all of which are in the Northeast – had loss ratios greater than 1.0, noted “2016: The Year in Review” authors Mechel Paggi, Frank Schnapp and Laurence Crane of National Crop Insurance Services. (Note: any number above 1.0 means that insurance claims paid out exceeded premiums received for policies.)

“This reflects a welcome change from recent years where drought and other extreme weather events drove up indemnities to historic highs,” the authors noted.  “The year-over-year variability of the returns is a reminder of the risk assumed by crop insurance providers in delivering this essential safety net for American farmers.”

It’s also a reminder of the risks and unpredictability farmers shoulder every day, which is exactly why so many purchase crop insurance to protect their businesses.

And the authors noted that farmers had plenty of skin in the game in 2016, paying $3.5 billion from their own pockets to purchase 1.2 million policies.  Of those policies, 218,000 had claims to cover losses, a lower amount than past years.

While the overall conditions improved in 2016, weather was varied across the nation and produced damaging events.

Fall was a record warm season with worsening drought in the Southeast that resulted in wildfires. Hurricane Matthew, and tropical rainfall, brought record flooding to the Atlantic region.

The 15-page report details precipitation for each state by season, crop yields and production, commodity prices since 2000, and more. Some highlights:

  • 2016 saw the most acres of soybeans planted in U.S. history
  • Peanut production continued to trend up
  • Rice acres were up 22 percent from 2015
  • Cotton rebounded to 10.1 million acres

“Looking to the future, the American public is assured that crop insurance will be in place to provide financial stability for the many small, family farms that comprise the core of U.S. production agriculture,” the authors concluded. “Crop insurance will ensure that when the repeated disasters of recent years strike again, as they most assuredly will, U.S. farmers will be able to bounce back to produce again at high levels the food, feed, fiber and energy crops on which the U.S. and world population have come to expect and depend.”

Midwest Loss Ratios Soar as Indemnities Continue to Rise

Twelve states have loss ratios of at least 1.1 — meaning crop losses paid are $1.10 for every dollar received in premiums for the 2012 crop year — according to the January 21 data from the Risk Management Agency. The highest loss ratio states are in the heartland, with the top five states including Illinois at 2.36, Missouri at 2.24, Kentucky at 2.16, Nebraska at 1.83 and Iowa at 1.66.

To date, most of the crop losses are to corn and soybeans, with corn producers accounting for 59 percent of all indemnities paid and soybeans accounting for roughly 12 percent. Cotton, wheat and grain sorghum make up the other top five crop losses.

While most of the losses nationally can be attributed to the record drought of 2012, other parts of the country suffered from other weather anomalies. The spring freeze that damaged crops in New England and the upper Midwest resulted in high losses in many apple orchards, with loss ratios in New Hampshire coming in at 1.24 and Massachusetts at 1.1. Nationally, the loss ratio is 1.12 and rising.

In 2012, farmers paid more than $4.1 billion in premiums to purchase crop insurance. To date, more than $12.3 billion has been paid out to farmers, easily surpassing 2011’s old record of $10.8 billion in indemnities paid. Unlike disasters of the past however, the private sector is paying for a significant portion of the bill.

In fact, past natural disasters – prior to the widespread availability of crop insurance – cost taxpayers $45 billion from FY1989 to FY2001, according to the Congressional Research Service. And while the data is still not in, private sector losses from 2012 will almost certainly be in the billions of dollars.

What’s worrying many producers is that there are early indications that 2013 could be even drier than 2012. More than 60 percent of the continental U.S. – including a good portion of the nation’s breadbasket – remains in some stage of drought, compared to roughly 32 percent a year ago, according to the January 8 U.S. Drought Monitor.

Every county in the states of Iowa, Minnesota, Missouri, Oklahoma, Kansas, Nebraska, South Dakota, Colorado, Wyoming, New Mexico, Arizona and Utah are either abnormally dry or in some level of drought. USDA has already designated 597 counties in 14 states as primary natural disaster areas due to drought and heat, making all qualifying farm operations eligible for low interest emergency loans.

Will Indemnities Hit $11 Billion?

Losses paid out by crop insurance companies to farmers for 2011 crops have now exceeded $10.7 billion and are edging ever closer to the $11 billion mark, according to data from the Risk Management Agency (RMA). This surpasses the previous record of $8.76 billion set in 2008 by almost 25 percent.

Spurred on by one of the worst weather years in history, farmers and ranchers faced unparalleled challenges in 2011 and crop insurance reached record amounts. The numbers paint a picture of Mother Nature’s devastation that befell farmers from coast to coast.

The top crops damaged, by dollar value, were corn, cotton, wheat, soybeans grain sorghum, pastureland and rangeland, and tobacco. And while the average loss ratio across the country is at .90 – which means that for every dollar purchased in coverage, 90 cents was paid out in indemnities – those numbers are much higher in some key states.

Top among them is Vermont, which felt the brunt of Hurricane Irene’s wrath last summer and is currently at a loss ration of 2.59. Texas and Oklahoma are not far behind, having fallen victims to an historic and prolonged drought, registering a 2.35, and 2.15 respectively.

The news comes as the Senate Agriculture Committee recently passed the 2012 Farm Bill and the House is conducting hearings on their Farm Bill. As Lubbock, Texas banker Rick Boyd noted in a recently-released NCIS video, the drought could have been catastrophic for many Texas farmers if they had not purchased crop insurance. “2011 was such that, with the insurance, we did not have any farmers that actually went out of business, and over 90 percent of our customers had to draw on their insurance claims,” he said. “The programs were in place that allowed them, not to make a profit, but to actually get a lot of their expense money back and that was enough to enable them to get financing for the upcoming year,” he added.

