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.

People Behind the Policies: Crop Insurance Agents Keep America Growing

We’ve been sharing the stories of the farmers who rely on crop insurance, but there’s another part of the equation that helps make crop insurance a success: private-sector agents.

Before planting a crop, farmers work with private-sector crop insurance agents to tailor a customized risk management plan that fits their unique needs. This individualized approach is one of the essential strengths of crop insurance.

Dustin Faulkner, a crop insurance agent in Jonesboro, Arkansas, starts the crop insurance conversation with his farmers by outlining the basics of crop insurance and how yield and coverage levels can affect policies.

It’s always difficult to have a farm hit by disaster, but Dustin takes pride in ensuring that his customers are covered should the worst happen.

“To be able to make that phone call in that time of need and let them know that the policy is there for them…you almost feel them sometimes have a little relief knowing that that process is in place. And they did have adequate coverage for their needs.”

It’s no wonder that Arkansas’ farmers trust crop insurance. Last year, crop insurance covered 5.5 million acres in Arkansas, and Arkansas farmers collectively paid $58.9 million out of their own pockets for coverage.

Agent Sam Walker in Brinkley, Arkansas, enjoys knowing that he is making a difference in the lives of his farmers and the economic health of his community. “Everything in Brinkley revolves around agriculture one way or another,” he said. “That’s the only way that we can make it around here is with farming.”

In many of these rural towns, agents are an integral part of the farming community.

“Crop insurance is something I enjoy,” said Lenny Adams, an agent at the Bank of England Insurance Agency in England, Arkansas. “I enjoy going out and sitting on the tractors and the combines and talking with the farmers and gathering data as well as taking care of them on their crop insurance needs.”

The Bank of England is the only bank left in the small town of 3,000 people. That’s why Lenny is passionate about ensuring that farmers have a strong farm safety net. He knows first-hand the financial risks that come with farming as well as how much farmers give back to their rural community.

If the farmers went under, “we’d probably lose every business we have in town.”

Watch these stories and more at CropInsuranceInAmerica.org.

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

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.

NCIS Scholarship Creates a Legacy of Giving Back

For more than a decade, National Crop Insurance Services (NCIS) has invested in fostering the next generation of America’s agricultural community through the NCIS 1890 Scholarship Program.

As George Washington Carver once reminded us, “Since new developments are the products of a creative mind, we must therefore stimulate and encourage that type of mind in every way possible.”

The 1890 Scholarship Program has worked to encourage creative minds by providing funding for four semesters to students with a professional interest in agriculture attending one of the 19 historically black land-grant institutions. It’s an investment in our nation’s farming future, and an investment in our commitment to increase the diversity in the crop insurance industry to reflect the diversity of the farmers it serves.

NCIS has awarded more than 25 scholarships to outstanding students since 2010. This year’s recipients are an exceptional group of young people who excel inside the classroom as well as through extracurricular activities on campus and are committed to giving back to their communities.

Scholarship recipient Samaya Brooks is studying agribusiness at North Carolina A&T State University.

“Agribusiness gives me the opportunity to learn about agriculture, which affects everyone, and help many people,” Samaya shares. “I’m very happy to have the opportunity to research and learn more about what I’m interested in. It has been my goal and dream since high school.”

After graduation, Samaya hopes to pursue a PhD to continue agribusiness research. Ultimately, she would like to use her career in agriculture to help to improve the lifestyle of farmers and protect them from exploitation.

Similarly, Tennessee State University student Tiffani Patterson also wants to use her agricultural career to help others.

“I plan to finish my degree in agricultural sciences and pursue a career in agriculture education. I plan to give back to students as my teachers did and hopefully show them that ag is not just for farm kids, but any kid who wants to learn about agriculture and [has] a passion to pursue it. I was not a farm kid by any means, but I was welcomed with open arms and learned many things I will use for the rest of my life,” Tiffani says.

This year, NCIS awarded a total of five scholarships to students from around the country. Our other deserving scholars are:

  • Erikton Goodloe is an agricultural business management major at the University of Arkansas at Pine Bluff. He’ll be a first-generation college graduate and looks forward to using his degree to launch a successful career helping farmers.
  • Paris Williams is an agricultural business major at Prairie View A&M University. Agriculture has been a lifelong interest for Paris, and she hopes to pursue a career in horticulture and agriculture research as well as start a small community farm.
  • Aja’Naeia Workman is a biology major at Alabama A&M University. She has plans to become a physician’s assistant to help others live healthier lives and make wiser health decisions.

All five of the 1890 Scholarship recipients are featured in the latest edition of Crop Insurance TODAY.

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.

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.”

The Three “C’s”: Crop Insurance, Climate, and Conservation

Over the past several years, farmers have dealt with immense climate and weather-related challenges. America’s farmers have survived droughts, hurricanes, derechos, floods, fires and a global pandemic. Through it all, farmers have kept farming. One constant throughout these past several years has been the availability of Federal crop insurance.

Recently, the Crop Insurance Coalition, a group representing farmers, lenders, agricultural input providers and conservation groups, sent letters to the Biden Administration and other congressional leaders asking them not to propose cuts to crop insurance in the upcoming FY2023 budget.

“Crop insurance [is] a farmer’s first line of defense against climate change and other disasters. As the challenges for America’s farmers and ranchers continue to grow, we believe crop insurance as a safety net is only becoming more important to stability in rural America…It is no accident that the most recent farm bills emphasized risk management, and in doing so, protected the interests of American taxpayers.”

Those familiar with the development of Federal crop insurance will recall that 1995 was the first year of implementation of the Crop Insurance Reform Act of 1994. The 1994 Act was in response to the extreme flooding and excessive moisture conditions occurring in the Midwest. Since the inception of the Act, acres insured have essentially doubled while coverage has increased more than five times.

Crop insurance is available nation-wide, and protection is provided for all eligible farmers. Accordingly, crop insurance has provided support to farmers that experienced losses due to a variety of adverse events across the country. Prominent examples since the 1993 flooding include:

  1. 2011 extreme drought in the Southern Plains coupled with flooding along the Missouri River
  2. 2012 drought
  3. 2019 excessive moisture conditions resulting in farmer prevented planting losses
  4. 2020 Midwest derecho
  5. Hurricane losses in the Southeast in 2020
  6. Drought in the Northern Plains in 2021

It is important to point out that as farmers with crop insurance have been financially protected from these weather events, the crop insurance program has operated well within its statutorily required actuarial soundness mandate. Since 1995, crop insurance premiums have exceeded indemnities.

Crop insurance’s mission is about more than the number of catastrophic weather events and dollars going out the door. It’s personal. Family farmers depend on crop insurance to maintain their way of life and support the local agricultural economy. For many rural towns, a healthy and resilient agricultural economy is also vital to their economic success.

Critics of the Federal crop insurance program have stated that the program does not encourage or require farmers to adapt to climate change. Such criticism ignores the evolution of the program to accommodate the integration of conservation programs and farmer initiatives to incorporate climate smart farming practices.

The guidelines for program participation, based on good farming practices, have evolved over time. Since 2014, farmers have been required to report their conservation plans in order to be eligible for crop insurance. In the 2018 Farm Bill, the use of cover crops was incorporated into the portfolio of good farming practices.

In a study published in 2020 in the Journal of Environmental Management, the authors report that crop insurance and conservation practices serve unique roles and are used simultaneously. Further, they report that the crop insurance program is not a barrier to the adoption of conservation practices such as cover crops and conservation tillage among Midwest farmers.

According to the study, “…results suggest that resiliency for Midwest operations includes both crop insurance and conservation practices. Neither behavior was found to inhibit the other. On the contrary, corn producers experienced complimentary outcomes from a combined approach that was greater than participation in either behavior by itself.

To state that the modern-day crop insurance program does not support farmers’ efforts to adapt to climate change or reduce greenhouse gas emissions is simply not true.

The Federal crop insurance program has demonstrated the flexibility to accommodate change. These changes have been, and will continue to be, science based, data driven, and provide incentives for voluntary participation by farmers.

Rural America to Congress: Protect Crop Insurance

As policymakers consider budget decisions for Fiscal Year 2023, rural America is once again asking that they “do no harm” to crop insurance.

Last week, a diverse coalition representing 55 farming, banking, and conservation organizations called on government officials to oppose cuts to crop insurance. 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.

America’s farmers and ranchers have been dealt a series of tough years, marked by extreme weather events. Despite the increasingly uncertain nature of farming, the certainty of crop insurance has provided an invaluable safety net for our farm producers, our food supply, and our rural communities.

“As the challenges for America’s farmers and ranchers continue to grow, we believe crop insurance as a safety net is only becoming more important to stability in rural America. During this tumultuous time, one of the few certainties that farmers could rely on was the protection provided by their Federal crop insurance policy,” the letters state.

Throughout each disaster, the crop insurance program has worked exactly as Congress intended, delivering aid in a timely manner to keep America growing. As the letters point out, the success of the crop insurance program is no accident.

