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.

Members of Congress Share Support for Crop Insurance

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

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

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

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

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

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

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

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

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

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

Farmers Emphasize to Congress Importance of Crop Insurance

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

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

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

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

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

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

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

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

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

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

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

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

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

Crop Insurance Protects YOUR State

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

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

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

How does crop insurance protect your state?

Visit 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 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

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 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.

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.

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.”

North Carolina Apple Grower Says Crop Insurance Key to Food Security

Kenny Barnwell is a fifth-generation apple grower in the mountains of North Carolina. His family farm covers approximately 150 acres and is home to 26 different varieties of apples.

This year has been tough for apple growers in North Carolina, much like farmers across the country. Apple growers have faced weather-related damages to their crop and fear revenue losses due to the COVID-19 threat and a decline in agri-tourism.

Despite the uncertainty, Barnwell takes comfort in knowing that he can rely on crop insurance.

He recently shared the importance of maintaining a strong crop insurance program in a column he wrote in his local paper, the Hendersonville Lightning:

The fact that I have a safety net under me with crop insurance helps me sleep at night, especially this season. I worked as a crop insurance adjuster for about 10 years, so I know just how well this public-private partnership works.

Crop insurance uses the efficiency of the private sector to quickly get relief to farmers so they can stay in business and continue producing the food, fiber and fuel that now, more than ever, are critical parts of our collective safety and security.

Crop insurance covers 3.5 million acres in North Carolina and provides $1.7 billion in protection. And as Barnwell notes in his piece, farmers have a role to play in their own protection by investing in crop insurance policies.

“The government keeps crop insurance affordable and widely available but it’s not free,” Barnwell wrote. “Farmers bought 1.1 million crop insurance policies last year, collectively paying $3.75 billion in premiums and shouldering more than $10 billion in deductibles.”

Throughout the COVID-19 pandemic, America’s farmers and ranchers have continued their essential work, feeding our nation. Crop insurance has been by their side every step of the way. Barnwell noted the importance of protecting a steady food supply:

As our nation recovers from the pandemic, and consumers learn more about where their food comes from, I encourage lawmakers to maintain a strong system of crop insurance to help ensure the safety and security of our nation.

Every American can sleep a little bit sounder knowing that crop insurance helps our farmers and ranchers feed our nation, no matter what challenges lie ahead.

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

Texas Farmer Hopes for Rain, Counts on Crop Insurance

Rain in West Texas can be scarce. So scarce, in fact, that farmer Brett Schniers wrote in a recent op-ed for the San Angelo Standard-Times that “when you lay down at night, you pray for rain because you don’t know when you’ll see it again.”

Despite the incredible promise of 2020, it has been a tough year for farming and ranching families across the country.

The Schniers family has already faced blistering drought, softball-sized hail that leveled their corn crop and plummeting prices due to the COVID-19 crisis.

“This year, we’ve needed all the help we can get,” Schniers wrote. “That’s why I’m grateful Congress, through the Farm Bill, helps make crop insurance affordable and widely available.”

Farmers and ranchers are resilient. Even in years like 2020, where it seems yet another disaster is always just around the corner. But while he hopes for rain, Schniers knows he can count on crop insurance:

We prepared at the start of the pandemic because we knew, as farmers, we couldn’t stop working. We had to be ready to produce as much food and fiber as we could, even with Mother Nature’s threats and an uncertain market looming.

I’m proud of the work American farmers do every day to make sure our nation is not reliant on imported commodities.

I’m also proud that our leaders in Washington are backing a strong farm safety net with tools like crop insurance.

Crop insurance is a big part of the reason farmers are able to go to work every season despite storms and droughts and faltering commodity markets.

We are proud to provide a critical risk management tool. Crop insurance helps America’s farmers and ranchers produce the affordable and reliable food, fuel and fiber necessary to keep our nation moving forward.

Congress continues to support crop insurance as a cornerstone of the farm safety net and farmers invest their own money in crop insurance to protect more than 90 percent of insurable farmland.

Schniers credits crop insurance with keeping him in business this year, writing, “The American farmer is the backbone of this country. And crop insurance is the backbone of the American farmer. It’s what we stand on.”

We could not agree more. We’re proud to stand side-by-side with America’s farmers and ranchers.

Read Schniers’ full op-ed on the importance of crop insurance at the San Angelo Standard-Times.

Wheat Growers Count on Crop Insurance

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

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

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

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

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

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

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

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

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

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

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

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

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.

America’s Farmers Remain Open to Feed America

Chip and Karla Bailey own KC Bailey Orchards in Williamson, New York, where they grow apples. They’re proud to help provide for their neighbors as well as customers across America, especially during the COVID-19 pandemic.

The past few months have resulted in some dramatic changes in our daily lives, but for America’s farmers, like the Baileys, there are still crops to be planted, fields to be fertilized and apple trees to be pruned.

The Baileys recently wrote an op-ed published in their local paper, the Times of Wayne County, talking about the essential work America’s farmers and ranchers continue to perform at this critical moment:

This crisis has demonstrated the importance of supporting our farmers and ensuring that we have a stable, safe and affordable food supply.

