USDA Unveils New Crop Insurance Product: Whole-Farm Protection Insurance

Specialty crop farmers, organic farmers and diversified producers will now be able to purchase the protection of crop insurance as part of a Whole-Farm Revenue Protection insurance policy.  “Crop insurance options continue to adapt to meet the farm safety net needs of today’s farmers,” said Risk Management Agency (RMA) Administrator Brandon Willis.

Whole-Farm Revenue Protection, passed as part of the 2014 Farm Bill, will offer fruit and vegetable growers and producers with diversified farms selling commodities to wholesale markets, local and regional markets, farm identity preserved markets, or direct markets, more flexible, affordable risk management coverage options.  “Whole-Farm Protection insurance will expand options for specialty crop, organic and diversified crop producers, allowing them to insure all the crops at once instead of one commodity at a time,” noted Willis.

The new policy will offer a whole-farm premium discount to farms with two or more commodities as long as minimum diversification requirements are met.  This will provide diversified farms a higher premium discount that previously available.  The policies will also allow farmers to insure all crops and livestock under one insurance policy in lieu of insuring each commodity separately.

Willis noted that the new policy, as part of the overall 2014 Farm Bill, will build on historic economic gains in rural America over the next five years while also achieving billions of dollars of savings for taxpayers.

California Drought Causing Weather Extremes in Central Valley

Weather extremes triggered by the prolonged drought have caused much of the damage to crops in California’s Central Valley in addition to lack of waters, says Doug Benik, a farmer and crop insurance agent from Fresno County.

While most assume that the absence of rainfall is largely behind much of the crop damage and losses in California, much of it has actually been caused by the absence of any moisture in the air – due to a lack of rainfall – that has produced weather extremes the area rarely sees. “The lack of moisture in the air allows air temperatures to get much colder in the winter and much hotter in the summer,” said Benik.  “And it prevents the cooling fogs from forming when many of the area’s trees need those conditions during the winter,” he said.

“For many farmers, the incredibly dry air is causing more damage than lack of water,” he said.   The drought, which is now in its third year, has forced many of the areas farmers, who grow all types of crops, to dig deeper wells in hopes of hitting more reliable water tables.

Benik, a second-generation farmer, said that for most of his life, farming in this area was much less stressful.  “This area of the Central Valley is an agricultural center because it is blessed with adequate water from a dependable rainy season in most years,” he said.   “And while we don’t receive adequate rainfall during the summer to sustain crops and trees, much of the water we need comes from the snowpack in the mountains,” he said.   “Unfortunately, this year, that snowpack never materialized, and moisture over the previous two years was subpar as well.”

Benik says that luckily, most of the area’s farmers have been purchasing crop insurance for years.  “Crop insurance has provided some peace of mind for many of our growers,” he said.  “Some growers will collect due to drought this year and that will save them.”

The drought is now in its third year, and the area farmers are keeping their fingers crossed that normal rainfall patterns return soon.  “This past year, some of the irrigation systems were denied water at the last minute, and that’s something we’ve never faced,” he said.

But if rainfall doesn’t return, Benik expects to see more deep wells go in this year to deal with it.   Either way, he says farmers will likely continue to purchase crop insurance to protect them from some, or part, of what Mother Nature has in store for them.

CROP INSURANCE IN ACTION: Matt Huie, Beeville, Texas

Bee County in the coastal bend of Texas near the Gulf of Mexico was not spared the crippling drought which struck the state with the worst dry spell in almost a century in 2011 and continued for several years.

Matt Huie works on 5,000 acres of row crops plus runs a cow-calf operation, and lives near Beeville, Texas. He has been farming the last 15 years since graduating from college.

For him, crop insurance has been invaluable. Huie calls it “the most vital risk management tool” in his quiver.  “We always buy it, and have since we started,” said Huie.

“It’s required to secure loans in our area. Because of the severe drought in Texas, we have used it two of the last three years. Without it we would be out of business, along with two-thirds of the farmers in our area,” he said.

Read Matt’s entire story here.

CROP INSURANCE IN ACTION: Klodette and Rick Stroh, Powell, Wyoming

Klodette Stroh isn’t your typical Wyoming farm girl.

Klodette is an Assyrian, born in Teheran, Iran, who came to the U.S. to attend college with the goal of becoming a physician and instead wound up falling in love with Wyoming farmer, Rick Stroh.

The couple began farming together in 1989, first purchasing some equipment and leasing land, all while hoping to one day own a farm of their own.    After years of hard work, the couple finally achieved a hard-fought dream and purchased their own farmland.  Today, the couple, and their two sons Rick and Paul, farm nearly 1,800 acres of malt barley, wheat, varieties of dry edible beans, corn and hay, near Powell, Wyoming.   They also tend to more than 50 head of cattle.

While things on their farm and in their lives have changed, one thing has always stayed the same:  The Strohs have always purchased crop insurance.   “We buy crop insurance mainly to safeguard from bad weather,” said Klodette Stroh.   “Last year we had four major hail storms in a row,” said Stroh.

Read Klodette and Rich Stroh’s story here.

“Eating Local” Made Possible With Strong Crop Insurance Policies

One side benefit of the popular “eating local” movement is a growing recognition by urbanites and suburbanites of the importance of agriculture and the need to ensure that farmers are able to withstand the many challenges presented by Mother Nature. While farmers manage their many risks using a wide variety of tactics, there is one tool in most farmers’ risk management portfolio, which they consider indispensable: crop insurance.

The value of crop insurance to New England’s farmers was made crystal clear in 2012 by Tropical Storm Irene, which brought heavy winds and even heavier rains just as crops were nearing harvest. While 2011 saw record losses across the U.S. with freezes in Florida, drought in the Southwest and floods in the Midwest, it was farmers in Vermont who sustained the highest loss ratios in the country. As a crop insurance agent, I can attest that many of our farmers saw their entire crops devoured in one day as floodwaters, sometimes six feet high, swallowed their fields.

After the waters finally receded and the extent of the damage to their farms was assessed, it quickly became clear that Irene’s wallop had the potential of being a “game changer” for many New England farmers. And crop insurance was the only thing that saved many of them from losing their farms to bankruptcy and instead allowed them to return to their fields this spring and plant.

View the entire story here.

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.

CROP INSURANCE IN ACTION: Art Wiebelhaus, Fordyce, Nebraska

People hear a lot about crop insurance and the fact that U.S. farmers spend $4 billion out of their own pockets to purchase it every year.   One of the greatest praises of our modern crop insurance system is the customer service that farmers receive before, but perhaps more importantly after, they have a loss.   For some farmers, the hours after a major farm disaster can seem like the lowest point in their lives, when their careers seem to be upended and their hopes for a big harvest dashed.

But quickly after a major loss occurs, crop insurance adjusters are on the scene to meet with the farmers assess the damage.  The crop insurance adjusters are one of the unsung heroes of the farm safety net, since they help ensure that when disaster strikes that help – in the form of a crop insurance indemnity check – is on the way.

Before ever climbing in the truck, crop adjusters are already on the phone making business calls, watching the weather forecast, reading the rain gauge, and checking in with their clients. They spend long days in the office and even longer days out on the road. Right beside the farmer as they walk through their fields, these men and women are at the very heart of why crop insurance is successful.

Art Wiebelhaus is one person in particular who exemplifies just what it takes to be a crop adjuster. He recognizes the commitment crop production takes, the need crop insurance fulfills, and the lifestyle agriculture holds. From his understandings, Art utilizes a dynamic relationship between crop insurance, farming, community, and family.

While he has been a crop adjuster for just six years, Art has been a farmer his whole life. As a third generation farmer, “I know what they are going through and what their worries are. I’m a farmer too,” commiserates Art. Imagine waking up one day to your life’s work destroyed by events beyond your control–producers must carry around this possibility (and lump in their throat) every day. It is an adjuster’s job to provide farmers with the aid they seek from crop insurance.

As producers dread the day when they must make a claim, Art is still able to make light of the situation. He laughs, “It seems that when it rains, it just keeps raining, and when it’s dry, it just stays dry.”

Growing up on the same place he now farms, Art has seen crop insurance grow around his own sleepy little town of Fordyce, Nebraska, “A while back I remember meeting one gentleman who didn’t have crop insurance, and that’s because there wasn’t a policy that really worked for his operation. Of course now, with improvements and changes to crop insurance, he has coverage. And today, I can’t name one person who doesn’t have crop insurance.”

“With current prices, farmers have to have crop insurance to stay in business,” points out Art. The loss of just one year can be so catastrophic that an operation cannot financially come back from it. Keeping a farmer’s “head above water” means another year that he is able to meet the demands of food production.

This is where the importance of an adjuster comes into play. They make the loss calculations for every insured field based upon scientific procedures. From these adjustments, it is determined how crop insurance policies can pay.  Creating a tie to the producer, adjusters work with their clients to provide assessments that will have a positive impact on the operation’s future.

Along with this, crop adjusters must be conscientious of their actions in order for this process to be successful. For the best results Art says that, “Every time I visit a field, I have two goals in mind: make the most accurate adjustment; and make sure the farmer feels that he can rely on my judgment.”

To reach this goal, “It’s very important that you clearly explain the procedures and how you came up with the loss adjustment total,” describes Art. Presenting these steps provides the farmer with an understanding as to how the loss was determined. Art’s appreciation for the producer is repaid with equal gratitude when he takes the extra time to help his clients.

From each visit, Art is one-step closer to a stronger relationship with the farmer. This is important to Art, because it is the reason he started adjusting in the first place.

“I always enjoyed visiting with my crop adjuster when he came out to my farm. He kept bringing up how he thought I would make a great adjuster,” tells Art, “I knew how much he had helped my farm operation, and I wanted to be able to do the same for others. I finally made the call and have loved my job ever since.”

It is not uncommon to find an adjuster like Art—one who has a passion for helping his community. But what is exceptional about him is that despite the fact that he must cover at least three different states at a time, being able to serve and contribute to agriculture is all Art asks for in return.

“Just like any job, there are trying times. But overall I enjoy my job, because I know that I am able to help the farmer,” explains Art.