Crop insurance is designed to provide individualized risk management to America’s farmers, no matter what they grow or where they grow it. Furthermore, its unique public-private partnership requires farmers and ranchers to share in the risk. Farmers and ranchers spent approximately $5 billion in 2021 to purchase crop insurance and then were required to shoulder deductibles before aid arrived.

Importantly, the letter highlighted the role crop insurance plays in helping farmers respond to climate change, increase resiliency, and invest in conservation efforts. This is strengthened by its nature of being a data-driven program.

“Crop insurance allows producers to customize their policies to their individual farm and financial needs and policies are based on fundamental market principles, which means higher risk areas and higher value crops pay higher premiums for insurance,” the letters state. “Crop insurance and its links to conservation further ensure that the program is a good investment for taxpayers.”

The letters close with a call to oppose any budget cuts to crop insurance.

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.

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.

USDA Chief Actuary Highlights Crop Insurance Strengths

America’s farmers and ranchers face an incredible number of risks every year, ranging from catastrophic weather events to market disruptions. That’s why rural America relies on the risk management tools provided by the Federal crop insurance program.

Dr. Thomas Worth, Chief Actuary at the U.S. Department of Agriculture’s (USDA) Risk Management Agency, recently spoke at an Agri-Pulse forum and highlighted some of the strengths of crop insurance, especially as farmers take action to combat climate change.

Farming is a dynamic environment, Worth said. So, the Federal crop insurance program has to be dynamic as well to accurately reflect risks and help farmers adopt conservation practices.

USDA is constantly updating premium rates and analyzing data to reflect a farmer’s actual risk.

“We’re always looking at and making refinements to mapping out high risk land like flood plains” Worth cited as an example, as well as evaluating weather trends and looking at region-specific agronomics.

One way that the Federal crop insurance program is designed to incentivize practices that benefit the environment is by utilizing a farmer’s Actual Production History. This is a self-correcting feature that discounts premiums for any producer who improves their performance.

This naturally incentivizes farmers to adopt best practices and techniques for their area – and avoid practices that would harm their performance, such as planting on land not appropriate for their crop.

“Farmers are highly motivated to take measures to mitigate [their risks] and crop insurance is structured so that farmers are best off when they grow a full crop,” Worth said, calling this a “results-based discount.”

Worth pointed to cover crops as an example of one practice that is gaining popularity. The USDA recognizes cover crops as a Good Farming Practice, which encourages farmers to use cover crops to prioritize soil health and resiliency. Ultimately, the use of cover crops can help reduce risk and improve a farmer’s yields, resulting in lower crop insurance premiums.

In fact, the Journal of Environmental Management recently published a peer-reviewed study that credited crop insurance with encouraging the adoption of conservation practices, such as cover crops.

Importantly, Worth emphasized the importance of crop insurance to the farm safety net and said it plays a critical role in helping farmers adapt to the challenges of tomorrow.

“The investments needed to make a farm resilient are generally long term in nature or may take a number of years before the benefit is fully realized,” Worth said. These types of investments can be difficult to make when a farm could go under after one bad year.

“Crop insurance provides the kind of financial stability, that will enhance the ability of farmers to think long-term, and to make the investments needed to adapt and be more resilient,” Worth said.

Crop insurance is proud to work with America’s farmers and ranchers to improve conservation practices and support a healthy environment.

Celebrating the Incredible Women of Crop Insurance

Last week, as we celebrated Women in History Month, the U.S. Department of Agriculture (USDA) hosted a special conversation to honor the women who work in the crop insurance industry.

Kendall Jones, chair of the National Crop Insurance Services (NCIS) and president and CEO of ProAg, and crop insurance agents and industry leaders Iris Sáenz and Pat Swanson participated in the discussion moderated by Richard Flournoy, Acting Administrator of the USDA’s Risk Management Agency.

Each of the women spoke about their careers in agriculture and the important contributions made by women in the crop insurance industry over the years.

“This industry is led by so many female agents in the field, so many female adjusters, people who do so much hard work,” Jones said. “I’m impressed with so many of the agents that I know today – not only are they running their agencies, they’re helping run farms or running the farms themselves, they have other businesses, they support the industry, their communities… They’re an inspiration to us all.”

Sáenz spoke about how women have always been key to food and farming.

“From the field to the table, women have always played an important role in agriculture. Since Indigenous tribes freely roamed these lands, women have been the primary providers of nourishment for their families and communities. Perhaps that is why many of us here today are inclined to dedicate ourselves to our agricultural communities… that is why it is so important that we, as women, come together to lift each other up.”

It’s important to honor the incredible work of the women in the crop insurance industry – and continue to share the stories of these women to inspire future generations of farmers, ranchers and agents.

Jones advised women who are just beginning their careers to be curious and take risks. Mistakes are inevitable, but with mistakes will also come successes that will build your confidence.

Swanson echoed this advice to be continually curious.

“My biggest advice to everyone… never stop learning. I feel it is so important to continue learning about your industry, about your farmers, about your customers you serve,” she said. “Never be afraid to ask questions.”

While each woman’s story and experience in agriculture has been unique, each found a fulfilling career working in the crop insurance industry and helping America’s farmers and ranchers manage their risks.

“From the cherry orchards in Michigan to the boardroom of the USDA building in Washington, DC, crop insurance has given me endless opportunities along the way,” Sáenz said.

We applaud the women of crop insurance for sharing their inspiring stories and grateful that they are helping continue the legacy of strong women in agriculture.

Crop Insurance Basics: Incentives

When policymakers prioritize specific behaviors or actions, they usually turn to incentives to jumpstart the process.

For example, the U.S. government has long promoted the benefits of homeownership to individual families and the economy as a whole. Hence, lawmakers introduced mortgage interest deductions on income tax filings to make homeownership more affordable and attractive.

In the world of agriculture, the public-private crop insurance system is often used as an incentive vehicle.

It’s helpful to think of crop insurance incentives in two buckets. The first bucket is using reductions in a policy’s premium rate to incentivize desired behavior. But with insurance, the key is not to incentivize in a way that upsets the delicate actuarial balance of the system, which could inadvertently do more harm than good.

For example, it would be inappropriate or unsound to arbitrarily discount premiums to promote an action without actuarial and financial justification – doing so could negatively affect coverage levels and/or drive up premiums for other farmers to offset resulting losses.

So, policymakers designed crop insurance with a self-correcting feature that naturally discounts premium for any producer who improves their performance. This catch-all incentive rewards any behavior that increases yields and reduces risk for farmers and taxpayers.

Take conservation for example. Farmers are turning to conservation practices like no-till more and more because those practices lower production costs and improve soil health which over time can lead to increased yields.

Through crop insurance’s incentive known as Actual Production History or APH, those farmers with above average yields are naturally rewarded with lower premiums.

The second incentive bucket works differently. In it, policymakers don’t adjust or discount premium rates. Instead, they offset a higher percentage of the farmer’s overall share of the premium costs.

This protects the actuarial soundness of the crop insurance system while providing additional financial incentives to help farmers who are willing to adopt preferred behaviors.

In recent Farm Bills, Congress wanted to encourage people to get into farming. To do this, the government agreed to offset a higher percentage of insurance premiums for new and beginning farmers as well as military veterans looking to break into farming.

Some states offer this second kind of incentive, too. In Iowa and Illinois, growers can get additional help paying their insurance premiums if they agree to plant cover crops – a conservation practice that helps sequester carbon, reduce soil runoff, and improve soil health.

These state pilot programs – although small – have proven to be very popular with farmers and have achieved the states’ goal of adding cover crop acreage.

Best of all, once this cover-cropping technique starts improving overall farm yields, it is rewarded with a higher APH and lower premium rate, falling within the first-bucket incentive, which will only encourage even higher levels of participation.

Crop Insurance Basics: Actual Production History

One of crop insurance’s defining attributes is its self-correcting nature.

That is, farmers who exhibit more risk pay more than those who exhibit less – much in the same way that car insurers reward safe drivers.

This is done by collecting and analyzing a producer’s Actual Production History (APH), which takes into account a grower’s actual yields over a period of time. It also compares performance to other farms within the county and surrounding communities.

Growers with a higher APH are able to get lower insurance premiums, saving both themselves and taxpayers money.

In this way, the APH formula serves to reward farmers for adopting new technologies and techniques that enhance efficiency and productivity.

For example, some agronomists, conservationists, and policymakers are currently promoting conservation practices – e.g., reduced till and cover cropping – explaining that these practices not only help the environment but can boost a farm’s bottom line.

When these conservation practices show dividends through higher-than-average yields, then the producer will be financially rewarded for adoption through cheaper insurance premiums.

This structure is one reason why a new peer-reviewed study in the renowned Journal of Environmental Management recently credited crop insurance with encouraging the adoption of conservation practices.

Conversely, higher premiums under the APH system act as a deterrent to farmers taking on more risk – for example, by not adopting the latest tools and techniques like their neighbors, planting the wrong crop for the geographic region, or farming on marginal land.

Such deterrents are of particular importance as farmers and ranchers must optimize efficiency to deal with extreme weather and the effects of climate change.