But with farming comes immense risk. The Baileys write that they are always dealing with weather threats. Hail and frost are not only hard to plan for, but they can be devastating to an apple crop.

That’s why they purchase crop insurance. The Baileys consider crop insurance a fundamental part of the farm safety net and are asking Congress to continue to support this important program:

Farming is our passion. As first-generation farmers, we know the difficulties that come with growing food. The COVID-19 virus has created more challenges and that’s why we are thankful for the steps that Congress has taken to help support rural America by passing aid packages with help earmarked for farmers.

However, it’s important that Congress also support, long-term, the farm policies that assist our family farm and allow us to survive even the difficult years.

That includes tools such as crop insurance.

America’s farmers are still farming. Let’s make sure they have the tools they need.


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

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

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

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

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

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

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

The study succinctly explained how it works:

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

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

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

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

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

ICYMI: Crop Insurance Protects Farming for Future Generations

Wheat farmers in the heartland are facing tough times. Prices have bottomed out, Mother Nature has been unrelenting and this year’s wheat harvest was well below average.

On our five-generation family farm in Sentinel, the story is no different. Our wheat acres were down just like nearly everybody else who grows the crop. And unfortunately, some economists are predicting things might get worse before they get better.

It’s in years like these that we can really appreciate the importance of the farm safety net, with federally supported crop insurance as its cornerstone. To be blunt, it would virtually be impossible to farm in western Oklahoma without crop insurance. And certainly impossible to secure the farm for future generations.

Crop insurance helps us manage risk and we are happy to pay into this safety net that kicks in when the worst happens. More often than not, farmers pay into the crop insurance system and don’t get anything back at all. And that is how we prefer it.

We are in the farming business and we take pride in our crops. We set out from the get-go to raise a crop the best we can. We want to get our money out of the marketplace, if we can. I tell my crop insurance agent, “I hope you don’t pay me a penny. I don’t want your money — I want it in the marketplace where it belongs.”

But in farming, there are no guarantees. And that is where crop insurance comes in. It won’t make up for a bad year, but it helps us to keep farming for another year.

It hasn’t always been this way. I have been farming for more than five decades and I remember quite well the days before we had an effective crop insurance program. For many years, natural disaster management was mostly accomplished in the form of costly disaster bills. These bills were not only slow in arriving to the farm, but also fell flat on the laps of taxpayers.

With crop insurance, agents sell policies, insurance companies service them and the U.S. Department of Agriculture oversees the program, making it affordable and widely available to all growers through aspects such as premium discounts.

For beginning farmers, having this protection is especially important. Many young farmers rely on banks for operating loans. And banks won’t make these loans without assurance that farmers would have a way to pay it back if Mother Nature strikes.

Farm policy critics, many of whom are paid anti-farm lobbyists, can be quick to criticize crop insurance. But ask anyone in farm country and they will tell you that putting limits on our most successful farm safety net tool is the last thing we can afford right now, especially given the current downturn.

I want to see my sons and grandsons continue our family tradition of farming. For this reason, and many others, I encourage you to join me in calling on our lawmakers in Washington to preserve and protect this important program as they continue to debate budgets and the upcoming farm bill. The future of farm country may very well depend on it.

Jimmie Musick, of Sentinel, is president of the National Association of Wheat Growers.​

This op-ed was published in The Oklahoman.

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

A Story You Won’t Hear About From the Critics

Agriculture’s opponents love to paint the picture of federal crop insurance as a program that just caters to big, conventional farming operations that only grow certain commodities. But, that narrative is simply not true. Crop insurance is widely available to farmers, regardless of their size or cropping choices.

And, now there is new data to demonstrate how crop insurance is helping farmers and ranchers all across the country manage the inherent risks of growing food and fiber.

“Year after year for 10 years in a row we are seeing growth,” explained Brandon Willis, the Administrator of the Risk Management Agency (RMA), to stakeholders during a recent meeting on the expansion of crop insurance. “It’s a tremendous success story.”

Much of this growth and success is due to efforts in the 2014 Farm Bill to improve existing products, as well as create new ones and expand them for all farmers growing in all regions of the country, especially beginning farmers, specialty crop and organic growers.

“We have made a concerted effort to make it work for all,” added Willis, who oversees the government agency that partners with private-sector insurance companies to deliver coverage.

The effort is paying off.

RMA estimates that the number of acres covered by crop insurance increased to 297 million in 2014 from 265 million in 2009. Roughly 85 percent of planted acreage for major commodity crops, 74 percent of all fruit and nut acreage, and 36 percent of vegetable acres are insured. Also, the number of organic acres insured increased by a staggering 110 percent during this same time.

Meanwhile, in 2015 alone, RMA and crop insurers helped 13,719 beginning farmers and ranchers who work more than 3.5 million acres start their operations and save more than $14 million through premium discounts and waived fees.

Investments in crop insurance have helped usher in new risk management tools like Whole Farm Insurance, which caters to diverse operations because it enables growers to insure all crops on the farm under one insurance policy. Whole Farm insurance is offered in all states with policies sold in 42 states this year covering an average of nearly 4 crops per policy.