Adjusters are the face of crop insurance, and make a direct impact on the perception of the industry. Besides their agent, a client will spend most of their time working with an adjuster when unfortunate weather strikes. It is important to remember that, “This is not only a business, but a livelihood; they [farmers] need to be reassured that they won’t lose what is very close and personal to them,” notes Art. How an adjuster interacts with a client will not go unnoticed or forgotten; a crucial point as to why crop insurance will always need adjusters like Art.

From developing a dedicated relationship, to mentoring farmers about procedures, Art brings a positive impact on crop insurance every day.

12 Essential Strengths of Crop Insurance

With the passage of the 2014 Farm Bill, crop insurance became the single most important risk management tool for America’s farmers and ranchers.  Crop insurance helps make America’s farmers and ranchers world leaders in agriculture, allowing producers to stay competitive and be more innovative.  It also helps them sleep better at night knowing that, should the unexpected happen, they will have the financial security to stay in business and go on to plant the next season.

As Nebraska farmer Quentin Bowen noted in an op-ed that appeared Lincoln Journal, “The speed of delivery of crop insurance — because it’s administered by private-sector companies — makes it a different kind of animal. In fact, if a natural disaster strikes and I’m covered by a crop insurance policy, typically the payment comes to me in one or two weeks, not in one or two years. Because of that speed of delivery, I can quickly recover from the loss and replant the field, garnering myself some needed income for the year and putting some food on the tables for consumers.

An available, affordable and viable Federal crop insurance program is a key component to the tremendous success of our country’s agricultural economy.  There are twelve reasons why crop insurance is an essential business tool for America’s agricultural producers.  Essential strength number one is “Producers Receive Individualized Risk Management Solutions.” Most farm programs are, in general, similar across all crops and producers, despite variations in an individual farmer’s operations. However, crop insurance allows farmers to customize their plans and coverage to accurately reflect individual losses and their unique yields or risk.  To review the twelve essential strengths and watch real testimonials as to why they are important in the real world, click here.

USDA Announces Progress In Implementing Crop Insurance Provisions

The U.S. Department of Agriculture (USDA) announced recently that it continues to make progress in implementing provisions of the 2014 Farm Bill that will strengthen and expand insurance coverage options for farmers and ranchers. The new Supplemental Coverage Option (SCO), available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility.

USDA Secretary Tom Vilsack pointed out that this nation’s producers work hard to produce a sufficient amount of safe and nutritious food for the country.   “It’s critical that they have crop insurance options to effectively manage risks and ensure that they do not lose everything due to events beyond their control,” he said.   Vilsack added that USDA has made it a priority to ensure the Supplemental Coverage Option was available to help farmers in this upcoming crop year.

The 2014 Farm Bill strengthens and expands crop insurance by providing more risk management options for farmers and ranchers and by making crop insurance more affordable for beginning farmers. SCO, which is administered by the Risk Management Agency (RMA), further strengthens the farm safety net.

SCO will be available for corn, cotton, grain sorghum, rice, soybeans, spring barley, spring wheat, and winter wheat in selected counties for the 2015 crop year. Producers should contact their crop insurance agents to discuss eligibility in time to sign up for winter wheat coverage. RMA plans to make SCO more widely available by adding more counties and crops. Information on SCO for 2015 winter and spring wheat is available on the RMA website.

SCO is a county-level policy endorsement that is in addition to an underlying crop insurance policy, and covers a portion of losses not covered by the same crop’s underlying policy. Producers who elect to participate in Agricultural Risk Coverage (ARC), which is offered by the Farm Service Agency (FSA), are not eligible for SCO for the crop and farm participating in ARC.

Vilsack noted today’s announcement was made possible by the 2014 Farm Bill. The Farm Bill builds on historic economic gains in rural America over the past five years, while achieving meaningful reform and billions of dollars in savings for taxpayers. For more information, visit

Crop Insurance Adjuster Schools Off to a Great Start!

Crop insurance loss supervisors and loss adjusters attended classes that provided them with updated field instruction, basic procedures, recent loss adjustment policy changes and hands-on training for dealing with crops damaged by hail.  The classes, part an ongoing adjuster educational series sponsored by National Crop Insurance Services (NCIS), were held in Columbia, Missouri in early June.

Nationally, more than 1,200 adjusters – new and experienced – attend these classes each year to learn valuable information, hone their skills, or teach new adjusters the ins and outs of loss adjustment.  When asked what the goal of this school was, Missouri’s NCIS Regional/State Chairman, Jeff Dexter, Rain and Hail, explained:  “To create an environment where new and seasoned adjusters can learn and follow procedures in loss adjustments.”  He went on to say, “…I think it is a responsibility of companies and seasoned adjusters to pass on knowledge to the future leaders of our trade. In the end, we all have one common goal – to follow the procedures provided to us from the many years of (NCIS) research.”

As one of the 13 NCIS schools being held in 2014, the Missouri Crop-Hail Wheat and Corn School was the second of the season.  Kathy Holmes, a Claims Adjuster for ARMtech Insurance Services said, “I really enjoyed the hail school this year. I have been numerous times and each year it gets better.”

The improvement and continuation Holmes speaks of is necessary for this industry to survive, as adjusters must be able to distinguish a range of possible causes of loss in combination with current issues or changes to procedure. Along with NCIS-sponsored schools, Approved Insurance Providers (AIPs) also conduct their own training sessions across the United States on a variety of crops. It is through the hands-on training at these schools that farmers can rest assured knowing the loss adjuster who comes to his/her farm is adequately trained and the loss will be evaluated based on sound, scientifically-proven procedures.

CROP INSURANCE IN ACTION: Andy Bell, Climax, Georgia

On the first Saturday after Thanksgiving, you can chase a greased pig in the southwestern Georgia town of Climax as it celebrates its Swine Time Festival, which normally draws up to 30,000 people in an area where only 300 people live.

There is also corn shucking and a squeal-off.  Climax is the highest point on the railroad line between Savannah and the Chattahoochee River.  After its founding in the 1880s, the town served as a rail junction and an agricultural community. It was incorporated in 1905.

The weather for a farmer in Climax can be tricky. The town is located only a few dozen miles from the Gulf of Mexico which can bring in hurricanes as powerful as Katrina, which struck New Orleans with devastating fury in 2005.  But this corner of southern Georgia has also been hit by a drought that rivals the one which hit this year in the U.S. Midwest, shriveling the cotton and peanuts that farmers grow in the area.

“We’re 90 miles from the Gulf of Mexico. We had a tropical storm come through in [20]09.  We’re so close to the coast that we have to have some type of insurance,” said Andy Bell, who farms about 2,000 acres outside town.  On the other hand, “2007 was a terrible, dry year.”

“We buy crop insurance every year,” said Bell. “We typically buy 70 percent [of coverage]. You’re not going to make any money but it will prevent you from losing the farm.”

His main crops are peanuts, cotton and corn. Some 700 acres are sown to peanuts, about 1,100 acres to cotton and about 200 acres to corn.  There is also a small herd of about 200 beef cattle.

Bell said there were some anxious moments before Hurricane Isaac veered away from their area a few months ago and headed for New Orleans. The storm season, which does not end until November 30, remains a threat, but the end to hurricane season is not far off.

For once, Bell is looking forward to harvest season as it looks like the weather is going to cooperate.  “I think the peanut crop is going to be good this year. We dodged a bullet when the storm went the other way,” said Bell, who began farming in 1982.

The average yield for peanut farms would run around 1 to 3 tons per acre. But just as Bell suspected, this year yields will be at record highs. USDA forecasts it at a record 3,714 pounds per acre, which would be 400 + pounds higher than last year.

Bell’s cotton crop is also in pretty good shape, with the Georgia farmer saying they may approach the yields of a few years ago when the harvest stood at 1,300 to 1,400 lbs an acre. That is pretty good considering the national average is about 800 pounds an acre.

His main problem though is the price of cotton. Since scaling a record high at $2.27 a pound in March 2011, cotton prices have shriveled and are now trading around $.75  a pound.  “We have (had) a price collapse,” he said.

In good years and bad, Bell said crop insurance is indispensable simply because the weather in his area is so unpredictable. “It can rain here and then five miles down the road, you get no rain,” he said. Bell noted that crop insurance is ”not a fix-all”, but it gives farmers a chance to come back after a bad year.

For him, removing crop insurance is unthinkable. Banks and other lending institutions would not extend any credit to farmers if there is no safety net like crop insurance to give them some assurance that they will get part of their money back.

“I think it would be catastrophic,” Bell declared. “He [the American farmer] would be out of business. We’ve got to have some form of insurance.”

Wyoming Farmers Can Depend on Crop Insurance

I have a unique perspective among American farm wives since I was born and raised as an Assyrian living in Teheran, Iran. I came to Wyoming as a student but fell in love with a farmer and have spent my life making a living from and raising my family on the land that we love.

Farming can be a risky business, which my husband and I have learned first hand since we began farming together in 1989. The risks that we face generally come from Mother Nature – drought, floods, pests or hail – so there’s only so much you can do to manage your risk. And that is why we have purchased crop insurance every year since we first bought our farm.

Crop insurance is no small expense for us or other Wyoming farmers, but it’s the best risk management tool in town. Last year, Wyoming farmers purchased over 2,500 crop insurance policies costing farmers more than $8 million out of their own back pockets. Nationally, farmers have spent more than $38 billion of their own money purchasing crop insurance policies since 2000.

Crop insurance not only helps you sleep better at night, but it’s a smart business decision, even though on most years we don’t collect a dime. But on those years when disaster strikes, farmers who haven’t purchased the protection of crop insurance could be facing a very gloomy future.

Last year, for example, we were hit with not one but four major hailstorms, which struck right when the plants were the most vulnerable. The leaves of area dry edible bean and sugarbeet plants were torn and tattered, which staunches their development.

In the past, before crop insurance became widely affordable, Wyoming farmers would have turned to the federal government for disaster assistance. But since roughly 90 percent of planted cropland was protected by crop insurance in 2013, farmers turned to their crop insurance agents, not the federal government, for help.

And unlike assistance from the federal government that can be agonizingly slow in arriving, crop insurance checks usually come within weeks or a month of completing the paperwork. That is one reason why it is so popular among farmers who have faced disaster, like us.