With a clear APH history record, farmers can more accurately select insurance policies that help them manage their unique risks and benchmark their performance.

The APH system provides growers with a clear incentive to constantly improve.

Crop Insurance Basics: Available to All

In the everyday insurance world, coverage may sometimes be hard to come by.

That can be true if you’ve had a disaster – such as a fire in your home – or live in an area at high risk for disaster. Car insurance coverage may be more expensive or even denied if you are a very young or very old driver, even if you’ve never had to file a claim.

Crop insurance is different.

Under the crop insurance system that has become the centerpiece of America’s farm policy, private-sector insurance providers must offer insurance to growers who are eligible for coverage and want it – regardless of a farm’s size, location, or cropping choice.

Additionally, crop insurers don’t have control over premium setting. A farmers’ rates are calculated and published by the USDA and, unlike other lines of insurance coverage, prices will not fluctuate between insurance providers.

Crop insurers compete on customer service, not price. And they cannot choose to simply do business with well-established farmers from areas that have a history of lower risk crops.

In fact, the crop insurance system must always look for ways to cover more and more farmers. Such inclusivity is a shared responsibility of the public and private sectors, which have partnered to bring additional public and privately augmented insurance options to the marketplace and keep pace with a constantly evolving agricultural sector.

While crop insurance was originally only available to major crops – such as corn, cotton, and wheat – it now offers coverage on 130 different crops, including most fruits and vegetables. Today, more than 1 million insurance policies provide $100 billion in protection to nearly 400 million acres – including about 90 percent of U.S. crop acreage.

And more policies and options are regularly being added through the USDA’s program to encourage new product development, where insurers work along-side farm leaders and researchers to create new and unique policies for everything from alfalfa seed to all-encompassing whole farm revenue protection.

Furthermore, this partnership teams up to deliver in-depth training services across the country for small and socially disadvantaged farmers to strengthen and broaden their familiarity with the inner workings of business planning and risk management strategies.

It’s a system that has married the best of the private sector with the best of government, and the result has been the most effective, popular farm safety net in the history of agriculture.

Agricultural Coalition Sends Letters Urging Federal Leaders to Protect Crop Insurance

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

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

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

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

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

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

Crop Insurance 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.

Crop Insurance Basics: Cost Sharing

Federal crop insurance is arguably the first farm policy in history that is financed, in part, by the farmers who benefit from it. Unlike farm policies of the past, which were 100 percent backed by taxpayers, modern-day farm policy requires growers to take an active role in sharing the financial costs of protecting America’s crops and livestock for a vibrant food supply.

The concept may be new to farm policy, but it’s not new to insurance. From the earliest shipping insurance at Lloyds of London in the late 1600s to the modern auto policy acquired instantly via a smartphone app, the principle is the same.

A customer pays a premium to an insurance company based on the value of property and predicted risks to insure its worth. If the property is damaged, the customer absorbs a portion of the loss, called a deductible, and the insurance company covers the remainder through an indemnity payment.

The deductible acts as a deterrent to risky behavior and keeps the insurance policy intact for true disasters. Meanwhile, premium dollars paid by customers fund the system that provides peace of mind.

The larger the pool of customers, the more risk can be spread, and the less expensive coverage becomes for all. The same applies to crop insurance, which is why arbitrarily excluding some farmers from participation or adjusting premiums without research-backed justification is not only a bad idea, but economically and actuarially unsound.

Today, famers collectively pay between $3.5 billion and $4 billion a year out of their own pockets in crop insurance premiums. And they absorb hefty deductibles (on average, 25 percent of loss) when disaster hits. In other words, they have a financial stake in the system, which ensures farmers are avoiding unnecessary risk and incentivized to embrace new technologies and techniques that drive efficiency and mitigate losses.

Famers utilize crop insurance because it offers predictability for marketing and for borrowing capital, and because it gives them the opportunity to tailor protection to their farms’ unique needs. Taxpayers reap the benefits, too.

That’s because in addition to farmers helping to offset costs, private-sector insurers are also investing dollars into the system. Crop insurance companies, for example, invest millions in new technologies, training, research, data collection, analytics, and customer service to keep things running smoothly.

And when Mother Nature strikes, companies often dig into their own reserves to keep farmers whole. For example, insurers experienced a $1.3 billion underwriting loss during the 2012 drought because indemnities paid outstripped premiums received.

Put simply, farmers, insurers, and the government must work together to fund crop insurance and ensure it can meet the challenges of tomorrow – from climate change to volatile markets.

Crop Insurance Basics: Actuarially Sound

Unless you’re an economist, an insurance guru, or a pension fund manager, chances are good you’re not overly familiar with the term actuarial soundness.

In short, it’s a fancy way of saying “the math must work.”

For example, an actuarially sound pension fund will have enough money in the bank to meet future obligations. If not, and investments made by the fund are overly risky or too conservative – or expenses run amuck – then a whole slew of retirees could be left in the cold.

Federal crop insurance, by law, must be actuarially sound. This ensures that the amount of money in the system is sufficient to meet the costs of paying claims when disaster strikes – and to establish a small reserve for possible extreme losses in the future. To achieve this goal, premium rates are adjusted regularly to reflect current market and crop conditions – a process that requires constant number crunching and research.

This kind of diligence and regular adjustment becomes especially important for those areas where the weather is turning more and more extreme amid climate change. And on the flip side, adjustments can be made to reflect changing conditions that may indicate less risk.

By being actuarially sound, the crop insurance system has a loss ratio performance mandate of “not greater than 1.0” – meaning that over time, indemnity payments paid out to farmers should equal the total premiums invested into the system.

Actuarial soundness has helped the program survive extreme events like the devastating drought in 2012, the worst disaster to hit agriculture since the Dust Bowl. But the system was managed prudently in the preceding years meaning that insurers had reserves to help pay $17 billion in indemnities and keep rural America afloat. The same could be said for the flooding and string of hurricanes seen in recent years.

Things could have turned out much differently had crop insurance not been actuarially sound and historical premiums not been sufficient to cover long-term losses.

That’s why crop insurers invest in actuarial professionals, data collection and analytics. It’s also why decisions made by policymakers carry such huge ramifications for farmers’ most important risk management tool.

Lawmakers must guard against creating new policies that reduce premium rates below future anticipated indemnities, increase risk within the system, or negatively affect the coverage that can be offered. Such policies will likely upset the fine-tuned balance that defines the crop insurance system and makes it affordable, widely available, and economically viable.

In other words, the math must work.

Crop Insurance Protected U.S. Farmers, Rural Communities as Weather, Health, Political Challenges Rocked the Nation in 2020

U.S. crop insurance policies protected the country’s farmers and ranchers and ensured rural communities stayed strong in the face of the COVID-19 pandemic, tornadoes, hurricanes, and political unrest. In all, those policies protected 398 million acres of land in 2020.

In her opening remarks at the crop insurance industry’s annual meeting, Kendall Jones, chair of the National Crop Insurance Services (NCIS) and president and CEO of ProAg, told the group that 2020 had been a challenging year for our country. But crop insurers rose to the challenge and provided stability to rural communities.

“We are in the crisis business,” Jones said. “So, it is not surprising that we performed extremely well over the last year, helping America’s farmers and ranchers mitigate their risks, continue their essential work, and keep the world fed.

“From floods and wildfires to hurricanes and even ‘The Derecho,’” she continued, “we were there to help our customers pick up the pieces in an unprecedented time of hardships created by lost crops, lost customers, and lost markets in the U.S. and overseas.”

To date, the crop insurance industry has delivered $7.4 billion in indemnities to help farmers rebuild. This includes a brand-new insurance product that is tailored to hurricane protection – a product that was triggered by eight separate weather events during last year’s unprecedented string of hurricanes.

“Our industry works with our government partners and leverages the efficiency of the private sector to make sure farmers and ranchers get payments on time,” Jones said. “This keeps agriculture growing after disaster strikes and quickly stabilizes rural economies.”

During the annual meeting, which was held virtually this year, Jones told attendees that agriculture has the unique power to unite lawmakers on both sides of the aisle.

“Elected officials on the right of the political spectrum often emphasize the importance of vibrant rural businesses, reducing risk, keeping taxpayer costs low and expanding the economy,” Jones said. “On the left, lawmakers also tout a healthy economy and place an emphasis on sound science, sustainability, and giving those in need a helping hand. That sounds just like crop insurance to me.”

Jones concluded by taking time to applaud many of the behind-the-scenes industry initiatives that often go unrecognized.

This includes collecting and analyzing mountains of data and conducting new research to continually improve operations and customer service. She also highlighted industry investments over the past decade to provide free business training to socially disadvantaged farmers and award scholarships to minority students attending 1890 Land Grant Universities.

NCIS Scholarship Program Helps Students, Promotes Diversity in Agriculture

Jaevien Akinmola grew up helping his grandfather raise vegetables and fruit in rural South Carolina.

Farming was everywhere in his hometown of Manning. He could walk out his front door and into a farm field just down the road.

Today, Akinmola is studying Agribusiness at South Carolina State University. He has big plans to be a leader in agriculture well beyond the limits of Manning.