Other new products like the Supplemental Coverage Option (SCO) and the APH Yield Exclusion have also helped farmers in all regions of the country secure better protection. RMA estimates that “nearly 1,000 fruit, vegetable, and other specialty crop policyholders are taking advantage of the APH Yield Exclusion for 2016.”

Additionally, while the program has expanded, the public-private partnership has made great strides in reducing mistakes, such as data entry errors or writing indemnity checks for incorrect amounts. Such actions are flagged by RMA as improper payments, and Willis said that such instances fell from a rate of 5.6 percent in 2014 to 2.2 percent in 2015. As a point of reference, the government-wide improper payment rate average is 4.39 percent.

Earlier in the year, Willis stated that cutting the rate in half demonstrated RMA’s “commitment to operating a well-run program that protects both taxpayers and farmers.”

Sadly, this success story is not one that you’ll hear about from the likes of the Environmental Working Group (EWG), the American Enterprise Institute (AEI), or the Heritage Foundation. These professional critics need something crow about in order to stay relevant and expand their own coffers even if it is at the expense of American agriculture.

But, as the old saying goes, they are entitled to their own opinions, but not their own facts. The facts are clearly on the side of crop insurance.

Crop Insurance is a ‘Well-Run’ Public-Private Partnership

The role of federal crop insurance has grown significantly through the years and it is now the key risk management tool for farmers all across the country. With this greater role comes a greater responsibility to ensure the program is working as efficiently and effectively as possible.

Part of this responsibility includes making certain that when a farmer does suffer a verifiable loss and files a claim, the indemnity payment is processed quickly and sent to the right recipient with the correct amount. In other words, making certain that there are no improper payments. This is important for the farmer who is counting on timely assistance after a catastrophic event and it’s important for taxpayers who demand program integrity.

And, new data from the U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA) reveals that crop insurance stands as an example of a successful, properly-managed public-private partnership.

During the recent annual meeting of crop insurers, RMA administrator Brandon Willis announced that the error payment rate has improved by more than 50 percent from 5.5 percent in 2014 to 2.2 percent in 2015. By way of comparison, the average error rate government-wide was 4 percent.

“This demonstrates that the crop insurance program can withstand the scrutiny,” Willis said. “It’s a good story. It tells the story that crop insurance is a well-run program with an error rate far below the government average.”

An improper payment occurs when funds go to the wrong recipient, the right recipient receives the incorrect amount of funds, including being paid too much or too little, or the recipient uses funds in an improper manner. And, as Willis noted, many errors are simply rooted in data entry and reporting mistakes.

Perennial critics of farm policy have often cast crop insurance in a negative light pointing to any error payment rate as an excuse to cut, or even, gut the program. As a result, RMA, crop insurers, and even Congress have worked together to improve the error payment rate through the years.

In fact, as former RMA administrator, Kenneth D. Ackerman recently wrote in a blog post, “RMA’s eye-catching new 2.2 percent ‘improper payment’ rate for 2015 was no fluke. Rather, it was the product of a long-term commitment and years of work by a wide range of people who deserve credit for sticking to it.”

Going forward, the crop insurance industry will continue to work with stakeholders to ensure the accountability and integrity of this critical risk management tool that farmers and consumers rely upon to maintain a steady and affordable food and fiber supply.

Insurance Basics: How Crop Insurance Stacks Up to Other Insurance Products

The concept of minimizing risk and financial loss by purchasing insurance is not a new or radical one. People have been doing it for centuries to guard against the financial pain that results from an accident or loss.

Americans are most familiar with health, auto, home, and life insurance, because most Americans have experience with these policies.

And most Americans understand basic insurance concepts and terms. For example, working through an agent to purchase a policy that is backed, or underwritten, by a private company; paying a bill, or premium, for that protection that is calculated based on your unique condition; shouldering some form of a loss, or deductible, before insurance kicks in; and receiving reimbursement, or an indemnity, only after the loss is verified by a trained claims adjuster.

Despite what the critics would have you believe, crop insurance operates similarly to these other types of insurance, and it is based on the the same philosophies and business principles.

  • Agents help customers choose the appropriate policy for their needs, and then a company underwrites it. There are 12,000 crop insurance agents who helped farmers purchase 1.2 million policies from 18 insurance companies in 2015.
  • Premiums are paid every year for coverage. For farmers, that means cumulatively paying more than $4 billion out of pocket each year.
  • A deductible must be met before an indemnity is paid to help restore the condition that existed prior to the loss. On average, farmers must lose roughly 30 percent of the value of their crop before their insurance takes over.
  • Claims must be verified and adjusted before they are paid out. With crop insurance, that job falls to roughly 5,000 claims adjusters tasked with understanding crop conditions on more than 298 million acres nationally.

Of course, the parallels are not perfect because agriculture is a unique kind of business that suffers unique kinds of losses. Unlike other insurance lines, agricultural losses tend to be geographically targeted and severe.

There is no chance that every car in a city will be simultaneously totaled, or that every person in a state will need medical help at the same time, or that every home in town will need a new foundation on the same day. But a single flood, storm, or drought can cause a catastrophic loss for every farming operation in a county or region, and that makes it much harder to insure.