The passage of the 2014 Farm Bill placed crop insurance as the centerpiece of the new farm risk management strategy. Crop insurance is a public/private partnership whereby the federal government discounts a portion of a farmer’s crop insurance premium to ensure that it is widely purchased, and 19 participating crop insurance companies sell and service the claims.

Banks do not always require crop insurance, but they certainly feel better making loans to farmers who have purchased it. Why? Because bankers like to know that if disaster strikes, that some of the money they loaned will be coming back to them.

Crop insurance, like other public policies, has its detractors. Among them are those who say that farmers would rather collect a crop insurance check than raise a crop. That’s simply not true. With the high cost of farm inputs, including seed, fertilizer, fuel, labor and overhead, there is no way that you could collect enough insurance every year to cover your expenses, much less live on.

A farm simply could not float by collecting on crop insurance claims, and anyone who has any understanding of agriculture should know that.

Coming from a different nation, I also see a value of crop insurance that might not be readily apparent to some Americans. Farmers are a major economic force in rural America, pumping billions of dollars into the rural economy – purchasing fuel, equipment, storage building and paying farmhands – while producing the food, fiber and fuel this nation needs. Believe me, Americans really would not want to be reliant on other nations for our food security.

When we lose our food security, next will come our independence. And none of us want to lose that.

Klodette and Rick Stroh farm 1,800 acres near Powell, Wyo. Klodette is also a member of Women Involved in Farm Economics (WIFE).

This op-ed appeared in the Prairie Star on July 17, 2014.

2013 Year in Review: New Policy and Coverage

Crop insurance reached significant and historic milestones in 2013 — both in its formal recognition by Congress as the primary risk management tool for farmers and the volume of protection it offered — according to an article released in the May 2014 edition of Crop Insurance TODAY.

“Again in 2013, crop insurance helped farmers deal with the year’s weather and market risks,” noted authors Keith Collins and Harun Bulut. “Crop insurance was singled out by legislators during the development of the new Farm Bill as the primary program supporting production agriculture and was heralded as indispensable for successful farming today,” they added.

The ability of farmers to rely on the crop insurance policies they had purchased gave them confidence to plant yet another year of near record total production, the authors explain. “Farmers were able to plant 325 million acres in the spring of 2013, down slightly from a year earlier but four million [acres] above the previous five year average.”

The article points out that looking to the future, the public can rest assured that crop insurance will be in place to provide financial stability for the many small, family farms that comprise the core of U.S. farm production. “Crop insurance will ensure that when the repeated disasters of recent years strike again, as they most assuredly will, U.S. farmers will be able to bounce back to produce again at high levels the food, feed, fiber and energy crops which the U.S. and world populations have come to expect and depend [upon],” they said.


USDA Announces Details on New Crop Insurance Option

Details of a new risk management option– known as Whole Farm Revenue Protection – designed to offer flexible coverage options for specialty crop, organic and diversified crop producers were recently released by USDA.

“Crop insurance has been the linchpin of the farm safety net for years and continues to grow as the single most important factor in protecting producers of all sizes from the effects of unpredictable weather,” said USDA Secretary Tom Vilsack. “Providing farmers the option to insure their whole farm at once gives farmers more flexibility, promotes crop diversity, and helps support the production of healthy fruits and vegetables. More flexibility also empowers farmers and ranchers to make a broader range of decisions with their land, helping them succeed and strengthening our agriculture economy.”

Whole-Farm insurance allows farmers to insure all crops on their farm at once, rather than insuring commodity by commodity.   In the past, many fruit and vegetable crops have not had crop insurance programs designed for them —making it less attractive for a farmer that primarily planted a commodity crop like wheat or corn to use another part of his or her land for growing fruits and vegetables or other specialty crops.

The 2014 Farm Bill requires a whole-farm crop insurance policy option, and paves the way for the Risk Management Agency (RMA) to make it broadly available to specialty crop, organic, and diversified growers. The Federal Crop Insurance Corporation Board of Directors (FCIC Board) approved the Whole-Farm Revenue Protection pilot policy for RMA to offer it through the federal crop insurance program in 2015.

USDA has been strengthening crop insurance by providing more risk management options for farmers and ranchers. The policy offers coverage levels from 50 to 85 percent; recognizing farm diversification through qualification for the highest coverage levels along with premium rate discounts for multiple crop diversification.

This Drought Is Awful, But with the Right Tools, Farmers Will Bounce Back

In many parts of Oklahoma, it seems like wheat farmers just can’t catch a break.

A late spring freeze, combined with excessively dry or extreme drought conditions throughout the winter and into spring have left many of the state’s wheat fields badly stressed or a complete bust.  I’d say this is the worst I’ve ever seen, and I started farming in the mid 1950s.

With the wheat harvest set to begin in about a month, farmers are expected to harvest about 40 percent less wheat this year than they did in 2013.   The low soil moisture has left many farmers wondering what they are about to go through.

For the state’s farmers who purchased crop insurance – and nowadays that’s nearly all of them – that will be their only saving grace.   I don’t know of a farmer anywhere in Oklahoma who doesn’t buy crop insurance.  It’s just like buying diesel fuel today…you don’t farm without it.

With the passage of the new Farm Bill, largely gone are the days of the Federal government stepping after a calamity.  Today, when a farm crisis hits, farmers turn to their crop insurance policy, not the Federal government, for help.  The public-private partnership that is today’s crop insurance ensures that farmers get the financial help they need in weeks, not years.

As a crop insurance agent, I can tell you firsthand that crop insurance is no small expense for most of the state’s farmers, who spend north of $20,000 a year purchasing policies that they pray they will not need.

Farmers buy crop insurance today just like they buy homeowners insurance.  And when a good year turns into a bust, the only thing standing between some farmers and bankruptcy is their crop insurance policies.

Last year, Oklahoma farmers spent more than $93 million to purchase the peace of mind of crop insurance.  Crop insurance allows individual farmers to purchase the coverage they need, tailored to their farms, financial standing and tolerance to risk.

For farmers who rely on loans to operate – and that’s a lot of farmers – crop insurance has become a bank’s best friend.  In fact, the best collateral you can take to a bank when you are seeking a loan is your crop insurance policy.

Crop insurance is not only smart farm policy, but smart consumer policy as well.  American consumers have come to see our affordable, abundant food supply as a birthright.  In fact, most of us alive today have never seen wide-scale hunger in this country.  But much of what we take for granted could quickly disappear if we allow our farmers to fail and were forced to import our food, fiber and fuel.

While this might be the worst drought I’ve ever seen, I have to say that my faith in the resilience and work ethic of Oklahoma’s farmers is undying, and I know that with their crop insurance policies as a backstop, our farmers will bounce back from this.

Max Claybaker is a farmer and a crop insurance insurance agent from Blackwell, Oklahoma.  This op-ed appeared in The Oklahoman on June 1, 2014.

California Drought Worsens as Rainy Season Ends, Growers Fret

“California’s reservoirs obviously will not be significantly replenished by a melting snowpack this spring and summer,” concluded the year-end snow survey by the California Department of Water Resources.

The mountain snowpack is critical to the state’s water needs and provides roughly one-third of the water for California’s farms and cities. “Today’s final snow survey of the year found more bare ground than snow as California faces another long, hot summer after a near-record dry winter,” the report said.

The May 1 survey found the state’s snowpack at a mere 18 percent of average for the date. “With most of the wet season behind us, it is highly unlikely late-season storms will significantly dampen the effects of the three-year drought on parched farms or communities…” the report noted.

According to the May 13, 2014 U.S. Drought Monitor the entire state of California is experiencing severe drought conditions. More than three-quarters of the state is suffering a state of “extreme drought,” a seventeen percent increase from three months earlier this year, with nearly 25 percent of the state experiencing “exceptional” drought, a fifteen percent increase from three months earlier.

The ongoing drought is hitting the state’s farmers and growers hard. California is the nation’s top agricultural state, with farming generating approximately $37.5 billion a year, growing roughly half of the nation’s fruits, nuts and vegetables.

California farmers purchased more than 25,000 crop insurance policies in 2013, protecting more than 5 million acres. Those policies protect crops ranging from almonds, apples and avacadoes to sugarbeets, Valenicia oranges and walnuts. To purchase those policies, California farmers paid more than $95 million out of their pockets and protected more than $6 billion in liability.

CROP INSURANCE IN ACTION: Tim Totheroh, Wellington, Illinois

Although Tim Totheroh says that his last name is “Pennsylvania Dutch,” he’s 100 percent Illinois farm boy, having spent his entire life on a farm near Wellington, Illinois.

Totheroh, who farms 850 acres of corn and soybeans, is also a crop insurance adjuster, which gave him unique insight into the historic drought of 2012. Totheroh says that in all of his years of farming, he’s never seen anything quite like last summer. “I entered a corn field and walked half a mile, turned and walked a half a mile in the other direction,” he said. “And I didn’t see a single ear of corn. Not one single ear.”

Totheroh said that sometimes he’d walk through a field and happen upon a small portion of corn that fared a little better. “Every here and there, you’d find a part of the field that got lucky and had a shower or two more than the rest, and you’d have 180 bushels in that one little spot. But then the rest of the field was just awful,” he said.

Read Tim Totheroh’s story here.

U.S. Agriculture at Historic, Pivotal Point

When the 2014 Farm Bill became law, it marked a pivotal moment in the history of U.S. farm policy. The new Farm Bill eliminated direct payments and replaced them with Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) that farmers must choose between. The Farm Bill also stressed the importance of Federal Crop Insurance by strengthening it and expanding it.

ARC compliments crop insurance by providing an additional 10 percent revenue coverage band at the farm or county level whereas PLC provides protection from consecutive years of lower prices by providing a much higher target price than in years past. Congress has made it clear that ad-hoc disaster bills are a thing of the past and the components of the Farm Bill, in conjunction with a strong crop insurance program, provide a valuable safety net for the producers in times of natural disasters.

Crop insurance ensures farmers have a risk management plan in mind early in the year. In addition to that plan, they must put their money toward purchasing a crop insurance policy. This is no small amount of money for farmers, who in 2013 spent roughly $4.5 billion on crop insurance premiums. Much has been said about the government’s subsidy for crop insurance, but similar to flood insurance, crop insurance wouldn’t be possible without the government’s contribution. Producers get a bill, not a check, at the end of the year for their share of the premium on crop insurance.