“I want to pursue my master’s degree as well as a juris doctorate degree and begin working with (USDA) to start off to mastering more of the policy side … to understand what can be done internationally as well as nationally within our own borders as far as agricultural work,” he said.

Akinmola is one of five students who recently received scholarships from National Crop Insurance Services.

The NCIS 1890 Scholarship Program is designed to help students at 1890 Land-Grant Universities complete their education and prepare for careers in agriculture. Land-grant institutions are historically black universities focused on agricultural and mechanical sciences.

Since starting the 1890 Scholarship Program 10 years ago, NCIS has helped fund schooling for more than two dozen students. Many are the first in their families to go to college. The program is part of a commitment within the crop insurance industry to increase the diversity in its workforce, reflecting the diversity of the farmers it serves.

“It’s meant a lot,” said Akinmola. “For one, it’s just meant that my hard work paid off and to be able to get this recognition on a national scale is very, very meaningful for to me. I’m just glad they see the work I’m doing and are willing to invest in me. It shows that I have support out there and I can even have a future with them hopefully.”

Watch Akinmola’s story here along with video stories about all of the 2020-22 NCIS 1890 Scholarship Program recipients.

Stronger Together: Farmers Count on Crop Insurance During Difficult Year

As America’s farmers and ranchers reflect back on this turbulent year, they’ll recall drought affecting much of America’s farmland, severe winds sweeping across Iowa, a record-breaking hurricane season and – oh yes – the COVID-19 crisis.

Throughout the difficulties farmers and ranchers faced in 2020, crop insurance was there to help them endure hardship and minimize risks so they can plant their crops again next year.

Tom Zacharias, president of National Crop Insurance Services (NCIS), spoke about the challenges of 2020 and the importance of the farm safety net with the National Association of Farm Broadcasting and RFD-TV.

“America’s farmers and ranchers never stopped their essential work of feeding America,” Zacharias said. “That’s why crop insurers, agents, adjusters and our partners at USDA have continually worked to support the farm community. It has been our priority to maintain our incredible record of service to the American farmer during this tough year.”

“It would be an understatement to say that farmers face an unpredictable future, but fortunately crop insurance is a predictable risk management tool,” Zacharias added.

Crop insurance is agriculture’s most effective and reliable risk management tool because it utilizes private-sector efficiencies and innovation to quickly deliver to the farm community.

And farmers and ranchers trust crop insurance. They purchased 1.1 million crop insurance policies in 2020 to protect nearly 400 million acres.

This proven record of success and the continued support of Congress has cemented crop insurance as the cornerstone of the farm safety net.

“No doubt, new uncertainties lie ahead, but we are stronger together,” Zacharias said. “America’s farmers and ranchers can rest easier knowing that their local crop insurance agents, adjusters, and crop insurance companies stand ready to quickly provide a helping hand when it is needed.”

2020 is a testament to the important role that crop insurance plays in not only protecting our food, fuel and fiber supply but also supporting millions of jobs along Main Streets throughout America. That is why it is critical that Congress keeps crop insurance affordable, widely available and economically viable.

Together, we navigated this difficult year and kept America growing. We’re looking forward to seeing what we can accomplish next year, and in the years to come.

Through Tough Years and Unexpected Hardships, Crop Insurance Helps Farmers Stay in Business

Just along the Texas-New Mexico border lies the small town of Texline. This west Texas community is where Valerie and Michael Diller raised their family while growing corn, wheat, hay and caring for sheep.

Farming isn’t easy, and the Diller family has experienced their fair share of heartbreak. They credit crop insurance with helping their farm weather disaster in an opinion piece recently published in the Amarillo Globe-News.

“For those tough years and unexpected hardships, I am thankful that Congress has supported a strong federal crop insurance program to help get us through,” Michael wrote.

When Valerie and Michael were beginning farmers, a storm badly damaged their wheat and corn crop. The safety net provided by crop insurance saved their farm and allowed them to once again plant the following year. After their firsthand experience with crop insurance, the Dillers became advocates for this critical risk management tool, even selling crop insurance themselves.

Michael wrote in the Amarillo Globe-News:

There is no better way to insure your crop than through the public-private partnership of crop insurance. The protection crop insurance products offer today help farmers manage the risks of Mother Nature and the markets so they can stay in business and grow the essential food, fiber and fuel products that are critical to our nation’s safety and security.

And this year has come with no shortage of obstacles for America’s farmers and ranchers.

…while farming always comes with risks, this year has presented some unique challenges. It’s been a rollercoaster ride on the market this year during this unprecedented time of the COVID-19 pandemic. Corn is at about the lowest price in memory.

Farmers in the west Texas panhandle are really scared about whether they are going to be able to make it next year. The tremendous rise in prices at the grocery store is not reflected at the farm level. These are issues that not only harm the farmers who are trying to make a living, but all of the small businesses and other jobs that farming supports in our community.

That’s why farmers like Valerie and Michael have made their message to Capitol Hill clear: we must maintain a strong and widely available system of crop insurance.

Crop insurance kept the Diller family in business. And crop insurance agents and adjusters are proud to work every day to give a helping hand to farming families across the country.

As Michael concluded, “Now more than ever [crop insurance] is needed to help farmers produce a reliable, high-quality and affordable food supply for our nation.”

Texas Family Says Crop Insurance Saved Their Farm

Valerie Diller met her husband Michael while they were students at West Texas State University.

They decided to return to his hometown of Texline, start a farm and raise a family.

About two years after they started farming, a terrible hailstorm destroyed all of their wheat and badly damaged the corn crop.

Fortunately, they had crop insurance. Without it, the Dillers say in a new video, they would have been out of business

That storm was pivotal for their farm and their lives. They started selling crop insurance after the storm because they saw just how important it was during a disastrous time.

“Truly, we wouldn’t be here today without it,” Valerie Diller says. “We would not be able to live where we live and do what we do. I decided at that point if there was a way to help people, if we could, I wanted to do that.”

Today they grow corn, wheat, hay and raise sheep. Their children decided to come back to farm. Their son is farming with them and their daughter is involved in the sheep business.

It’s been a rollercoaster ride on the market this year for the Dillers, and farmers across America, during this unprecedented time of the COVID-19 pandemic. Corn is at about the lowest price in memory.

Farmers in the west Texas panhandle are scared about whether they are going to be able to make it next year, the Dillers say. The tremendous rise in prices at the grocery store is not reflected at the farm level. They want Congress to know crop insurance is more important than ever.

“When I talk to a guy about federal crop insurance, I tell them there is no better way, no cheaper way, to insure your crop than through federal crop insurance,” Valerie Diller says. “You can’t farm without it.”

Watch the Dillers’ story at CropInsuranceinAmerica.org.

Maryland Farmer Thankful for Crop Insurance During Uncertain Year

In farming, the future is never certain. It requires trust that a planted seed will sprout and then flourish and hope that weather or market conditions will not upend that year’s crop.

One thing America’s farmers and ranchers did not predict this year: a global health care crisis.

Brooks Clayville grows row crops on his family farm located on the eastern shore of Maryland. Clayville recently authored an op-ed for The Dispatch sharing that, like many farmers, he began 2020 with high hopes before the COVID-19 pandemic took hold.

“Corn and soybean prices, for the first time in a long time, were expected to improve with the resolution to the ongoing trade wars that have hit rural communities hard,” Clayville wrote. “But the COVID-19 pandemic has dramatically interrupted our economy and our food supply chain.”

Every year, Clayville writes, he purchases crop insurance to help protect his crops and ensure that his family farm can survive any challenges that may arise. Including the current pandemic.

Now, more than ever, Clayville believes that crop insurance is an important tool:

Although rural America faces mounting uncertainty related to the COVID-19 pandemic, Mother Nature certainly won’t give anyone a pass this year. Farmers in Maryland and all across America need to maintain the tools that allow them to protect their farms and keep supply chains moving.

The best tool out there for mitigating the risks of weather and prices is the public-private partnership of crop insurance…

Farming is an expensive and risky business. Farmers have to buy all of the inputs that go into growing a successful crop before they know what the final harvest prices will be and without knowing whether a big storm is going to ruin all of their hard work or whether a pandemic will create new challenges that we didn’t plan for this planting season.

And Clayville is concerned not only about the farmers growing our crops, but the rural economies and small-town jobs that are supported by agriculture:

I think about the banks and equipment dealers, hardware stores and grocery stores in my town. If farmers weren’t spending money on Main Street, we’d have no town keeping our rural economies alive and grocery stores stocked is critically important.

The bottom line: farmers require the strong farm safety net provided by crop insurance to provide certainty as they navigate an uncertain world and continue their essential work of feeding and fueling America.

Crop Insurance Protects Essential Food and Fiber Supply

Steve Ward talks to as many lawmakers as he can about farming. Specifically, growing cranberries.

Ward grew up helping his dad on the family farm in Massachusetts, building cranberry bogs and digging ditches. Now, he farms that land with his son.

But growing cranberries is extremely labor intensive and carries a large amount of risk, not the least of which is the constant threat from Mother Nature.