In addition, the likelihood of a hurricane hitting Florida farmland or a drought wilting Texas crops is statistically much greater than triggering a disability or life insurance claim.

Because of this higher risk, the concentration of losses, and the likelihood for wide-scale disaster, crop insurance policies would be cost prohibitive and very limited without some government incentive.

Thus, America has a crop insurance system based on a public-private partnership between private insurance providers and the U.S. Department of Agriculture – a system that after decades of refinements and investments has ascended to become the cornerstone of modern-day farm policy.

Crop Insurance Primer Available Online

The 2014 Farm Bill was clearly a turning point in federal policy towards agriculture, pivoting away from the traditional support mechanism paradigm of the past and into a risk management model that features crop insurance as farmers’ primary—or only—risk management tool.  But with that new emphasis comes an increased need for basic information about crop insurance, what it is, how it works and why it has become the risk management tool of choice for America’s farmers.

These basics of crop insurance are available in an NCIS video titled “Crop Insurance 101.” The video is very helpful for Americans who have very little to do with agriculture, or for those who now find themselves needing to know more about this important risk management tool.

The video explains the public-private partnership of the crop insurance, the way crop insurance has removed some of the risk burden from taxpayers, and the role adjusters, and the companies they work for, play in the crop insurance program.  It also explains that in order to be protected by crop insurance, farmers must first purchase it with their own money.   Already this year, farmers have spent nearly $4 billion purchasing crop insurance.

The California Deep Freeze: Thankfully Local Farmers Purchased Crop Insurance

Weeks before the Midwest, Northeast and South went through their historic early January deep freeze, the citrus industry in California’s San Joaquin Valley experienced a record early cold snap – weeks before Christmas – that had many of the state’s fruit and vegetable growers reeling. This was the longest cold spell California has had this early in the season in decades. The good news was the cold snap came and went in days. The bad news was that it wasn’t even the first day of winter yet.

In the not-too-distant past, a freeze like this would have meant immediate and long-term economic devastation for the region’s economy. In 1990 and again in 1998 there were devastating freezes in the San Joaquin Valley that not only put local citrus growers on the brink of losing their farms, but also cost many of the area’s workers their jobs and caused local businesses to shutter their windows. Agriculture is the engine that drives the local economy, purchasing large amounts of goods, services and fuels. And when farmers catch a cold – as the saying goes – rural America catches pneumonia.

In 2007, yet another devastating freeze hit the valley. But this time there was no widespread scare of farm foreclosures, no downturn in the local economy and no shuttering of windows. That’s because unlike the old days, California specialty crop farmers were protected by crop insurance policies, purchased with money out of their own back pockets.

For the vast majority of California’s farmers who raise specialty crops – like citrus, almonds, grapes and stonefruit – crop insurance is the only tool available to help them recover from natural disasters. Crop insurance is a public-private partnership whereby farmers purchase policies that are sold by private crop insurance companies and partially discounted by the federal government.

First and foremost, crop insurance puts risk management squarely in the hands of farmers, requiring them to purchase polices in order to enjoy the relative protection that crop insurance offers. California farmers have certainly embraced crop insurance, spending nearly $100 million out of their own pockets in 2012 to purchase policies. As Senate Agriculture Chairwoman Debbie Stabenow pointed out, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.”

Since crop insurance is sold, managed and delivered by the private sector, when disaster strikes, indemnity checks usually arrive less than a month after the paperwork is completed. In the past, when farmers would rely on disaster assistance from the federal government, it took months, and more than a year in some cases, for those funds to finally reach the hands of the growers who had lost everything. For a grower whose entire citrus crop has just been frozen, a year can be about 11 months too long.

Another aspect that sets crop insurance apart is that it is sold, and delivered by private sector crop insurance agents who can only differentiate themselves from other agents through the exceptional customer service they give to farmers. Talk to a popular crop insurance agent and you will find that when a freeze hits, they’re working 24/7 to help make sure the farmers who purchased policies are getting back on their feet.

The growth of crop insurance from a policy that few farmers purchased a few decades ago to today’s policies which in 2013 protected 90 percent of planted cropland is a testament to the efficacy and affordability of the policies and the dedication and professionalism of the private sector crop insurance agents who sell and service the plans.

Crop insurance is available for 128 different crops, and that list is expanding. In some ways, the abundance of America’s farm sector seems like a miracle, but it’s not. If it weren’t for hard work, investment, infrastructure and crop insurance to manage some of the major risks, there might be a lot fewer consumers enjoying America’s fresh fruits, nuts and vegetables.

Certainly the growers of mandarins, oranges and lemons in the San Joaquin Valley were stressed out by the long and unusual freeze. But those who purchased crop insurance knew that when the sun rose the next day, they won’t be alone, as their crop insurance agent and participating company will be there to help get them back onto their feet.

Laurie Langstraat is vice president of public relations for National Crop Insurance Services in Overland Park, Kansas.