Crop insurance has been a work in progress since 1938. In 2013, 90 percent of planted cropland was protected by crop insurance. And when disaster struck – as it did in the historic drought of 2012 – farmers turned to their crop insurance policy, not their Member of Congress, for help.

Crop insurance has been widely praised by farmers, the financial community, and farm leaders from every major commodity organization. But before the ink was even dry after the President signed the bill, crop insurance was already under attack by those who don’t understand the complexities and importance of it to farmers with all sizes of farming operations.

For that crowd, crop insurance has become a new favorite target, and they will stop at nothing in an attempt to both discredit this praiseworthy public-private partnership and the farmers who purchase it. The first assault – on the premium discount – is aimed at trying to increase how much farmers pay for their insurance premiums. We must be very careful to not change the parameters of a system that is fragile and like a house of cards can fall apart if the premium pool is changed.

The critics of crop insurance claim that it benefits the large producer at the expense of the small producer, when in reality every farmer, with the same APH and same coverage plan, receives the same premium subsidy per acre, regardless of the size of their operation. The key words are “per acre.” A farmer with 10 times more farmland will receive 10 times the subsidy but he also incurs 10 times the risk and 10 times the premium he pays.

Means testing raises the premium costs for those affected and will cause reduced participation. If crop insurance opponents are successful, insurance would become more costly per acre to larger growers and force them out of purchasing crop insurance. The effectiveness of crop insurance depends on total enrolled acres.

Just as with any kind of insurance product, crop insurance needs a large, diverse risk pool to remain affordable for all. Anything that removes acres from the program, particularly lower risk acres, erodes the stability of the program and ultimately harms the remaining participants by driving up their costs.

These same growers have the most acres in the program and provide a critical balance in the risk pool to smaller, higher risk producers. This would result in a weaker, more unstable crop insurance system and higher premiums for smaller, socially disadvantaged, or newer farmers who also need this critical risk management tool.

Crop insurance is not a social program, it is a risk management program designed to attract high participation and protect as many farms and acres as possible from disaster and thereby enable steady and stable production of food, biofuel and fiber for the U.S. economy.

As we move forward and critics of agriculture line up to attack, we must ensure that crop insurance remains affordable for growers, available to all regardless of size, and that the public-private partnership remains viable so that it can service those who buy insurance.

Bing Von Bergen is the past president of the National Association of Wheat Growers, and lives in Moccasin, Montana. This op-ed appeared in the Helena Independent-Record on May 1, 2014.

Crop Insurance: From Little Known Law to Cornerstone of Farm Policy

Although federal crop insurance has been around since 1938, for more than half a century it was largely unknown and underused. Because of this, natural disaster management was mostly done after the fact, in the form of large, costly disasters bills. These bills were not only slow in delivering much needed help to farmers, but also fell full on the laps of taxpayers to fund.

Repeated weather disasters in the 1980s, accompanied by an equally painful farm debt crisis, was causing hardship in rural America and anxiety in Congress about how these expenses would be covered and who would foot the bill.

Concerned that the federal government’s responses to natural disasters had typically been “generally reactive and ad hoc,” House Agriculture Committee Chairman E. “Kika” de la Garza asked the General Accounting Office (GAO) for guidance on how to better manage expensive, recurring disasters.

The resulting 1989 GAO examination and report would help pave the way for a new approach to agricultural policy – one that would ultimately protect 90 percent of planted cropland in 2013 and would help farmers manage back-to-back years of natural disasters in 2011 and 2012.

Specifically, the GAO studied USDA’s three main disaster programs – ad hoc direct disaster payments, disaster emergency loans and crop insurance – and compared their effectiveness using eight different criteria. And while none of the programs satisfied all the criteria laid out, the GAO report pointed out “crop insurance is a more equitable and efficient way to provide disaster assistance” than both direct disaster payments and emergency loans.

The report noted “crop insurance treats disaster victims more equitably” and also “provides farmers disaster assistance more efficiently because farmers generally have more incentive to reduce risk under the program than they do under loan and direct payment programs.”

And so, crop insurance began its journey of improving and evolving as the centerpiece for U.S. farm policy. That included more private-sector involvement, making the program actuarially sound, and encouraging participation.

Even as late as the early 1990s, crop insurance participation rates hovered in the 30 percent range and Congress was often spending considerably more each year in disaster relief expenditures than it was on crop insurance.

The Federal Crop Insurance Reform Act of 1994 restructured things to boost farmer participation, increase the private sector’s role and create the USDA’s Risk Management Agency (RMA). Other important reforms to crop insurance can also be found in the “Blueprint for Financial Soundness,” published in the Federal Register in 1994. Many of these recommendations have been implemented since its publication.

They include:

• Determination of more accurate yields;

• Better tracking of ineligible producers;

• Premium rate adjustments;

• Improved underwriting;

• Better program compliance;

• Introduction of new products to improve participation;

• Increased risk bearing by AIPs;

• Management actions to correct if changes not working.

By 1998, more than 180 million acres of farmland were insured under the program, representing a three-fold increase over 1988. But coverage levels on a per acre basis were still low, such that Congress had not been able to break the habit of yearly ad hoc disaster bills.

Then, in May of 2000, Congress approved the breakthrough piece of legislation: the Agricultural Risk Protection Act (ARPA). The provisions of ARPA made it easier for farmers to access different types of insurance products including revenue insurance and protection based on historical yields.

By the summer of 2012, more than 280 million acres were enrolled in crop insurance – just in time for historic drought that would have otherwise crippled rural America.

As a result of these continuous improvements to modern-day insurance program, there have been no calls for ad hoc disaster bailouts – even after the widespread floods of 2011 and Dust Bowl-like conditions of 2012.

In 2013, nearly 296 million acres were protected by federal crop insurance, which represented nearly $124 billion in liabilities, and offered policies covering 128 different crops. Farmers have shown their support for crop insurance with their pocketbooks, spending more than $38 billion out of their own back pockets purchasing premiums since 2000.

Just days after the 2014 Farm Bill was signed into law by President Obama, RMA Administrator Brandon Willis commented about the evolution of crop insurance and why it has become the centerpiece of risk management in farm policy. “There is one simple reason why crop insurance has lasted for over 75 years while other programs have come and gone. It’s because it makes sense … for consumers, for taxpayers and for farmers,” he said.

CROP INSURANCE IN ACTION: Andrew Bowman, Oneida, Illinois

Andrew Bowman is a fifth-generation farmer from Oneida, Illinois, in the western part of the state. Bowman, who is in the family business with his father, farms 1,100 acres of corn and soybeans, although they are also looking into new crops. “But corn and soybeans are definitely our bread and butter,” says Bowman.

The drought of 2012 was especially hard on the state of Illinois, with farmers there seeing some of the highest losses in the country. But there were a few counties in the western part of the state that escaped the worst of it. “In 2012, when everyone in Illinois was suffering under an incredible drought, we were in a garden spot,” said Bowman, who noted that while their yields were slightly down, the high commodity prices made up for it.

Bowman says that the worst year his farm has experienced in recent history was in 2005, which saw a very regionalized, yet extreme drought in western Illinois, with the rest of the Corn Belt being relatively unaffected. It was the first year since the drought of 1988 when farmers saw Spider Mites in their soybeans. Bowman notes that the low yields combined with the low prices that year was a double whammy for farmers in the drought area.

Read Andrew’s entire story here.

North Dakota Farmers Know First Hand Why Crop Insurance is Money Well Spent

I’ve spent the last 17 years of my life farming in North Dakota and I’ve loved every minute of it. But it can be a very risky business. There are many steps that farmers can take to manage risk, like growing a wide variety of crops, rotating crops and growing cover crops to prevent erosion. And we do all of that.

But let’s face it, when we get an early August freeze, or a spring flood, or a drought, just about all of the best farming practices in the world will fail to protect us. And that is why I, like most farmers across the state, always purchase crop insurance. In fact, last year North Dakota farmers spent more than $38 million out of their own pockets purchasing crop insurance policies.

It’s just a smart business decision. There has never been a year when we didn’t have crop insurance. Sure, it costs a lot of money, and that money could be spent elsewhere. But that would be a penny wise and pound foolish, since going through a natural disaster can cost you the farm.

This isn’t a hypothetical argument. In fact, last spring during planting, we had 18 inches of rain in 21 days. In between downpours we planted what we could, but by the time the rain was finished, we couldn’t get back into the fields to finish planting. In other words, we started off our growing season with only half a crop. Thankfully, our crop insurance policy covered that kind of loss. We certainly didn’t make a dime from the policy, but the indemnity check helped cover the rent on the land and the lost fertilizer that had been laid on a field that couldn’t be planted.

The passage of the new Farm Bill this year marks a pivotal stage in U.S. farm policy. Gone are the days of direct payments and large disaster bills aimed at helping farmers after natural disasters. In its place is crop insurance, which has been embraced by farmers, farm groups and lenders alike. Farmers who don’t purchase crop insurance need to realize that the federal government is no longer going to come along with an ad hoc disaster bill and bail us out.

The centerpiece of the new risk management strategy on the farm is crop insurance, which is sold and serviced by private insurance companies and partially discounted by the federal government. The government’s role – helping to ensure that crop insurance is affordable to farmers – has remade the face of crop insurance from a policy that for many years was largely unknown and underused to a risk management tool that last year protected 90 percent of planted cropland.

Crop insurance is not only popular with farmers, but with bankers as well. In fact, most farmers need to show proof of a crop insurance policy when they meet with bankers to secure production loans. The banks realize what a risky loan they are making, and are more likely to take that risk if they have the relative protection of crop insurance.

Crop insurance is good public policy for farmers, bankers, and taxpayers alike. In the past, extensive droughts like what much of the nation experienced in 2012 would have triggered an enormous ad hoc disaster bill in Congress. But since the vast majority of the cropland was protected by crop insurance during the worst drought to hit the nation since the Dust Bowl days, farmers sought assistance from their crop insurance policies, not the federal government.