Ward recently wrote a letter to the editor of his local paper, the Taunton Gazette, emphasizing the critical role that crop insurance plays in protecting America’s farmers:

At every step in this process, Mother Nature can destroy the crop.

Too much water can erode a bog. Not enough water can stress the plant. Hail can destroy berries and flowers in minutes. Fire worms can chew through a bog and leave what looks like ashes in their wake.

You can be left with no crops, no income to cover all the input costs and no money to grow again next season.

That’s why the strong farm safety net of crop insurance helps me sleep at night. I would not be in business without crop insurance.

The public-private partnership of crop insurance means farmers get financial help fast after a disaster. It allows them to stay in business and continue to produce the food, fiber and fuel that are essential to our nation’s safety and security.

Crop insurance saved me. I would not be in business without it.

Our farmers and ranchers have continued to work day-in and day-out throughout this pandemic to provide Americans with a safe and affordable food supply. Let’s ensure we continue to provide the protection they need by supporting a strong crop insurance program.

Crop Insurance Protects Rural America, Solidifies Popularity as Risk-Management Tool

Crop insurance proved to be a critical risk-management tool for America’s farmers in 2019, keeping rural America afloat during what was one of the most difficult years in recent memory. Crop insurance policies protected a record 380 million acres of land, or more than 90 percent of planted acres.

In his opening remarks today at the crop insurance industry’s annual meeting, Jim Korin, chairman of National Crop Insurance Services (NCIS) and president of NAU Country Insurance Company, credited crop insurance’s integral role in the farm safety net for its increasing popularity.

“Despite the financial challenges that rural America has faced over the past several years, farmers continue to invest in the reliable crop insurance products we provide,” Korin said. “This is a testament to our industry’s record of service as well as the trust farmers place in us to provide assistance with efficiency and integrity when disaster strikes.”

In 2019, farmers purchased 1.1 million crop insurance policies, collectively paying $3.75 billion in premiums and shouldering more than $10 billion in deductibles.

As disasters threatened both planting and harvest across the heartland, the crop insurance industry acted quickly to deliver aid. As of Feb. 10, 2020, the crop insurance industry has already paid more than $9.15 billion in crop insurance indemnities to help farmers cope with their losses, and this number is expected to grow as claims are finalized.

“The fact is, corn fields and cow herds can’t survive on political promises,” Korin said. “Farmers can’t wait for politicians to fight over the details of what they deserve when their farm and their livelihood is on the line.”

Mike Davenport, chairman of the American Association of Crop Insurers and Chief Operating Officer of Rain and Hail LLC, a Chubb Company, also addressed the convention and asserted that crop insurance delivered as promised to farmers.

“We have indeed helped farmers and ranchers manage a challenging year by processing claims and getting payments out the door quickly. It underscores why private-sector delivery is such an integral part of the program and it demonstrates that crop insurance works,” Davenport said.

Both Korin and Davenport praised the wide availability of crop insurance, noting that the program protects the vast diversity of food, fuel and fiber production across the United States.

Korin concluded his remarks by pledging that the industry will continue its efforts to strengthen crop insurance, saying: “We will always work to ensure crop insurance remains affordable, widely available and economically viable.”

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.”

Investing in the Future of Agriculture

National Crop Insurance Services is proud to invest in the future of agriculture through the NCIS 1890 Scholarship Program. NCIS awards scholarships to students majoring in agriculture-related disciplines at historically-black 1890 Land Grant Universities.

Scholarship recipients are driven students with strong academic records. Their accomplishments are not constrained to the classroom and students have a dedicated record of service to their communities.

These awards not only help deserving students complete their education, they promote diversity in agriculture in recognition of the wide range of farmers NCIS serves.

NCIS is proud to introduce the exceptional young men and women who have been named this year’s recipients of the NCIS 1890 Scholarship Program.

Celina Bowman is from Woodbridge, Virginia, and attends Alabama Agricultural and Mechanical University. Bowman is majoring in Family and Consumer Science with a concentration in General Dietetics with the goal of becoming a Registered Dietitian Nutritionist.

 

A’ysha Callahan is from a low-income neighborhood in Waukegan, Illinois, and is majoring in Food Science at Alabama A&M University. She is dedicated to helping people in poor communities improve their lives by improving their diets.

 

 

Myles Davis is from Kansas City, Missouri, attending the University of Arkansas at Pine Bluff. Davis is majoring in Agricultural Business and one day he would like to help reduce food insecurity in low-income urban areas.

 

 

Morgan Green is from Houston, Texas, and the first member of her immediate family to attend college. She is an Animal Science major at Prairie View A&M University and would like to continue her education to become a veterinarian.

 

Kevin H. Holmes Jr. is from Marianna, Arkansas, and is pursuing a degree in Agricultural Business at the University of Arkansas at Pine Bluff.  Holmes grew up working on the family farm and would like to use his degree to help his family succeed on the farm.

National Crop Insurance Services Launches New Website to Educate Public, Policymakers on Importance of Crop Insurance

Our nation’s farmers and ranchers face unpredictable hazards, many of which can destroy a hard-earned livelihood in moments. Thankfully, farmers can count on crop insurance to help them navigate these risks and protect their operation should disaster strike.

However, the continued success of crop insurance depends on keeping the program affordable, widely available, and economically viable. And that starts with educating both the public and policymakers as to the important role crop insurance plays in the farm safety net.

National Crop Insurance Services (NCIS) has launched a new website at CropInsurance101.org that aims to be an easily-accessible resource where visitors can learn more about the history of crop insurance, download fact sheets, or find a glossary of common terms. As part of this initiative, NCIS also debuted a new Crop Insurance 101 video that explains how crop insurance works.

The Crop Insurance 101 website was officially launched at a congressional briefing today hosted by the new House Crop Insurance Caucus.

Created by Reps. Cheri Bustos (D-Ill.) and Glenn “GT” Thompson (R-Pa.), this bipartisan caucus will provide a forum for all members to learn more about the value of the public-private partnership that makes crop insurance unique while encouraging bipartisan collaboration to strengthen this program for rural America.

Members of the caucus include: Reps. Cindy Axne (D-Iowa), Mike Bost (R-Ill.), Salud Carbajal (D-Calif.), TJ Cox (D-Calif.), Angie Craig (D-Minn.), Rodney Davis (R-Ill.), Alcee Hastings (D-Fla.), Dave Loebsack (D-Iowa), and Jefferson Van Drew (D-N.J.).

Illinois farmer Ron Moore provided congressional staff at the briefing with a first-hand perspective of the importance of crop insurance.

“The crop insurance program is a critical tool to protect against the risks that come with farming,” Moore said. “As the rural economy faces another tough year, it is encouraging to see members of Congress from both sides of the aisle come together to stand up for America’s farmers.”

And with crop insurance policies protecting nine out of every 10 planted acres of principle crops, crop insurance does more than provide economic security – it safeguards our nation’s food and fiber supply.

Learn more about how crop insurance works for both farmers and taxpayers alike by visiting CropInsurance101.org.

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.

Crop Insurance Wins Wide Support on Capitol Hill and In Countryside

Federal crop insurance and the critical role it serves as part of the farm safety net unexpectedly took center stage at a recent Senate Finance hearing with the United States Trade Representative, Robert Lighthizer.

Michigan Senator Debbie Stabenow questioned USTR Lighthizer on the Office of Management and Budget’s (OMB) proposed spending plan for Fiscal Year 2020, which takes aim at the United States Department of Agriculture. OMB suggested making cuts to a popular farm risk management tool: crop insurance.

While this budget is unlikely to ever be adopted by Congress, Senator Stabenow, who is the top Democrat on the Agriculture Committee, rightly noted that cuts to the USDA and crop insurance would be contrary to the policy objectives established by the overwhelmingly bipartisan passage of the Farm Bill in December 2018.

Finance Committee Chairman Chuck Grassley (R-IA) immediately interjected, emphasizing that cutting crop insurance is a non-starter.

“It would gut the program,” the Chairman said of OMB’s proposal, “and that’s the one thing that our farmers and ranchers and growers all over the country said was the number one issue.”

He wasn’t alone in criticizing the plan.  Senate Minority Whip Dick Durbin (D-Ill.) made his objections heard a couple of days earlier.

“More than 310 million farm acres protected by crop insurance would be at risk,” he said of the plan, which he noted, “undermines our farmers.”

And those farmers have been very clear in their message to Capitol Hill to “do no harm” to crop insurance. Some of these farmers reiterated this ask at this week’s Agri-Pulse summit in Washington, D.C.

Luke Howard, an organic farmer from Millington, Maryland, shared how crop insurance helped his farm after a record rainfall last year, stating it was a lifesaver and “a smart use of tax dollars.”

And a first-generation farmer, John Shepherd from Blackstone, Virginia, emphasized that he may not have survived his first few years of farming without the safety net provided by crop insurance.

Their stories and similar testaments from farmers and ranchers are clear.

We simply cannot balance the federal budget on the backs of America’s farmers and ranchers. And agriculture cannot thrive without a strong crop insurance system.