For Farmers, Risk Comes in Many Forms

When thinking about the risks faced by farmers as a part of their daily lives, what is first to come to mind are the risks related to Mother Nature, like drought, flooding, freezes and hail. But there are many other obstacles that farmers face in addition to the elements that they must manage in order to produce the feed, food, fuel and fiber that we need.

The May issue of Crop Insurance TODAY provides a broad overview of the tools farmers have at their disposal to manage the risks they face, examining where specific strategies are useful, the risks they can and cannot mitigate, as well as assessing their limits and overall value to farmers.

While crop insurance is the most ubiquitous risk management tool used by farmers – 89 percent of total planted acres in 2013 are insured – there are other tools that many farmers use as well. These tools are, by category:

Agricultural Practices

• Crop rotation. Crop rotation is the practice of growing different types of crops on the same field in different years or growing seasons. One of the most common crop rotations in the U.S. is interchanging corn with soybeans.

• Crop diversification: Crop diversification is a strategy whereby farmers diversify geographically, or by crops, or both.

• Seed varieties. Hybrid seed varieties have been developed that produce plants that are tolerant to different kinds of stresses.

• Irrigation. Irrigation is the practice of bringing water to plants using various methods, including flooding the fields, overhead, pivot-irrigation and drip irrigation.

• No-till planting. No-till planting is a way of planting crops without breaking the soil through tillage. This practice increases the amount of organic matter and water maintained in the soil while decreasing overall erosion.

• Timing of planting and harvesting. Farmers must hit the window for the best time to plant to maximize the potential of their crop. The same is true for the harvest. For example, harvesting during a dry spell reduces the costs of drying the grain before storage.

• Pest management. Farmers and ranchers can use various herbicides to reduce competition from weeds and use insecticides and fungicides to combat unwanted insects and disease in farming operations. They may also employ scouting to detect pests to best time their applications.

• Use of advisors. Agriculture extension agents or professional crop advisors are present in most states to advise farmers and ranchers on a wide variety of topics, such as marketing, nutrient use or pest management. Usually, this advice is “free” or requires a “small” charge.

Marketing Instruments

• Product differentiation. Product differentiation is the process whereby farmers or ranchers manipulate the quality, characteristics or inputs involved in the production of their product in hopes of attaining a premium from the consumer. Examples of this in ranching would be “humane raised” or “free range.” Examples in farming would be “organic”, “certified natural” or use of specific varieties that improve processing performance (high oil, high fermentable starch, etc.).

• On-Farm Storage. For storable crops, farmers can invest in on-farm facilities to store their production allowing sales to be prolonged until prices improve.

Financial Instruments

• Crop insurance. Crop insurance is a private insurance policy, purchased by a farmer or a rancher – partially underwritten by the federal government – that insures crops or livestock against price volatility and/or weather losses.

• Marketing Contracts. Marketing contracts include the various types of contracts between producers of commodities and buyers that lock in prices in advance, including forward contracts. The product is owned and controlled by the producer during the production process. Similar marketing contracts may also be used by producers to acquire production inputs and reduce input price risk.

• Options and futures contracts. Both options and futures contracts are specific types of marketing contracts – that protect against price risk only – between the producer and a specific buyer at a price on a given date. The basic difference between the two is that options give the holder of the contract the right to buy or sell the asset during a given time period, while the holder of a futures contract is obligated to take delivery or deliver the asset by the end of a given time period under the terms of the contract.

• Production contracts. A production contract is a legally binding agreement made between two parties, generally a producer and a contractor, where the producer transfers ownership or control of the product to the contractor. For example, the producer may agree to sell the output prior to production or agree to produce the ouput that is owned by the contractor in exchange for a payment. The agreement is for a fixed period of time – either one crop year or several production cycles – and begins prior to production.

Financial Strategies

• Share rent and variable cash leasing arrangements. Rather than own farmland, a producer may rent farmland under various rental arrangements. For example, land may be rented just for cash or rented under a flexible-cash arrangement where the landlord may pay some expenses or bear some risk. Or farmland may be rented under a share rent arrangement where the landlord receives a share of production as rent.

• Maintaining cash reserves and liquidity. Holding cash or near-cash allows farmers to weather adverse events. Essentially this tool is self-insurance.

It should be noted that most farmers use many of the above strategies to protect against the many risks they face during any typical year. The question for the farmer is one of profitability: How many risk mitigation strategies can be employed while maintaining the profitable margins needed to keep the farm running?

Also, most of the strategies above only mitigate fairly specific threats, and not the whole gamut of risks faced by farmers. Crop insurance is the only tool available that helps farmers mitigate both natural disasters and market fluctuations, which is why it’s a complimentary risk management tool to all of the above strategies.

In 2013, nearly 294 million acres (more than 89 percent of total acres planted to crops) are protected by crop insurance, which, along with some of these other strategies listed above, will help farmers and ranchers manage their risks. That statement alone underscores the fact that crop insurance has become the preferred risk management tool for America’s farmers, and underpins the stability of the nation’s food supply.