Crop insurance, like all public policies, has its detractors, however. And before the ink is even dry on the new Farm Bill, these groups are plotting their assault on crop insurance. They have their sights set on the premium discount, the very thing that makes crop insurance affordable to farmers. Without the discount, farmers like me couldn’t afford to purchase crop insurance. And if a large-scale natural disaster hits and farms across the country fail, where is our food going to come from? I don’t think most Americans would want to be in a position of relying on other nations for our food in addition to our fuel.

Crop insurance is good public policy because it helps underpin farmers, who are enormous consumers and literally drive the rural economy. Americans spend about10 percent of their incomes on food, among the lowest of any country. With the proper risk management tools in hand for farmers, the promise of a safe and affordable food supply will not only be a legacy for our children, but for the world’s growing population as well.

Diane McDonald, from Inkster, North Dakota, is the national media chairperson for Women Involved in Farm Economics (WIFE).

This op-ed appeared in Agri-Pulse on April 8, 2014.

2014 Farm Bill Changes to Crop Insurance Detailed in Newly Released “Crop Insurance: Just the Facts”

Since the new 2014 Farm Bill was signed into law, questions have arisen about how this new legislation affects crop insurance and the farmers who rely on it. Detailed answers to questions, ranging from major and minor policy changes, the introduction of new products including SCO and STAX and the link between the premium discount and conservation are all detailed in the newly released version of Crop Insurance: Just the Facts.

“The 2014 Farm Bill is 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,” noted Tom Zacharias, president of National Crop Insurance Services.

Crop Insurance: Just the Facts, a popular online resource that provides the A to Z overview of Federal crop insurance resides here, on the Crop Insurance Keeps America Growing website page “About Crop Insurance” where it is continuously updated.

“This resource has proved invaluable to farmers, students and policy experts who need to better understand the nuts and bolts of crop insurance,” said Zacharias.

In addition to addressing the various aspects of the new Farm Bill, the online series covers important topics such as how crop insurance benefits the public, economics of the industry, risk management in global terms, how crop insurance benefits producers and many other important issues.

Zacharias noted that crop insurance discussions are replete with exaggerations and misrepresentations about this important risk management tool. “Crop Insurance: Just the Facts, provides the details in an easy to read, reasoned and balanced perspective,” he said.

Farm Bill Proves Crop Insurance Popularity At All-Time High, Says Industry Leader

Weber,Tim FinalPassage of the 2014 Farm Bill, which cemented crop insurance as the cornerstone of farm policy, proved that crop insurance’s popularity among farmers has reached an all-time high, said Tim Weber, co-chairman of the American Association of Crop Insurers and National Crop Insurance Services.

“If I had to sum up the story of the crop insurance industry in one simple statement, I think it would have to be ‘We’ve made a lot progress but our best years remain ahead of us,’” Weber said today during his opening remarks at the annual conference sponsored by National Crop Insurance Services and the American Association of Crop Insurers in February.

Since its inception in 1938, crop insurance has steadily evolved and today protects 90 percent of planted cropland in America. The industry won widespread praise in agricultural circles and on Capitol Hill for helping rural America quickly rebound after the devastating droughts of 2012.

“There can be no question that when it comes to managing the risks posed by Mother Nature or volatile world markets, federal crop insurance has no equal,” he said, adding “it has reached its pinnacle, all while overall federal spending on farm programs has trended down.”

Weber explained that in order to continue to build on past successes, the industry should rely on the same three keys that helped its rise to prominence: Affordability, availability and viability.

In order for crop insurance to remain viable as farmers’ primary risk management tool, the crop insurance infrastructure must remain financially strong, he said. Additionally, customer service, program integrity, and widespread participation will be paramount. And unless crop insurance remains affordable and available to all, Weber believes the entire system could collapse.

Crop insurers faced attempts to reduce program participation during the Farm Bill, but proposals to cap crop insurance benefits and force some farmers to pay higher premiums failed.

“We applaud our congressional leaders for overwhelmingly passing a Farm Bill that strengthens, not weakens, our commitment to crop insurance even in the face of federal spending pressure,” Weber concluded. “I truly believe that 10 years down the road, when we look back at the 2014 Farm Bill, it will be elevated to one of the major legislative initiatives that established landmark developments for crop insurance and production agriculture.”

CROP INSURANCE IN ACTION: Tom March, Bethlehem, Connecticut

In 1915, Thomas and Rose Marchukaitis, two Lithuanian immigrants who had been in the country for only a few years, purchased a farm in Bethlehem, Connecticut, which consisted of 114 acres and supported 15 cows and two horses. There, they raised their nine children and worked hard for their American dream.

Three generations later, their grandson, Tom March, is still farming that parcel of land, which has grown to 150 acres, along with his brother-in-law and their two sons. “We’re a diversified farm, because you have to be,” said March, whose farm consists of about 75 acres of sweet corn, 30 acres of apples, 4 acres of peaches, along with some strawberries and blueberries.

March took over the farm from his father in 1976 and has been at it ever since. Most farmers are quick to recount their “really bad year,” but Mother Nature has been unusually cruel to the March Farms with a long string of natural disasters.

Read Tom March’s entire story here.

Farm Bill Reduces the Deficit, Boosts Crop Insurance

What started off two and half years ago as an attempt to craft a Farm Bill with bold deficit reductions in mind became the new North star of U.S. agriculture policy last week when President Obama signed The Agriculture Act of 2014 into law at Michigan State University.

The law marks a dramatic turning point in American farm policy, with the sun setting of the 18-year old system direct payments – which cost more than $4.5 billion annually – accompanied by a renewed emphasis and commitment to crop insurance.

“This is not your father’s Farm Bill,” said Senate Agriculture Committee Chairman Debbie Stabenow. “From now on, farmers will protect themselves from disaster with risk management programs like crop insurance,” she said. “Instead of getting a government check even in good times, farmers will pay an insurance bill every year and will only receive support from that insurance in years when they take a loss.”

The bill won immediate praise from national farm groups as soon as it emerged from the conference committee in late January. National Association of Wheat Growers President Bing Von Bergen said the bill “ strengthens crop insurance and allows growers the necessary safety net to keep a secure, affordable and healthy food supply.

The sorghum industry issued a statement underscoring their strong support for the bill and applauded the $24 billion it would save taxpayers. “This legislation meets [National Sorghum Producer’s] goals in providing farmers with a number of risk management tools, strengthening and protecting crop insurance, and including strong conservation and energy titles,” said Chairman J.B. Stewart.

The crop insurance industry applauded the years of hard work by both chambers and noted that it was looking forward to working with the Risk Management Agency on implementation of the law. “With one bold stroke of the pen, the President charted a new course for U.S. farm policy, sun-setting the policies of yesterday and putting greater emphasis on farmers’ use of crop insurance,” the industry noted in a nationally-released written statement.

Agriculture Secretary Tom Vilsack noted the bill “will allow the proud men and women who feed millions around the world to invest confidently in the future,” adding, “this legislation is important to the entire nation.”

2013 A Landmark Year for Farmers, Crop Insurance Industry

On the heels of the 2012 drought, farmers turned to crop insurance in record numbers to protect their crops in 2013, according to data released recently at the convention hosted by the National Crop Insurance Services (NCIS) and American Association of Crop Insurers

The industry noted that 2013 had been a landmark year for both farmers and the crop insurance industry as a whole. The year clearly showed that farmers who purchase crop insurance can bounce back with a vengeance – producing bumper wheat and corn crops – without the need for costly disaster bills. Some of the more notable statistics for the year include:

  • Farmers spent $4.5 billion to purchase insurance policies. That is up from $4.1 billion in 2012 and brings farmers’ total investment in crop insurance to $38 billion since 2000;
  • 52,000 more policies were sold in 2013 than 2012;
  • Crop insurance protected $123 billion of potential liabilities last year, as compared to $117 billion in 2012 and $114 billion in 2011;
  • A record 296 million acres, or 90 percent of insurable cropland, was covered by crop insurance in 2013. U.S. farmers protected 86 percent of eligible acres in 2012 and 84 percent of acres in 2011;
  • To date, 423,000 policies have been indemnified in 2013, a sharp fall from the record of 495,000 in 2012. As a result, taxpayer costs dropped considerably.

“The fact that farmers were able to bounce back with a vengeance from the worst drought in decades and plant bumper crops, all without a call for disaster assistance to Congress underscores the value farmers place on crop insurance and why they are buying it up and protecting a record number of acres,” said Tom Zacharias, president of NCIS.

“Crop insurance is the risk management tool of choice for farmers, ranchers, farm leaders, bankers and members of Congress for one reason: it works,” he said.

2014: A New Year, A Fresh Outlook…Spotlight on Crop Insurance

When Nebraska and Kansas farmers looked out their kitchen windows in the late summer of 2012, they saw withering fields that harkened back to the Dust Bowl years. The majority of both states were experiencing extreme or exceptional drought, a condition that would not change for most farmers through harvest in the High Plains.

And while many farmers cringed as they watched their hard work and investment wilt in the fields, the vast majority of them did not worry that this drought would put their farms on the auction block. That is because 86 percent of planted cropland was protected by crop insurance policies.

In the not-too-distant past, such agricultural calamities would have triggered widespread fear on the farms and in rural towns where bankruptcies and economic devastation was barreling down the tracks like an out of control train. With nowhere to turn, rural America had to plead with their congressional delegations for help, which would come in the form of an ad hoc disaster bill.

This is not a hypothetical scenario. Since 1989, the tab for 42 of these emergency disaster bills for agriculture cost U.S. taxpayers $70 billion. The financial aid from this legislation, while appreciated, often took years to reach the devastated farmers. After a string of these costly bills, Congress moved to incentivize farmers to purchase crop insurance. From that point on, when disaster struck, farmers would turn to their crop insurance agents, not taxpayers, for recovery.

Fast forward to the 2012 crop year. Nebraska and Kansas farmers together had spent over half a billion of their own dollars purchasing crop insurance premiums just in case disaster struck. And when it did, crop insurance indemnities were in the hands of the farmers who suffered losses in weeks, not months or years.

Nothing is quite as loud as success. And the decision to make crop insurance the primary risk management tool has been an unequivocal success for farmers, taxpayers and rural America.