“Thanks to the foresight of Congress, crop insurance has been in place to weather enormous natural disasters and help ensure that farmers survive to plant yet another year,” said Tom Zacharias, president of NCIS. “Those billions in damages would have landed on the plates of input suppliers, lenders, marketers and farm families if crop insurance wasn’t in place,” he said.

Since 2008, more than $28 billion private sector dollars from crop insurance companies have gone back into the hands of farmers across the country for policies they purchased. During that same period, crop insurance has shouldered more than $12 billion in cuts in Federal investment even while exposure to risk has continued to rise.

“With damages from last year approaching the $11 billion mark, the fact that there has not been a single call from farmers and ranchers for a federal disaster bill is testimony to the efficacy of crop insurance and proof that farmers and rancher consider it indispensible,” said Tom Zacharias, president of National Crop Insurance Services.


$7.1 B and Counting: Indemnities Soar In 2011

Crop insurance companies have paid out more than $7.1 billion and climbing in claims so far this year, which makes 2011 second only to 2008’s $8.6 billion in the total value of indemnities paid out to farmers. The combination of several large-scale floods in the Central U.S., record droughts in the southern plains, a strong tropical storm in the Northeast and a hard freeze in Florida set the stage for the widespread agricultural losses.

But what is the significance of this? The fact is that despite being one of the worst weather years in recent history, farmers had a policy backstop in place—crop insurance—to preclude major losses from natural disasters or market fluctuations that could lead to widespread bankruptcies and foreclosures.

Thankfully, Congress had the foresight to make decades of significant investments in crop insurance infrastructure, increase the varieties of crops covered and policies available as well as augmenting resources to increase farmer participation. The net result is the resilient and robust modern-day crop insurance policy.

But it hasn’t always been this way. Although the program was originally launched in 1938, it was not particularly successful because program costs were high and participation by farmers was low. In 1980, Congress passed legislation designed to increase participation in the crop insurance program and make it more affordable and accessible for farmers. This modern era of crop insurance was marked by the introduction of a public-private partnership between the U.S. government and private insurance companies. Despite these changes, farmer participation remained low, averaging about 30 percent.

Low farmer participation in crop insurance combined with several large natural disasters set the stage for today’s crop insurance policy. A major drought in 1988 spurred the first of what would be the last costly string of federal ad hoc disaster assistance bills for farmers. Another ad hoc disaster bill was passed in 1989; a third one enacted in 1992 gave farmers the option of claiming disaster losses on a farm-by-farm basis for any year between 1990 and 1992, and then an extremely wet and cool growing season in 1993 caused more losses, and Congress passed yet another ad hoc disaster bill.

Low farmer participation remained a major hurdle. Congress enhanced the crop insurance program in 1994 and again in 2000 in order to encourage greater participation. They accomplished this by combining federal dollars with farmer premiums to make otherwise cost-prohibitive crop insurance policies universally affordable to farmers of all sizes. The changes also expanded the role of the private sector in developing new products that would help farmers manage their risks. With these additional changes, farmer participation in the policy greatly expanded.

By 1998, more than 180 million acres of farmland were insured under the program, representing a three-fold increase over 1988. By 2010, roughly 80 percent of eligible farm land including all major grain crops and cotton, nursery, citrus, rice, potatoes, and livestock, covering more than 256 million acres of farmland and valued at nearly $80 billion, were protected by private crop insurance policies.

As the number of acres covered by crop insurance policies grew, so did the cost of the program along with it. Another factor that has driven up the cost of the policy is the recent dramatic rise in commodity prices. As the value of crops rise, the coverage needed to protect them rises too. For example according to USDA’s Economic Research Service, the average price a farmer received for a bushel of corn in September 2007 was $2.20. In September 2011, that price had nearly tripled to $6.37 per bushel. Soybean prices nearly doubled during the same period, with prices rising from $5.24 per bushel in September 2007 to $9.98 in September 2011.

The success of the agriculture sector due to these record prices has been a major boon to rural America. According to USDA, net farm income is forecast at $100.9 billion for 2011, up $21.8 billion for a rise of 28 percent from 2010. All three measures of farm sector earnings (net farm income, net cash income, and net value added) are forecast to rise more than 18 percent in 2011.

Underpinning this economic boon that has been one of the only bright spots in the U.S. economy has been this nation’s private crop insurance policies…and that’s been a dose of good news for taxpayers.

Keeping Crop Insurance Strong

The 2012 budget will likely include modifications and reductions to farm policy. Policy makers should consider 12 essential strengths that make crop insurance the cornerstone of the farm safety net programs. We’ll introduce one strength of crop insurance per month and explain how the sum of these strengths has given us the successful program we have today.

Strength: Producer indemnities are not capped by arbitrary payment limits.

All farm programs have limits on a producer’s annual adjusted gross farm and off-farm income to be eligible for payments. Farm programs also have annual payment limits for all programs except marketing loans.

There are no income caps to be able to buy crop insurance and crop insurance premium subsidies and indemnities are not limited by income or net worth. Additionally, because crop insurance is tailored to the individual’s specific needs, farmers pay a share of their premiums in proportion to the amount of risk they face.