NCIS, RMA Team Up To Help African American, Limited Resource Farmers Develop Risk Management Plans

Thanks to a joint effort between USDA’s Risk Management Agency and National Crop Insurance Services (NCIS), limited resource farmers and African American producers of specialty crops and under-served commodities in Mississippi and Arkansas were instructed on how to develop personal risk management plans in five risk areas..

The courses consisted of three, day-long structured workshops, held roughly one month apart and lasting six hours each day. Participants, who attended workshops in either Pine Bluff, Arkansas or Jackson, Mississippi, were instructed on how to manage risk in the areas of production, marketing, financial, human resource and legal. The instructors included Dr. Albert Essel, Delaware State University and Dr. Laurence M. Crane, NCIS.

The classes were organized by NCIS and funded through a Cooperative Agreement from RMA, which selected several areas in the country where rural poverty was endemic, to focus its resources. Over the course of the workshops, participants were educated in the various risks they could expect when running farm and ranching operations. The goal was that by the end of the third class, each farmer would leave with his or her own personalized risk management plan in hand.

NCIS_carousel_image_62The seminars sought to educate producers through a combination of instruction, discussion, interactive group activity and roughly 60 hours of homework assignments (20 hours after each workshop). “These classes are a great opportunity to help a group of eager, hard-working farmers learn more about managing the risks they personally face on their farms and how to better prepare themselves for the adversity that is all too common in agriculture,” said Dr. Crane.

The classes also allowed farmers and producers to network and share best practices with their peers, helping to build valuable business connections that could prove profitable in the future. “Not only did students walk away with valuable risk management plans and risk mitigation strategies, they also made invaluable contacts with other farmers who have faced many of the same challenges they do,” said Dr. Essel.

Essel gave an overview of many of the risk mitigation strategies available to farmers, including crop insurance. “Crop insurance can be very important to farmers who are growing crops that are insurable,” he said.

Many of the students and local extension agents who attended, applauded the workshop series and expressed hopes that follow-up courses would follow. “In addition to the students who have already attended these course to have a refresher, there are many, many more people in this area who would benefit from attending this seminar who just couldn’t make it this year,” said John Coleman, a research associate with Alcorn State University’s extension program.

CROP INSURANCE IN ACTION: Jimmy Miller, Interlachen, Florida

For centuries, blueberries were gathered from the dense forests and bogs by Northeastern U.S. Native Americans, and are one of the only fruits we consume that are native to North America. So when most of us hear about blueberry farms, we conjure up images of cool, damp climates and cold winters.

Except on Jimmy Miller’s blueberry farm, which is located in Interlachen, Florida. Miller has operated the farm, which is the oldest existing blueberry farm in the state, since 1979. Miller, along with his two daughters and son-in-law, operates the 124 acre operation using a variety of blueberry developed by the University of Florida that tolerates the summer heat and mild winters.

One of the main issues for blueberry growers in Florida, Miller explains, is that they must have at least 200 hours every winter where the temperature goes below 45 degrees in order for the bushes to flower, and fruit, later that spring. Lack of enough cool days can mean very low fruit production the following year.

The Millers sell their blueberries, which are among the first in the nation to ripen each year, to both national and international fresh fruit markets. While they are relative newcomers to the blueberry market, they have been dealt quite the lucky hand by Mother Nature. That is, until early spring, 2012.

“We never had a real loss until this year,” said Miller, who explained that their primary risk is a freeze or hail. “And the way we manage freeze is with overhead water protection,” he explains, which protects the bushes by allowing a layer of ice to form on the plants and the berries, keeping the plants warmer than the outside air.

Florida, like much of the rest of the country, had a very early spring in 2012, which resulted in the bushes pushing out new growth and eventually blossoming several weeks earlier than usual. “The plants become vulnerable in late January or early February, and then the berries start to form,” Miller noted.

“It was an early spring, and then all of the sudden, we had a front blow through that dropped our temperature to 24 degrees,” he explained. That usually wouldn’t be a huge problem, given the sprinkler system, but this freeze was accompanied by 15 to18 mile per hour wind gusts, which made the water evaporate as quickly as you spray it.

“When water evaporates, it cools the plants, and we were trying to warm them,” he said. “We had plants that were vulnerable because they were in full growth, and then we had the wind,” he added. “The second night, the temperature actually got down to 18 degrees, but we were fine because we didn’t have the wind.”

The next day, the Miller clan was hopeful that it would be ok, “but we also knew that it could be catastrophic,” he said. Miller explained that one of the risk management strategies they have employed is the use of different varieties of plants that have different cold tolerances and will go into bloom at slightly different times.

The problem was, the bushes that should have fared well with the cold snap didn’t fruit fully that year because the mild winter had not met the requisite number of cool days. “And the plants that did put out a good amount of flowers were severely damaged by the freeze and accompanying winds,” he said.

Thankfully, for Miller, he always purchases crop insurance, and if the blueberries didn’t look better in a few weeks, this could be his first crop insurance claim. After the cold snap ended, Miller called his crop insurance agent who came out for an initial assessment.

“When you feel like it looks pretty bad, you need to give your agent notice,” said Miller. As the agent came out to inspect the bushes, Miller noted that “initially, as the plants came out of the cold snap, we were all hopeful.”