For farmers, who will wave farewell to direct payments and other commodity support programs when this farm bill passes, it allows them to purchase a risk management policy tailored specifically for their needs and risk tolerance. Taxpayers benefit because they are no longer on the hook for the whole tab when disaster strikes.

In fact, since 2000, farmers have spent $38 billion nationally purchasing crop insurance policies, ensuring that they had “skin” in the risk management game. As Senate Agriculture Chairwoman Debbie Stabenow pointed out, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.”

As for the health of rural America, when farmers catch a cold, the rural economy catches pneumonia. That is because farmers are enormous consumers, investing huge amounts of capital directly into the communities where they live, purchasing fuel, machinery, feed, fertilizer and other durable goods, as well as hiring workers.

Anyone questioning the effectiveness of crop insurance need only look at how well farmers bounced back from the worst drought in decades. The 2013 growing season was one of the best ever, producing the largest corn crop the nation has ever seen. And all of this while total federal spending on farm programs has trended down.

Like other highly successful policies, crop insurance has its detractors. The very same groups who during the 2012 drought were saying that farmers were “praying for drought, not praying for rain,” are now calling for means testing.

Means testing would force many large or highly successful farmers – who also tend to be the least risky – out of the risk pool. And when the lower risk policyholders leave the risk pool, those left, the smaller, younger farmers who also tend to be the riskiest, will see their premiums go up. In short, means testing is the new poison pill being used by those wishing to kill any form of farm program or assistance to rural America.

While the popularity of crop insurance continues to grow, with 90 percent of planted cropland having the protection of crop insurance in 2013, this year is different. This summer when farmers looked over their crops and saw bountiful fields full of golden grains, they knew they would be selling an abundant harvest and not collecting an indemnity check, which brought a smile to many faces. The plentiful harvest and the satisfaction of feeding others is, after all, what farming is all about.

Tom ZachariasTom Zacharias, president of National Crop Insurance Services and is located in Overland Park, Kan.

This op-ed appeared in Midwest Producer Magazine on December 26, 2013.

Ten Considerations: The Role of Crop Insurance in the Farm Safety Net

More than a half-century ago, acclaimed historian Murray Benedict noted, “There are indications … that crop insurance is gradually emerging as one of the more settled features of American farm policy.” That prediction, perhaps a bit premature at the time, has certainly been borne out, as over the last decade crop insurance has grown from a little-known and underused program into the primary risk management tool for farmers and ranchers that protected 90 percent of planted cropland in 2013.

A newly released article in the third-quarter issue of Choices magazine offers a “within the industry perspective” on the status of crop insurance and key issues it faces as farmers’ quintessential risk management tool. Authors Tom Zacharias, National Crop Insurance Services president, and Keith Collins, former USDA chief economist note, “U.S. farm policy appears to be transitioning from direct income support to a risk-management-based system depending upon both public and private sector participation.” This rise, however, has triggered “significant criticism for its level of subsidization and other aspects,” they point out. “Such a tension, especially during the development of a new farm bill, seems natural and appropriate.”

Pointing out that there are many “key issues that remain in play,” the authors offer 10 considerations that the public and policy makers should be aware of when assessing the efficacy and future path of the crop insurance system. These considerations are intended to highlight and address the primary considerations from both the public and private sector in terms of the program’s current status, future regulation and information needs. These considerations are:

1. Is there a public interest in a resilient, financially sustainable and competitive industry that produces the nation’s food and is subject to natural disasters and other shocks?

2. Should there be taxpayer (government) support for a farm safety net?

3. What is the willingness and ability to spend on the farm safety net?

4. Should the safety net be ex ante or ex post?

5. Is the safety net income support or risk management?

6. Is current risk sharing optimal?

7. What is the role of area versus individual plans?

8. Should the safety net be incentivized?

9. Can the current incentive structure be improved?

10. Is crop insurance distortionary?

“It will be interesting to observe and participate in the direction of agricultural policy in light of the expected increasing prominence of crop insurance,” noted Zacharias and Collins, adding that the sway of the political pendulum will determine short-run directional shifts in policy. “Yet, as we outlined above, key issues remain in play, and particularly the level and use of taxpayer funds in determining a proper balance between the roles of the public and private sector in agricultural risk management,” they concluded.

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.



Crop Insurance Is Critical to Michigan’s Specialty Crop Industry

The affordability and bounty of the American food system did not occur by happenstance. It took wise policies supported by dedicated officials, hardworking farmers willing to risk their fortunes and a first-rate transportation and distribution system.

Many of the policies that underpin food production chiefly support the major food and feed commodities like corn, wheat and soybeans. But for those of us raising specialty crops – those fruits, vegetables and nuts that are an important part of our diet – there’s only one major risk management tool available: crop insurance.

Crop insurance is a public-private partnership whereby farmers purchase their own policies to cover the risks they choose to pay for. Michigan’s farmers face a huge amount of risk on a daily basis, including early frosts, drought, floods and market fluctuations. That’s why in 2012, farmers in this state paid $63 million to purchase policies to cover those risks.

Before crop insurance was widely available, natural disasters like the drought of 2012 would have triggered a massive, expensive ad hoc disaster bill in Congress that would have cost taxpayers dearly. In fact, 42 emergency disaster bills in agriculture have cost taxpayers $70 billion since 1989, according to the Congressional Research Service.

Last year, after a late spring freeze that destroyed the tree fruit crop followed by the worst drought in decades, there wasn’t a single large-scale outcry for help from Congress. The reason is that 86 percent of planted cropland was protected by crop insurance. Farmers put skin in the game and helped take some of the burden off of the taxpayers.

When disaster strikes a farmer, he needs help now. While every farmer appreciated the disaster bills of the past, they took a very long time to arrive – sometimes up to two years. For a farmer who has lost everything, two years might as well be 200 years.

Crop insurance is not without its critics. In fact, there are some in Washington, D.C. who, during last summer’s drought, claimed that farmers were praying for drought, not rain, implying they’d rather collect a crop insurance check than a harvest. To set the record straight, crop insurance is not cheap, and the nation’s farmers spent more than $4 billion in 2012 buying it. Most of them will spend that money without collecting an indemnity. In fact, in 2011, about two-thirds of the crop insurance policies purchased never collected an indemnity.

Michigan grows a wide variety of specialty crops each year, leading the nation in the production of several specialty crops, including dry beans, red tart cherries, blueberries, Niagara grapes and squash, making the state second only to California in the diversity of its crops.

In some ways, that abundance is a miracle, in other ways it is not. If it weren’t for hard work, investment, infrastructure and crop insurance to manage some of the major risks, Michigan’s horn of plenty might not be so full.

Steve Umlor is the president of Centennial Fruit in Conklin, Michigan. This op-ed appeared in the Lansing State Journal on May 12, 2013.


Former USDA Chief Economist Details Growing Popularity of Crop Insurance

Crop insurance continues to grow in popularity, with 90 percent of planted cropland being protected by crop insurance in 2013, former USDA Chief Economist Keith Collins told Agri-Pulse radio host Ken Root during a recent interview on “Open Mic.”

Root asked Collins why he had decided to return to working on crop insurance after his retirement from USDA. Collins noted that he had worked as Chairman of the Board of Federal Crop Insurance Corporation for seven years while at USDA. “I started in 2000 when we had a couple of hundred million acres insured and I watched that program grow dramatically,” he said. “I looked out at the landscape and it seemed apparent that crop insurance was going to be the most important and most powerful program to help the financial security of American agriculture,” he said.

Root pointed out that it took a long time for the crop insurance program to reach its full potential because Congress continually undercut its success with disaster programs. “That is absolutely true,” said Collins. “We had standing disaster programs in the 1970s, ad hoc disaster programs from the 1930s,” he said. Collins noted that when farmers were protected by those other programs, plus standing disaster bills, plus ad hoc disaster bills, “there wasn’t a big need for crop insurance for a lot of farmers.”

Root pointed out that today, farmers and farm organizations are saying that if they could only get one thing from the federal government, it would be crop insurance. “The government supports critical sectors for which there is public interest, and agriculture is one of those sectors,” said Collins. “And within agriculture, what is the primary safety net for famers,” he asked? “It’s crop insurance.”

Root asked if it was possible to get crop insurance coverage for the country without government involvement. Collins pointed out that “Congress has historically said that we’re willing to put more money in to get farmers to buy crop insurance so that we can cover the acreage that needs to be covered in the U.S. to avoid ad hoc disaster assistance and financial disruption.”

CROP INSURANCE IN ACTION: Bing Von Bergen, Moccasin, Montana

Bing Von Bergen is not only the president of the National Association of Wheat Growers, he’s a third-generation Montana wheat farmer who has seen all kinds of weather over the years. “Last year, parts of the nation had the worst drought since the ‘Dirty 30s,” he said, recalling the name given the Dust Bowl years.

Von Bergen farms about 4,700 acres near Moccasin, Montana, close to the heart of the state. Growing up in agriculture, he knows hard times can be just around the corner.

But a lot has changed since the Dust Bowl years, including the tools farmers have to manage risk. At the top of that list is crop insurance. “Crop insurance is our principal safety net,” he said. “And farmers are fighting to preserve it.”

Von Bergen says that in the 34 years that he’s been farming, crop insurance has gone from being a program that few could afford or would consider purchasing to being the most important risk management tool available to farmers today. “It has taken 30 years for crop insurance to develop from a program that offered little protection into a program with real protection,” he said.

Read Bing Von Bergen’s story here.

Crop Insurance Helps NC Farmers Weather the Ups and Downs

From rags to riches. From feast to famine. From pauper to prince. We’ve all heard the phrases to describe going from one extreme condition to the opposite. But farmers in North Carolina understand this concept first hand. Unfortunately.

In 2011, just about every imaginable weather disaster hit the state. It started with frigid cold, moved on to a sweltering heat wave, interspersed with a historic tornado outbreak and then hurricane flooding.

In 2012, started out with much of the state experiencing a severe drought, but thankfully Mother Nature eventually dealt a kinder hand to farmers in the Tar Heel state than most of the rest of the county, who experienced the worst drought since the Dust Bowl.