Celebrating Our Farmers Today and Everyday

Many Americans may never step foot on a farm. But America’s farmers and ranchers are an integral part of our everyday lives, working to feed and clothe the nation. In fact, each American farmer feeds more than 165 people.

Today is National Agriculture Day, a day to celebrate the American farmer and recognize the incredible contributions that our food and fiber producers make every single day.

Agriculture Secretary Sonny Perdue has instituted an informal motto at the USDA: “Do Right and Feed Everyone.” The crop insurance industry is proud to support the farmers who devote themselves to this important mission.

America’s farmers are the most efficient in the world, but they can’t always predict what the future holds. Crop insurance helps protect our farmers and ranchers, ensuring that they can keep producing a safe and affordable supply of food for those here at home and abroad.

The federal crop insurance program protected a record 334 million acres in 2018. That’s more than 90% of America’s farmland. With insurance available for more than 130 different crops and affordable policies for operations both large and small, crop insurance provides an important safety net for farms across the country.

Jim Korin, chairman of National Crop Insurance Services (NCIS) and president of NAU Country Insurance Company, recently said it best: “We must remember our purpose: To provide exceptional coverage and service to farmers and ranchers to help them do what they do best…feed and clothe the world.”

Thank you to all of America’s farmers and ranchers. Today, and every day.

Crop Insurance Program Integrity Continues to Improve

Crop insurance’s already-low improper payment rate — a closely-watched standardized measure of waste and efficiency – improved again in 2018.

Martin Barbre, Administrator of the USDA’s Risk Management Agency (RMA), delivered the good news this week while addressing the crop insurance industry’s annual convention.

The FY2018 rate of 1.81 percent marked the fourth consecutive year it declined, falling from 2017’s 1.96 percent and 2.02 percent and 2.20 percent in 2016 and 2015. The USDA and private-sector insurers made program integrity improvement a top priority following an improper payment rate of more than 5 percent in 2014.

“RMA has continued to improve program integrity for federal crop insurance through an effective public-private partnership with our Approved Insurance Providers,” Barbre said.

Improper payments occur when funds go to the wrong recipient; when the correct recipient receives too little or too much; or when the recipient uses funds in an improper manner. Many errors are simply rooted in data entry and reporting mistakes.

The government closely monitors improper payments for all major federal spending programs, and the last time a government-wide figure was posted, it was twice as high as crop insurance’s rate.

Tom Zacharias, the president of National Crop Insurance Services, which sponsored this week’s meetings, said the news illustrates the power of the crop insurance system’s unique public-private partnership and is a testament to investments made in recent years.

“Crop insurers enjoy a tremendous partnership with the USDA, and we work closely together to ensure that we are good stewards of taxpayer dollars and are constantly improving efficiencies for America’s farmers and ranchers,” he said.

Zacharias noted that the partnership fosters investment in data collection, education and training, monitoring and new research and technology to continually improve.

“In addition to the USDA’s hard work, the private sector is spending millions every year to maximize program integrity,” he concluded. “This new data is proof that crop insurance is a highly efficient, well-run public-private partnership.”

Crop Insurance Sets Record, Saves Money, Protects America’s Heartland in 2018

More than 334 million acres of farmland were protected by crop insurance in 2018, a 20 million acre increase over 2017 and an all-time high. And, crop insurance came in $2 billion under original federal budget projections for the year.

Jim Korin, chairman of National Crop Insurance Services (NCIS) and president of NAU Country Insurance Company, noted these accomplishments, among others, in his opening remarks at the crop insurance industry’s annual meeting this week.

With more than 1.1 million crop insurance policies sold to farmers across the nation, Korin credited the growing popularity of crop insurance to the exceptional service provided by private-sector insurers and the unique working relationship they share with the government.

“The public-private partnership that defines crop insurance has been successful in providing the important safety net for our farmers and the rural areas where they live,” Korin said. He noted that the crop insurance industry has been able to quickly pay claims while routinely coming in below budget projections, saving taxpayers billions.

Under the successful crop insurance model, farmers invested in their own protection by paying $3.7 billion in premiums and shouldering a significant portion of losses through deductibles.

This public-private partnership was further reinforced with the overwhelming passage of a bipartisan Farm Bill in December that strengthened crop insurance and firmly rebuffed efforts by some critics to make the program less affordable and available to farmers.

“With everything that occurred during the year, nothing defined the world of agriculture more than the debate and passage of the 2018 Farm Bill,” said Korin. “This process saw congressional field hearings from coast to coast and a steady call from farmers across the nation to ‘do no harm’ to the crop insurance safety net.”

Larry Heitman, chairman of the American Association of Crop Insurers and senior vice president of NAU Country Insurance Company, also addressed the convention and said maintaining this kind of support from farmers will continue to be important moving forward.

“As tempting as it may be to relax until the next Farm Bill negotiations begin again, let’s remember our program is a target for those that want to redirect agricultural funds to their own causes or programs,” he told the group. “We must continue to maintain and strengthen our partnership with agriculture commodity associations and conservation and wildlife protection groups to work together for a coalition to benefit all Americans – rural and urban.”

Heitman and Korin explained that the industry’s attention will now turn to working with the U.S. Department of Agriculture to ensure a smooth implementation of the 2018 Farm Bill, while continuing to serve rural America.

Korin concluded, “We must remember our purpose: To provide exceptional coverage and service to farmers and ranchers to help them do what they do best…feed and clothe the world.”

NCIS Fosters Next Generation Through Agriculture Scholarships

Our nation’s farmers come from every walk of life. Our workforce should reflect that fact.

National Crop Insurance Services is exceptionally proud to help foster the next generation of America’s agricultural community and promote diversity through the NCIS 1890 Scholarship Program.

Since 2010, NCIS has distributed nearly two dozen scholarships to students at historically-black 1890 Land Grant Universities in order to assist these students in completing their education and preparing for a career in agriculture. This scholarship program is a key part of a broader effort to proactively increase diversity in the crop insurance industry in recognition of the vibrant and varied communities we serve.

This year, NCIS awarded scholarships to five students who had demonstrated their academic prowess and an interest in agriculture. These deserving recipients were highlighted in December’s issue of Crop Insurance Today magazine.

Scholarship recipient Aaron Dore, from McDonough, Georgia, is majoring in economics with a concentration in agribusiness and a minor in business logistics at Fort Valley State University. Notably, Aaron has made the Dean’s List while playing cornerback for the FVSU Wildcats and conducting student research on organic vegetables.

Aaron wasn’t the only FVSU Wildcat to receive an NCIS scholarship. Hailing from the town of Louisville, Georgia, Jerstashia Sims is hoping to use her degree in agricultural economics to help lift up others from economically depressed rural communities.

“There have been semesters where I couldn’t take many classes due to how much financial aid I had. I would like to thank [NCIS] because that scholarship helps get me closer to graduation,” Jerstashia said.

Ashli Holloway is majoring in animal science at Alcorn State University. Originally from Stockbridge, Georgia, Ashli plans on working in the animal care industry and has dedicated time during her summer vacations to attend the Veterinary Science Training, Education and Preparation Institute at Tuskegee University.

Fellow animal science major Mary Mitchell grew up in the tiny town of Kremlin, Oklahoma, population 255. Now a junior at Langston University, this NCIS scholarship provides Mary with unique opportunities to continue developing her exceptional leadership skills.

Wesley Adair Maximilian Benson, known to most as just Max, is from Ardmore, Oklahoma, and is studying natural resources management at Langston University. Max is a positive role model for his peers, volunteering to help students who are struggling in classes and promoting mutual respect among his classmates.

Each of these students will bring their unique understanding of the issues facing our rural communities to their future careers in agriculture. NCIS congratulates them for receiving this hard-earned scholarship opportunity and we look forward to celebrating all of their future accomplishments.

Family Farms in Iowa Find Crop Insurance Invaluable

The Swanson family has been rooted in Wapello County, Iowa for over 170 years. Don Swanson and his brother, Bill, grew up watching their fathers work the land. “It’s just a passion that we grew up with,” Don said.

It’s a passion that Don and Bill hope to pass along to their children and grandchildren.

But modern-day farming is more than the inherent satisfaction that comes from harvesting a crop planted from seed or raising the next generation of livestock.

“I wish I had time to do what lay persons consider farming – driving the tractor, feeding the cows,” Don laments. “It’s a full time job for me just managing the books, managing the risk, forward planning and strategic planning.”

National Crop Insurance Services has traveled across the country to talk to farmers and agriculture lenders on the ground to learn what crop insurance means to their farms, families, and communities. For the Swanson family, they would be left vulnerable without the safety net that crop insurance provides.

“Crop insurance protects that bottom line… It’s by far the best government program we have, hands down,” Don said.

Another multi-generation Iowa farmer, Dustin Johnson, enjoys being able to share the rewards of his labor with his children and expose them to the first-hand educational experiences that a working farm provides.

“In a world where technology has kind of taken over, it’s still nice to be able to bring the kids out, ride around in the tractor, get to see first-hand what Dad does every day,” he noted.