But hope wasn’t enough. As the season progressed, it became apparent that the losses would be staggering. “Without crop insurance, it would have been bad, real bad,” said Miller. In the end, the blueberry farm suffered a seventy percent loss.

“I would have been forced to borrow money just to get through the next year,” said Williams, explaining that without crop insurance, he would have to go to a bank and ask for a loan just for operating capital for the year. “And then two bad years in a row, and you are really out on the ledge,” he said.

“This is a tool, a necessary tool,” he said of crop insurance. “You can’t absorb this kind of loss, so you need to have a tool in place to transfer some of the risk to a private company.”

Luckily, the blueberry bushes appear to be recovering in the warm Florida sunshine and Miller is optimistic about his family’s and his farm’s future. “I feel like we’re going to be fine,” he said.

Vital Role of Crop Insurance Highlighted at CIRB National Meeting

Speakers including the Senate Agriculture Committee Chairwoman and Ranking Member, the Risk Management Agency Administrator, and several industry leaders underscored the vital role of crop insurance as the cornerstone of federal farm policy during the 48th annual meeting of the Crop Insurance and Reinsurance Bureau (CIRB). The two-day meeting was held in Scottsdale, Arizona, and featured the following comments:

  • “We have heard loud and clear that crop insurance is one of the most critical risk management tools, embraced by farmers and producers in all parts of the country. We will continue working to strengthen crop insurance to make it available to more producers and to make sure farmers have the tools they need to effectively manage their risk.” –Senate Committee on Agriculture, Nutrition and Forestry Chairwoman Debbie Stabenow.
  • “This program has traveled leaps and bounds from where it first started, and it has now become the most important risk management tool in most producers’ toolboxes. Like CIRB, my goal is to maintain a robust risk management program that is delivered by the private sector, which is critical for providing jobs in rural America and excellent service to producers.” — Senate Committee on Agriculture, Nutrition and Forestry Ranking Member Pat Roberts.
  • “Crop insurance is a vital part of the farm safety net and has become an integral part of business life for a large majority of American farmers and ranchers. In years like this one, the value of this critical safety net is made clear.” –USDA’s Risk Management Agency Administrator William Murphy.
  • “Crop insurance literally saved my operation this year – I seldom have claims of any size, but the Mississippi River flood wiped out a lot of my crop. It’s a critical program that I have faith in, and the private sector delivery system is second to none.” — John McKee, Owner and General Manager, Westside Farms, McKee Planting Co.
  • “Support for crop insurance is at an all-time high – among policymakers and farmers. Without a doubt, crop insurance has a very bright future.” — Jim Wiesemeyer, Senior Vice President, Informa Economics.
  • “While policy development and positions among commodity groups are fluid, there is one point of agreement: crop insurance is a risk management tool that farmers cannot live without.” — Mary Kay Thatcher, Senior Director, Congressional Relations, American Farm Bureau Federation.
  • “In the crop insurance community, weather is at the forefront of everything that you do. Looking ahead at 2012 and what we might expect, it’s possible that volatility is the new standard, and natural disasters are just going to become one of the many expected costs of doing business.” — Drew Lerner, Senior Agricultural Meteorologist, Founder and President, World Weather, Inc.
  • “As a reinsurance intermediary, I can testify that commercial reinsurance is a critical component of the crop insurance program. While the Federal Crop Insurance Corporation provides some level of reinsurance support, the role of the commercial reinsurance community is essential.” — John Reinman, Guy Carpenter & Co., CIRB Board Member.
  • “Government clearly has a role to play in crop insurance by making valuable private sector-backed insurance policies available and affordable for all growers in the United States. Without this public-private partnership, farmers would be unable to meet the challenge should Mother Nature indeed give us another weather year like we just experienced.” — Sam Scheef, chairman, CIRB.

It’s the Farm Safety Net That Makes Our Success Possible

By Alan Rosendahl

What could possibly be scarier than being a farmer who stakes his yearly income on getting the divine cooperation of Mother Nature? Being the banker who makes the loan to the farmer every year to take that risk.

In a year when both the Mississippi and Missouri rivers have left their banks and Iowans are sandbagging levees while the Southern Plains bake in drought, it’s not hard to understand the risks associated with farming.

Recognizing the inherent and yearly risk in agriculture and the need for the country to have a stable food supply, years ago Congress assembled a set of policies known as “farm safety net programs” to ensure that farmers weren’t knocked out of business because of bad weather or wild market fluctuations. The most important of those policies—and the one that serves agriculture the best—is crop insurance.

As a banker and a farmer, I can tell you first-hand that federal crop insurance is the only thing that makes it possible for us to loan money to small farmers here in Iowa. Banks, like other businesses, need to turn a profit to stay in business. But loaning money to small and beginning farmers can be very risky, because they often have less net worth, and tighter cash flows. Coupled with the fact that small banks are inherently risk-averse, particularly after the banking implosion of 2008, and you see the dilemma.