This unending rollercoaster of weather extremes underscores the reason why year after year, farmers across the country happily purchase crop insurance to help mitigate the unknowns that are never far from hand. In the past, disasters like these would have triggered large disaster relief bills, much like what was passed after Hurricane Sandy.

Those bills were costly – 42 such bills have cost taxpayers roughly $70 billion since 1989 – and slow in delivery, and dealt with disasters after they happened. Crop insurance policies, by comparison, force farmers to think about their risk management plans before planting. Policies are purchased at the beginning season, and if disaster strikes, it takes a month or less, not a year, for assistance to arrive.

The passage of the Farm Bill in both the House and Senate will mark a new chapter in U.S. farm policy. The days of direct payments to farmers will be gone as well as many of the large commodity support programs. Left in their place is crop insurance, a public-private partnership whereby farmers purchase individual policies that are tailored to their specific needs, and are sold, serviced and delivered by participating companies. As Senate Agriculture Chairwoman Debbie Stabenow pointed out, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.”

The key to the success of crop insurance is its affordability, thanks to a premium discount from the federal government, combined with its ubiquity, meaning that any farmer who wishes to purchase a policy must be sold one at a price set by the federal government, regardless of that farmer’s risk profile. And unlike the past, taxpayers aren’t stuck footing the bill alone.

Farmers wishing to be protected by crop insurance must purchase it with money out of their own pockets. Since 2000, farmers have spent $38 billion doing just that, protecting crops ranging from corn and soybeans to apples, pears, blueberries and tomatoes.

The reason why crop insurance is so successful is that it is widely purchased, with roughly 90 percent of all planted cropland protected in 2013. And since so many farmers had bountiful harvests in 2013, more than half a million of the farmers who purchased crop insurance never collected an indemnity.

But some crop insurance critics are calling for a major policy change, called means testing. Means testing is a bad idea because it would force many large or highly successful farmers to pay more for their federal crop insurance coverage, which could reduce the amount of insurance they purchase, leaving many acres with inadequate coverage. Fewer acres covered mean more expensive premiums for everyone else, including small and mid-size farmers.

Why? Because if the biggest farmers, who tend to be the least risky, are driven out, the pool of insureds shrinks and thus the risk for those remaining gets larger. For example, if a company selling car insurance excludes the best drivers from their pool of insureds, the only drivers left would be those who are the riskiest, and thus the costliest to insure. This fact would drive up the premiums for all remaining drivers, or in this case, farmers.

Facing extreme conditions is part of farming that will always be with us. But for the sake of the rural economy and the many rural Americans who depend on it, keeping crop insurance robust and widely available is the best thing we can do for both farmers and consumers alike.

William “Midge” Tankard farms corn, wheat, soybeans, sorghum and tobacco and lives in Bath, NC. This op-ed appeared in the Fayetteville Observer on December 4, 2013.

Farmer Testimonials: “Peace of Mind” from Purchasing Crop Insurance

Beginning farmer Cody Bornholdt returned to the family farm in 2011 in Inman, Kansas, after finishing college to find himself in the middle of what would be a multi-year drought in the southern plains. Bornholdt said that given the amount of risk that farmers face to put a crop in the ground, crop insurance is an invaluable risk management tool. “As a beginning farmer, it is essential for me to cover my investment as I take on a big risk with a lot of capital investment into these crops,” he said.

Bornholdt noted that his decision to purchase crop insurance yearly gives him peace of mind, even in the worst of times. “It’s nice to know and it makes it easy to sleep at night when you are in a year like this year when it’s a catastrophe or a drought,” he said. “Not knowing if you’re going to have a crop in the fall … knowing that you have your crops covered and you’ll be able to make ends meet at the end of the year and get that note paid off is a huge relief,” he said.

Lindsborg, Kansas, farmer Tom Toll explained that given increased expenses, the constant volatility of the market, the uncertainty in the world and the chance that his entire investment in crops and livestock could disappear overnight, purchasing crop insurance was the only thing that let him sleep at night.

Toll noted that those who choose to not purchase crop insurance are taking an enormous risk that could cost them everything. “One hail storm, an early frost, one of those things, could put your farm in jeopardy this year,” he said.

Pala, California, citrus producer Raymond Lodge said that farmers purchase crop insurance for the same reason car owners and home owners purchase insurance: the cost of complete loss is too high. “One cannot eliminate totally the risk of life but having crop insurance has been a godsend for us,” he said.

CROP INSURANCE IN ACTION: Tim Totheroh, Wellington, Illinois

Although Tim Totheroh says that his last name is “Pennsylvania Dutch,” he’s 100 percent Illinois farm boy, having spent his entire life on a farm near Wellington, Illinois.

Totheroh, who farms 850 acres of corn and soybeans, is also a crop insurance adjuster, which gave him unique insight into the historic drought of 2012. Totheroh says that in all of his years of farming, he’s never seen anything quite like last summer. “I entered a corn field and walked half a mile, turned and walked a half a mile in the other direction,” he said. “And I didn’t see a single ear of corn. Not one single ear.”

Totheroh said that sometimes he’d walk through a field and happen upon a small portion of corn that fared a little better. “Every here and there, you’d find a part of the field that got lucky and had a shower or two more than the rest, and you’d have 180 bushels in that one little spot. But then the rest of the field was just awful,” he said.

Totheroh said that thankfully, not all farmers suffered such extreme losses. “Some of the new hybrid varieties helped farmers a bit because the plants were more efficient at using what little moisture fell,” he said. But for most farmers, who are accustomed to getting about 180 bushels of corn per acre, the losses were substantial. “Last year, I walked a lot of fields that had 80 to 100 bushels per acre,” he said. “We just had half a corn crop around here, basically.”

Totheroh noted that losses of that magnitude are hard to handle, particularly for the younger and new farmers, who are just getting started and are thus more vulnerable. “There aren’t a lot of new farmers, unfortunately, but the ones who were coming into the business last year were shocked by how bad it was,” he said. “Even if they had spent their whole lives growing up on a farm, they had never experienced anything like that,” he said.

“Thankfully, most of those young farmers had purchased crop insurance, which allowed them to put their worries on the back burner a little and focus on what they could do to make the most of the hand they had been dealt,” he said. Totheroh noted that while crop insurance premiums are not cheap, it is often money well spent. “Most farmers around here purchase crop insurance, and most rarely collect on their policies,” he added.

Totheroh explained that while Illinois generally has consistently good corn crops, there is an area not far from his farm that has had three really bad years in a row. “Without crop insurance, those guys would be out of business,” he said. And that is due to no fault of their own, just three bad years where Mother Nature had thrown them a curve ball,” he said.

Totheroh noted that this year, despite a cold wet start, the corn crop looks much better and farmers are feeling far more optimistic, with some forecasts predicting the largest corn crop in U.S. history. “The young farmers are very upbeat too,” he noted. “They weathered a bad year, saw how well their insurance worked, and they know that if they purchase crop insurance, they have a backstop if the floor drops out from under them,” he said. “They’re not going to necessarily lose everything just because of a bad year.”

Crop Insurance: The New Face of Farm Policy

From walking on soil baked into near-concrete during the worst drought in over 50 years in 2012, to dredging across flooded fields this soggy spring, farmers are wondering when an “average” year will occur. And that’s just weather. As a 26 year-old farmer, I’m starting to wonder what “average” or “normal” even means.

In my relatively short career, corn prices have been below $2.00 and over $8.00 per bushel, land prices have nearly tripled since I purchased my first field, proposed regulations point to increasing costs without offsetting revenues, and farm policy has evolved from focusing on price supports and direct payments to farmers towards a more market-oriented risk management tool called crop insurance, a public-private partnership whereby farmers purchase policies and only receive a payment if there is a documented loss.

In light of our new “normal” characterized by volatility — in weather, markets, and regulation —farmers would struggle without access to crop insurance. The Farm Bill, which will guide American agriculture for the next five years, is currently being debated in Congress. At its centerpiece is crop insurance, a vital component that is an economic and social development tool for rural America and the new face of farm policy.

The average American farmer is 58, the oldest at any time in our history. Assuming most of us retire at 65, that puts us seven years away from real problems if we don’t start transitioning to the next generation. Crop insurance helps young farmers because it serves as a “stop-loss” collateral source to back credit—a crucial transition tool given the high capital costs of farming. In this sense, crop insurance is a bridge to the future for America’s farmers, as well as a first-rate risk management tool.

Crop insurance is also a working capital tool. But why farmers and not other business sectors? Non farmers do not negotiate with the whims of Mother Nature, cater to consumers in foreign and domestic markets, AND compete with neighbors two miles up the road, farmers two states over and farmers outside our borders to produce a non-differentiated commodity.

Farmers in other countries need to stockpile a large share of their profits into cash reserves planning for a bad year – be it weather, price or market related – so that they have sufficient liquidity when disaster strikes. Because American farmers can purchase crop insurance, we don’t need enormous cash reserves and we can instead reinvest our profits. I have paid down debt faster and invested in newer and more sustainable technologies because I had crop insurance to cover big, volatile losses. Farmers put profits back into their communities and do so more quickly because of crop insurance.

Crop insurance saves taxpayers money. In the past, when disasters struck — and they struck often — the federal government was called upon. Recovery was paid for completely by taxpayers. Last year, when farmers here in Illinois were decimated by drought, we had crop insurance policies and didn’t need a disaster bill to help us plant this year.

Crop insurance is a vast improvement over the price support system and direct payments of the past. It puts emphasis on farmers having “skin in the game” to protect themselves from the risks they deem most likely to occur. It is not uncommon to hear a farmer complain about the money he has spent over the years purchasing crop insurance. It’s a major expense for us, but one we’re happy to pay for because it gives us something this new era rarely allows: peace of mind.

Crop insurance allows market forces to work; we can fail or succeed. Crop insurance is only a buffer, not a guarantee; it is based on historical yields and current prices. It protects “good” farmers — those that apply new technologies, manage risk, and preserve soil and resources — from circumstances beyond their control, like last year’s drought, this year’s flood and the volatile market we now accept as the new “normal.” In contrast, it allows “bad” farmers to fail because, over time, they will tend to have lower yields. The free market still works, just with a buffer that ensures long-term stability in an unstable environment.