When Dustin started farming, the amount of capital required for essential items was daunting. Especially when his income relied not only on his hard work, but the hazards of unpredictable weather, and market fluctuations.

“The risks go way beyond anything that I can control,” Dustin explained. “Which is a really good thing to have crop insurance for.”

Crop insurance gives Dustin the peace of knowing that even in a down year, “we’re still going to have a safety there that we’re going to be able to farm next year.”

For many Iowa towns, agriculture is not only an integral part of the community but also critical to their economic success.

Erica Wuthrich from Bloomfield, Iowa, explains, “The majority of the families around here are farmers… if we didn’t have the farming operations around here, it wouldn’t be good – it would be awful.”

As young farmers, Erica and her husband, Brent, rely on the stability that crop insurance provides in order to keep their farm running. “We don’t make money from it, but it helps us sustain our operation,” Erica said.

Another young Iowa farmer, Colin Johnson, echoes this sentiment, “A component like crop insurance and the assistance that we get, as a young farmer, that helps me know I can continue farming another year. I have been farming for nine years on my own, and… I probably wouldn’t have lasted two years without my crop insurance support.”

Iowa farmers know first-hand that farming does not mean an easy harvest or quick profit. Jared Lyle, Senior Vice President and Senior Loan Officer for Iowa State Bank and Trust in Fairfield, stresses to his agriculture customers the importance of protecting their farms by purchasing crop insurance.

“It’s more a matter of a safety net to keep them from not losing quite as much money and keeping them in business,” Jared explains.

Weakening the public-private partnership of federal crop insurance would be detrimental to the Iowa families that Iowa State Bank and Trust serves.

“There will be less farmers in business for sure, if they lose that safety net,” Jared said. “Ag is very important. I would hate to see anybody underestimate that.”

Rural America to U.S. Senate: Do No Harm to Crop Insurance

More than 600 trade organizations and companies throughout rural America sent U.S. Senators a clear message today about crop insurance as they prepare to debate the 2018 Farm Bill.

“As you consider the 2018 Farm Bill on the Senate floor, we urge you to oppose harmful amendments to crop insurance, including those that would 1) reduce or limit participation in crop insurance, 2) make insurance more expensive for farmers during a time of economic downturn in agriculture, or 3) harm private-sector delivery,” the groups wrote in a joint letter.

The signers, which range from farm groups to financial lenders, rural businesses and conservation organizations, explained their strong support for farmers’ primary risk management tool:

Without crop insurance most producers simply could not qualify for the operating loans they need to put a crop in the ground.  Due to extremely tight margins in agriculture, regulators examining agriculture lending portfolios typically insist borrowers have crop insurance.

Crop insurance is available to all types and sizes of producers in all regions.

Crop insurance provides for environmental benefits.  Crop insurance requires producers to meet wetlands protections and highly erodible lands protections to be eligible for a premium discount.

Crop insurance is a rapid response solution to disasters.  Private-sector delivery typically allows farmers who have losses and have met their deductible to receive indemnity payments in less than thirty days, while ad hoc disaster can take months or even years.

Crop insurance protects jobs, both on and off the farm.  Crop insurance enables farmers to rebound quickly after a disaster and allows producers to pay credit obligations and other input expenses, such as fertilizer and farm equipment. 

And, they noted that consumers and taxpayers benefit as well since crop insurance reduces the need for expensive, unbudgeted disaster aid packages.

“Crop insurance is food and fiber security insurance, and food and fiber security is national security,” the letter concluded.  “Given the importance of crop insurance, the undersigned organizations urge you to support America’s farmers, ranchers, rural economies and national security by opposing amendments that would harm crop insurance.”

The letter can be read in its entirety here.

NCIS Launches Website Highlighting Crop Insurance in All 50 States

The Senate officially begins its Farm Bill process June 13, as the Agriculture Committee debates a draft bipartisan bill released last week by the panel’s top Republican and Democrat.

And thanks to a new website just unveiled by the National Crop Insurance Services (NCIS), Senators and other interested parties won’t have to look very far for information about how crop insurance affects every state in the country.

The new website, Crop Insurance In My State, offers an interactive map that provides visitors with access to state-specific information such as: number of crop insurance policies, acres insured, value of insurance protection, how much farmers paid for coverage, how much insurers paid to cover losses, and hail protection coverage.

In addition to the interactive map, the site includes 50 downloadable and printable fact sheets, as well as farmer testimonial videos and articles from several states. There’s also a dynamic social media feed.

“Crop insurance is a cornerstone to modern-day farm policy, and growers from coast to coast have called it their top Farm Bill priority,” explained Tom Zacharias, president of NCIS.  “This site really shows, on a state-by-state basis, the success of crop insurance and why it’s agriculture’s most important risk management tool.”

The new site pairs with the already established site Crop Insurance In America, which takes a national look at crop insurance and the record 311 million acres it protects.  The Crop Insurance In America site was first introduced 10 years ago, and has since been added to the Library of Congress’ prestigious historical collection.

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.

Scholarships, Training Build Strong Communities

Mar’Kayla Bethea had to balance work with studies when she was an undergraduate student at Alabama A&M University.

Working at night and going to class during the day wasn’t easy. But she had no choice because she was paying for her education on her own.

That changed when National Crop Insurance Services awarded her with a scholarship.

“It allowed me to complete my undergraduate degree and I am now onto bigger and better things,” she said.

Today, she’s studying geographical information systems in graduate school at AAMU.

“This money was greatly appreciated,” she said.

NCIS has proudly provided scholarships to 18 students at 1890 Land Grant universities to help them complete their education since 2001. The universities have historically served African-American students.

It’s part of NCIS’ mission of helping under-served communities in rural America with access to top risk management and marketing training and education to develop the agriculture workforce.

Bethea’s story, and the stories of others who have benefited from scholarship program, are featured in the latest edition of Crop Insurance Today magazine.  Crop Insurance Today featured the risk management and marketing training offered through its partnership with 1890 Land Grant universities with a cover story last summer.

The scholarships are important to students who struggle with financial difficulties, said Dr. Mohammed Ibrahim, Associate Professor of Agricultural Economics at Fort Valley State University in Georgia, in the article.

“Sometimes, this struggle leads them to obtain a full or part-time job off campus and those jobs usually (due to lack of study time) cause their academic performance to fall,” he said

Dr. Albert E. Essel, Dean, Research Director & 1890 Administrator for the College of Agriculture at Lincoln University thanked NCIS for its continued support of students who will become the next generation of agricultural workers.

Essel is also involved in the community risk management and marketing training programs NCIS funds across the nation.

He spoke to a group in South Carolina last summer about marketing.

Farmers Tony and Belinda Jones of Morning Glory Homestead on Saint Helena Island, S.C., were among the participants. They said the NCIS training was very beneficial.

“If we did not attend the workshops and conferences like this we would have to research that on our own and might overlook it or skip it or not think it was important. But when you hear it from professionals who have a lot of knowledge in that field, it really hits home,” Belinda Jones said.

You can read more about the scholarship program in the Crop Insurance Today magazine and watch a video about the community training program at CropInsuranceInAmerica.org.

Crop Insurers Release Last Video in Three-Part Series

National Crop Insurance Services today released the third installment in the “Risk Management Minute” series. This final video is focused on the importance of maintaining a strong public-private partnership.

“Now, assistance arrives in weeks, not years, because the private sector is involved,” explained the video, which noted that there are 20,000 agents, adjusters and staff to help rural America pick up the pieces following droughts, floods and freezes.

“And insurers spend millions on training and new technology to constantly improve efficiency,” it continued. “It’s a system that saves farmers time and taxpayers money.”

Despite crop insurance’s benefits and popularity among farmers, some farm policy critics are proposing drastic cuts that would make crop insurance unaffordable and unavailable for many farmers. And if such proposals were adopted, it would be difficult for the private sector to remain in business.

“Such short-sightedness would only weaken farmers’ primary tool for managing risk and put more burden on America’s taxpayers,” the video concluded.

Other videos – about the cost-sharing and risk-pooling attributes of crop insurance – can be viewed at CropInsuranceInAmerica and on NCIS’ social media channels.

New Video Explains Importance of Widespread Crop Insurance Participation

As the Farm Bill debate heats up, some farm policy opponents are lobbying to exclude people from crop insurance, which would harm farmers and taxpayers alike. That’s according to a new video released today by National Crop Insurance Services – the second video in its “Risk Management Minute” series.

Legislative proposals to apply an income means test to crop insurance participation could remove many farmers who have large farms, grow high-valued crops or work off-farm jobs.

“Doing so would only increase insurance costs for smaller farmers,” the video explains. “It’s kind of like preventing the safest drivers from getting auto insurance. The result would be an expensive wreck for farmers and taxpayers.”

The idea of shared risk – where premiums rise and fall with participation levels – is not unique to agriculture.

“Crop insurance is like other kinds of insurance,” according to the video. “The more people it covers, the more people there are to shoulder risk. And the more people there are to shoulder risk, the cheaper coverage is for everyone.”