But federal crop insurance bridges the risk problem because the policy itself serves as the collateral that the farmer needs to secure the loan, lowering or eliminating the risk to the bank altogether and ensuring the loan is made. Crop insurance establishes the floor for the farmer under which he can fall no further, ensuring that although he is small, he will be here to farm yet another year, and perhaps, pass the family farm on to his or her children.

During my long career in the banking business, I have noticed that the most profitable and successful farmers carry the most crop insurance. Why is this? Because successful farmers must be good businessmen, and good businessmen manage their risks. And it’s precisely their ability to manage risks and ensure continuity of production that explains the abundance and affordability of the American food supply. Food is plentiful here in the U.S. because our system is working.

But it doesn’t stop there. A side benefit of crop insurance is that is also serves as a much needed capital lifeline for small towns and rural America. This happens because crop insurance policies establish a cash flow from the farmer to the bank, in what will be the first of many times those dollars change hands.

So how does this happen? The bank takes the money it brings in from farmers and invests it in the local community or makes the funds available as loans to others seeking growth or investment capital. In fact, I’d argue that these dollars turn over multiple times and have major rippling effects benefitting the vast majority of the residents of small towns throughout the Hawkeye state.

The beauty of crop insurance from the taxpayer’s point of view is that it is a public-private partnership where the public helps fund a portion of the premiums yet the bulk of the risk, and the costs associated with that risk, is shouldered by the private sector, not taxpayers.

Unfortunately, farm safety net programs, like other parts of the federal budget, are on the chopping block. That’s why it’s critical that Iowa’s congressional delegation ensures that agriculture is not forced to shoulder a disproportionate part of the burden. Despite its success, crop insurance has already sustained over $12 billion in cuts over the last three years. Any more cuts to the crop insurance delivery infrastructure could undermine the viability of the program, and its benefits to Iowa and all of rural America.

Thankfully, because of federal crop insurance, it’s not scary for banks to make loans to farmers. There are no federal policies that can eliminate all risks to farmers or anyone else. But there are policies, like federal crop insurance, that make risk manageable. And the fact that banks aren’t forced, year in and year out, to take a leap of faith when they make the loan to the small or large farmer is one of those little known facts that makes America’s agricultural abundance the talk of the world.


Alan Rosendahl is a Senior Vice President at Iowa State Bank and a farmer who resides in Kesley, Iowa.

This op-ed appeared in the Cedar Rapids Gazette on July 13, 2011.

Crop Value, Crop Insurance Coverage At Record High

At least $110 billion worth of crop insurance liability – the largest amount in U.S. history – will be written this year, underscoring the popularity of crop insurance and the growing value of agricultural commodities, according to National Crop Insurance Services (NCIS).

“The value of our agricultural output is at an all-time high,” said NCIS President, Tom Zacharias, at a March 8 news conference. According to the Federal Reserve Bank this is helping to fuel the overall economic recovery in the U.S.

Best of all, Zacharias noted, “If disaster strikes and puts the valuable 2011 crop at peril, it is the private sector delivery system, and not the U.S. taxpayer, who will be the first line of defense to ensure that America’s farmers do not suffer severe financial hardship due to events out of their control.”

In a recent guest opinion article in the Traverse City (Michigan) Record-Eagle, Zacharias noted that it is easy to see why crop insurance has gained so much popularity with farmers, pointing out that more than 1.1 million policies covering 256 million acres across the U.S. were written in 2010 to deal with risks. “Nationally, this public/private partnership enabled the government to turn a modest investment into nearly $80 billion in protection in 2010,” he added.

Crop insurance was designed by lawmakers to combine the strengths of the government and private sector to best leverage taxpayer investment. The government’s main role is to regulate the business and subsidize farmer premiums making coverage more affordable and practical for farmers who greatly need tools to hedge their risks. Farmers purchase the policies and pay for a portion of the premiums out of their own pockets. The policies are sold by licensed agents and serviced by private insurance companies.

“Without the crop insurance program that we have in place today, U.S. agriculture could be facing a liability of $110 billion, should farmers get hit with a catastrophe in 2011,” noted Zacharias. “That would be unsustainable. Congress should be applauded for structuring a system that achieves so much return on investment,” he added.

Every dollar of investment achieved $20 of protection last year – a gap that should grow substantially in 2011. Zacharias says that he hopes Congress will consider this return on investment as it begins writing the 2012 Farm Bill.

Michigan Senator and Chair of the Senate Agriculture Committee, Debbie Stabenow (D-MI), recently outlined her principles for the upcoming Farm Bill, urging us not to look at the 2012 Farm Bill under the lens defined by budget concerns or specific programs but instead from principles like “creating the best safety net and the best tools possible for managing risk.” She added, “We need an effective safety net so that we aren’t watching family businesses go under because of a few days of bad weather or market factors outside of their control.”

Michigander and crop insurance agent, Mike Gaynier, echoed the importance of the farm safety net to the state’s diverse agriculture sector during a recent national radio interview. “Crop insurance provides protection to producers of Michigan’s lucrative specialty crops — like the well-known tart cherry crop, or important grains like corn, wheat and soybeans — should prices crash or Mother Nature deal an unwelcome blow. In fact, it is the only safety net tool available for most fruit and vegetable growers,” he concluded