Things get riskier and more expensive when participants are removed – especially insureds who carry less risk like the farms that are being targeted by farm critics.

“Congress made crop insurance a cornerstone of U.S. farm policy for a reason. It works. It’s efficient. It saves money. And it’s popular,” the video concludes. “No wonder so many farmers are saying ‘do no harm’ to crop insurance in the Farm Bill.”

Most Farmers Get a Bill, Not a Check, with Crop Insurance

We all carry insurance on something: Our homes, our cars, maybe even a special vacation or a treasured antique.

And, we all get bills in the mail to pay premiums on those insurance policies. When disaster strikes, and we have to use the policies we’ve paid for, we must first absorb part of the loss as a deductible before aid is received.

Farmers are no different, despite what farm policy critics might have you believe.

As with any line of insurance, farmers receive crop insurance payments only when there are verified losses and only after shouldering a chunk of those losses themselves through deductibles.

More often than not, farmers pay into the crop insurance system and don’t get indemnities at all. That’s why it’s often said with crop insurance, farmers get a bill not a check.

An examination of recent USDA figures shows farmers purchased 2,364,338 policies between 2015 and 2016. Of those, there were 563,506 claims, meaning 1,800,832 policies were not triggered.

In fact, if we look further, we find that farmers spent $7.2 billion out of their own pockets for insurance protection in 2015 and 2016. They also shouldered $13.6 billion in losses as part of deductibles. Indemnities totaled $10.2 billion, meaning farmers collectively put much more into the system than they got out.

This trend appears to have continued in 2017, too.

In other words, a bill, not a check.  Exactly like insurance is supposed to work.

But farmers are not complaining about helping fund their own farm policy. Crop insurance is not about making money. It’s about managing risk and paying into a safety net that kicks in when the worst happens so farmers can recover and continue to provide safe and affordable food for U.S. customers.

Farmers are happy to pay that bill.

Attacks on Revenue Insurance Harm America’s Farmers

Farm families across America are struggling.  Crop prices are down.  Farm incomes have fallen drastically in the past several years and weather disasters have hit farms in most parts of the country.  And the pain is trickling down to small businesses and communities throughout rural America.  Yet, some lawmakers are pushing proposals that will make it nearly impossible for farmers to rebound.

Senators Jeff Flake (R-AZ) and Jean Shaheen (D-NH) and Rep. John Duncan (R-TN) recently introduced bills to eliminate premium support for the harvest price protection component of the Revenue Protection (RP) crop insurance policy.  Revenue Protection protects against a loss of revenue caused by low prices or low yields or a combination of both.  Revenue Protection has become a valuable risk management tool for farmers across the United States and accounts for more than 75 percent of the Federal crop insurance policies sold today.

One of the key components of the revenue policy is the utilization of the fall harvest price, which allows a farmer to receive the greater of the fall harvest price or the projected harvest price to insure against revenue declines. The loss due to an increase in the harvest price occurs when a farmer suffers a yield loss.  Those lost bushels are worth more when the harvest price increases and therefore the loss of revenue is greater because the insured could not sell the bushels lost at the higher price. The farmer automatically has harvest price protection when buying an RP policy, but can choose to exclude it by selecting the Harvest Price Exclusion (HPE).  If the farmer opts to do so, he or she will pay a lower premium rate.

“This legislation specifically targets crop insurance policies that farmers pay more for out of their own pockets to provide some revenue stability amid price declines and low yields,” said Tom Zacharias, president of National Crop Insurance Services (NCIS).  “For example, corn farmers in the Midwest can pay more than 40 percent more in premiums for RP, depending on coverage level, than if they choose to exclude the harvest price protection. And because this is still an insurance policy, farmers face upwards of a 30 percent deductible before an indemnity is even paid.”

He continued: “Amazingly, supporters of this anti-farmer proposal tout taxpayer benefits as the justification for weakening the farm policies that are so important today. This is disingenuous considering farmers help pay for their own insurance protection and crop insurance represents less than one-third of one percent of federal spending.  It is also worth noting that crop insurance is operating below budget projections.”

Zacharias also noted that, despite critics’ accusations, revenue polices are not paying out frequently.  In its current form, RP has only been available since 2011.  However, according to an NCIS analysis of soybean and corn price movements, had RP been in effect since 1990, the price component would only have triggered in 11 out of 28 years for soybean farmers and even less for corn farmers – only eight out of the last 28 years.

NCIS analysis also shows a drastic increase in insurance costs for farmers if this proposal is enacted. A corn farmer in Illinois who selects the highest level of coverage for an RP policy – 85 percent – would see premiums climb by almost 30 percent.  Meanwhile, premiums at the 75 percent coverage level would increase by a staggering 98 percent.

Such increases in premium would likely result in dramatic declines in overall crop insurance participation.  Farmers would lose an essential risk management tool and be more inclined to turn to Congress to pass expensive, taxpayer-funded disaster packages when revenues plummet.

Farmers all across America have repeatedly asked Congress to protect crop insurance – to keep it available and affordable for all farmers.  Unfortunately, this proposal would do exactly the opposite, leaving many without the means to weather these tough economic times.

Misleading Crop Insurance Attacks Hurt America’s Farmers

Agriculture’s opponents use terms like “guaranteed profits” to disparage the crop insurers that protect America’s food and fiber supply, help farmers pick up the pieces after disasters, and shield taxpayers from footing the whole bill through unbudgeted ad hoc disaster packages.

These criticisms unfairly confuse basic business concepts like gross returns and net income. The National Corn Growers Association (NCGA) asked economists from the University of Illinois and Cornell University to study this issue in depth, and noted:

“What we discovered is that the returns private crop insurance companies receive are much smaller than opponents claim, and they are well within the standards set by [the USDA].”

It’s easy to see how this conclusion was reached once you compare the expected versus actual returns under the current Standard Reinsurance Agreement (SRA) – the business agreement between the government and crop insurers.

The 2011 SRA set a target gross return of 14.5%. This measure of revenue does not include business expenses or reflect profit. But the target has not been met, according to the Government Accountability Office, which calculated returns of 13.7% from 2011-2016.

After subtracting expenses like technology and compliance costs for government regulations, the net income realized by insurers is even lower, as the chart below from the NCGA study shows.

Year Net Income
2011 11.3%
2012 -20.2%
2013 -0.7%
2014 3.0%
2015 13.9
Average 1.5%

*2016 data not yet available

In other words, there are no guaranteed profits in crop insurance. In fact, crop insurers had underwriting losses in 2012, 2002, 1993, 1988, 1984 and 1983 – a far cry from other lines of insurance, which are historically more profitable than crop insurance.

As a result, the crop insurance industry has witnessed consolidation and the exit of major agribusinesses since the implementation of the 2011 SRA. If farm policy critics are successful in their efforts to reduce returns by another 33%, other providers will follow suit, and farmers could be left without the tools necessary to manage falling crop prices and extreme weather events.

Then, the burden of providing billions in disaster assistance will again fall squarely to U.S. taxpayers.

ICYMI: Insurance Vital for Farmers

By: Luke Sandrock
Published in the Herald & Review
August 25, 2017

Even the best-laid plans sometimes go wrong. No one knows this more than a farmer. They can plan out the entire year for how they will harvest a crop, but a single storm or a drop in the market can change everything. It can leave a farmer in financial ruin, and in the worst of cases, it can leave them without the ability to start again the following year.

This is why most farmers purchase crop insurance. It is the one part of the plan that holds together in a crisis. It is a tool that farmers rely upon when things go awry.

This hasn’t always been the case. When crop insurance got its start in the 1930s, it was a poorly run government program and rarely used. The premiums were too high and the coverage area was too limited, which resulted in low participation. Farmers mainly relied on costly ad hoc disaster assistance when natural disasters wiped out their crops, but that required Congress to not only act to authorize this assistance, but to act quickly. It was a clumsy system that didn’t provide any peace of mind to farmers or their bankers, and it was a costly way to operate since Congress was never budgeting for this disaster assistance.

This led lawmakers to rethink the mechanics of the program. In 1980, Congress passed the Federal Crop Insurance Act, which created the successful public-private partnership that remains today where risk is shared among farmers, the Federal government, and private insurance providers.

Premiums are more affordable for farmers through a government discount. Insurance products have expanded to include more crops across the country. Both of these factors have increased participation and broadened the risk pool, which makes the program more actuarially sound. Private companies are servicing the policies and making sure any claims are processed in an efficient and timely manner.

Another part of this success story is that Congress no longer has to worry about authorizing unbudgeted disaster assistance. Further, the current cost of crop insurance is under budget.

With Congress gearing up to write a new farm bill, a central concern for farmers all across the country is that lawmakers will fail to recognize this success story and will create new policy that undermines a farmer’s ability to manage risk.

The farm economy is struggling with net farm income half of what it was four years ago. Planning for the future is challenging enough given these circumstances, let’s not make it harder by eliminating a farmer’s ultimate backup plan when everything else fails.

Luke Sandrock is a junior partner and crop insurance agent at The Cornerstone Agency, Inc. in northern Illinois.