Is crop insurance perfect? No. In my perfect world, I want the final 50 years of my farming career forged in a landscape with a stable dollar and interest rate, vastly reduced government regulations, increased free trade and an educated, appreciative consumer. But today, in the real world, crop insurance is the best risk management tool we have. It helps farmers survive the worst of times, reduces costs to taxpayers and allows market forces to work. It’s the new face of farm policy.

Andrew Bowman is a fifth generation farmer, Certified Crop Adviser, and full lines insurance agent, including crop insurance, from Oneida, Ilinois. This op-ed appeared in the Farm Bureau News Service on August 2, 2013.

New NCIS Video: Crop Insurance By The Numbers

As we continue pressing forward in the 2013 Farm Bill debate, the success of the crop insurance program and the benefit that it has had to the American taxpayer is the subject of a recently released NCIS video.

“Over the last decade, overall taxpayer spending on farm policy as a whole has steadily declined,” notes Tom Zacharias, president of National Crop Insurance Services. “That’s no accident,” he adds, explaining that commodity prices have strengthened and the country began shifting to an insurance system that reduced the need for traditional subsides and limited taxpayer exposure.

From 1998 to 2012, insured acreage has increased by 100 million acres. “It has become such a success, that most farmers agreed in 2012 to get rid of direct payments during the Farm Bill debate,” Zacharias notes.

But in addition to eliminating the need for direct payments, the public-private partnership of crop insurance has also eliminated the need for costly ad hoc disaster bills. “Since 1989, 42 pieces of legislation, totaling $70 billion in unbudgeted dollars were passed to help farmers following a disaster, he explains. “Those days are over.”

With crop insurance in place, farmers and private insurance companies now share the risk, ensuring that the entire burden doesn’t fall solely on the laps of taxpayers. Each farmer must pay the premium for their individual policy, and when disaster occurs, the billions paid in premiums by farmers help offset the cost of the insurance. “Farmers have paid $30 billion of their own money on crop insurance protection to buy this coverage,” Zacharias notes. In addition to the premiums paid by farmers, the government has collected more than $4 billion in underwriting gains from 2001-2010, which helped offset losses in the bad years as well.

Zacharias points out that crop insurers have stood alone in offering up budget reductions in recent years, totaling $12 billion. Unfortunately, some in Congress are angling for more, says Zacharias. “The additional cuts they are proposing would result in lower crop insurance participation, ironically shifting risk away from farmers and crop insurance companies right back to taxpayers,” he said.

“As we go forward in the next farm Bill, we would say ‘Do No Harm” to crop insurance.”

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.

Crop Insurance Is Critical for this Nation’s Fresh Produce Industry

Sometimes, timing is everything. And for fresh fruits and vegetables, there has been a recent convergence of trends and preferences that bode well for the industry.

The first is the federal government’s decision to ensure that more fresh fruits and vegetables are consumed as part of the school meal programs, which will expose children who would otherwise have limited access to these important foods. The other trend is the locavore – or eating local – movement, that underscores the importance of buying local and eating fresh produce.

But to ensure that fresh fruits and vegetables are available for a population that is increasingly asking for them, we need to have wise public policies in place that help the farmers who grow these important foods to manage the many risks they face brought on by Mother Nature.

And for specialty crop growers – farmers who grow this nation’s fresh fruits and vegetables, nuts and berries – the quintessential risk management tool is crop insurance.

Many of the public policies that underpin food production – typically known as farm programs – chiefly support the major food and feed commodities like corn, wheat and soybeans. Those crops and the programs that support them are critical and have been a major factor behind why the United States is a global player in food production.

But for those raising specialty crops, crop insurance is the only public policy tool available to deal with extreme weather patterns. Crop insurance is a public-private partnership whereby farmers purchase their own policies to cover the risks they choose to pay for. And farmers are quite happy to purchase it, having spent $4.1 billion out of their own pockets in 2012.

There has been a lot of media attention about the historic drought of 2012, and deservedly so. But that drought was preceded by a very devastating late spring freeze here in New England that nearly wiped out a year’s worth of income for many of the growers who raise this nation’s fresh apples.

Without the protection of crop insurance, these growers might have been completely knocked out of business from such a devastating freeze. And the ones who hadn’t purchased crop insurance might have been. But the majority of the region’s farmers who purchase crop insurance every year, were able to bounce back from the freeze, continue to care for their orchards and prepare for the 2013 crop.

But having just one bad year would have actually been good news for me. Six out the last seven years, I’ve had hail damage on my apple crop. Last year, I lost 90 percent of my apple crop on that late frost and then the other ten percent was demolished by hail. For my peaches, another big crop on my farm, I’ve also had major losses 6 out of the last 7 years. Needless to say, if I hadn’t purchased crop insurance, I would have had many lean years in a row.

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, or more than a year in some cases, for those funds to finally reach the hands of the growers who had lost everything. And for a grower whose entire apple crop has just been frozen, a year can be about 11 months too long.

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 and vegetables.

Tom March grows fruits and vegetables on his farm, which has been in the family since 1915, in Bethlehem, Connecticut.

This op-ed appeared in the Hartford Courant on July 29, 2013.

New Video Highlights Success of Crop Insurance in Managing Disaster

America’s Farmers Bounce Back from Record Drought of 2012

On the heels of the worst drought in decades, Americas farmers — and the rural economies they support — bounced back and are expecting a record corn crop this year, due in part to the fact that 86 percent of planted cropland was protected by crop insurance last year.

“America’s breadbasket rebounded after a punishing drought and farmers have shown that with the right risk management tools in place, they are among the most resilient and productive workers in the nation,” said Tom Zacharias, president of National Crop Insurance Services (NCIS).

A new NCIS video offers an oversight of risk management in agriculture and the various risks farmers face, including those from Mother Nature, market forces and rising input costs. “America used to handle agricultural risk through unbudgeted, after the fact ad hoc disaster bills,” noted Zacharias, adding that this was all taxpayer funded, very costly, and slow to deliver.

Finally, America turned to a before the fact, affordable and more accountable way to handle agriculture disasters: Crop insurance. In 2001, crop insurance began its rise in prominence as farmers’ most useful, and popular risk management tool, all while overall federal agriculture spending was trending down. “The idea here was to reduce taxpayer burden and put the system on a planned, sustained basis, noted Zacharias.

The drought of 2012 put that model to the test. “Crop insurance was credited with helping to keep the rural economy afloat,” he added, noting a recent study that credited crop insurance with saving 22,000 jobs and $2.2 billion in four Midwest states alone after the 2012 drought. “This was an enormous benefit,” he added, noting that as we saw the drought sweep through the nation last summer, “indemnity payments were paid back to the farmers within ten to thirty days, and money went back into the rural communities.”

“An important part from the aspect of farm policy is that there was no call for an ad hoc disaster bill,” he added. “And taxpayers were not on the hook for the whole thing.”

Farmers Belong on a Tractor, Not Under the Bus

By Mark Gerdes

One of the beauties of life in our great democracy is that spirited debate about important public policies is not only expected, it’s encouraged. One of the intrinsic rules of these discussions, if they are to be productive and fair, is that the policy itself should be scrutinized from every angle without demonizing or castigating the various groups affected by these policies.

In other words, we should be able to discuss education policy without demonizing teachers or impugning the integrity of students. Likewise, we should be able to debate defense policy without bashing soldiers or peace activists. Unfortunately, when it comes to discussions about farm policy — in particular the decision by many farmers to purchase crop insurance — critics have chosen to throw farmers under the bus time and time again instead of debating the policies on their merits.

Last year, we had one of the worst droughts our nation has seen in decades. And while America’s farm families watched their crops shrivel in the fields, some critics said “farmers are praying for drought, not praying for rain.” Another critic said that farmers who purchased crop insurance last summer “were laughing all the way to the bank.” In short, they argued farmers make more money from collecting a crop insurance check than harvesting a crop, and in fact they would prefer to watch their crops wither or livestock die and collect a crop insurance check than to take the fruits of their labors to market.

As a farmer, I must point out that statements about the integrity and motivation of farmers and their decision to purchase crop insurance demonstrates both incredibly poor math skills as well as a complete lack of understanding about the core values and beliefs of America’s farmers.

Take, for example, the charge that farmers hope their crops will fail so that they can collect a crop insurance check. Critics are quick to point out that more than $17 billion will be paid out to farmers and ranchers who purchased crop insurance for their losses in 2012. The implication here is that the $17 billion is some sort of windfall being bestowed upon farmers by the federal government.

But the math tells a very different story. Insurance policies must first be purchased, and then policy holders must absorb the policy’s deductible after suffering a verifiable loss, before they can collect a single dime. In 2012, farmers paid $4.1 billion out of their own pockets to purchase crop insurance policies. Then, farmers shouldered $12.7 billion…

Mark Gerdes, a fourth-generation farmer, raises corn, soybeans and cattle on 2,800 acres in Aredale, Iowa. This op-ed appeared in the Ames Tribune on June 7, 2013.

NCIS Responds to Unfair Bloomberg Series on Agri-Talk

Mike Adams, radio host of Agri-Talk, recently interviewed National Crop Insurance Services President Tom Zacharias regarding a recent Bloomberg News series that contained numerous factual errors and obvious bias, claiming for instance, that the government “pays farmers to buy [crop insurance] coverage.”

“Farmers are not paid to buy crop insurance,” noted Zacharias. “Farmers pay for crop insurance.” Zacharias explained that crop insurance was a new kind of risk management tool which required farmers to purchase policies with their own money in order to enjoy the relative protection that crop insurance provides.

Zacharias noted that farmers “spent about $4 billion of their own money in 2012 for premium, and last year when we had the catastrophic drought through the Midwest, before those deductibles kicked in, farmers absorbed just under $13 billion in uninsured losses.”

He explained that contrary to farm safety net programs of the past, there is no subsidy in the traditional sense of the word to farmers who purchase crop insurance. “Farmer premiums are discounted which makes crop insurance affordable,” he said, adding that farmers only receive an indemnity payment if they receive a verifiable loss.

Zacharias also pointed out that Bloomberg News led its readers to believe that the costs from last year’s historic drought had become the norm, “not putting it into perspective of what we were going through – the drought of 2012,” he said.

Zacharias told Adams that contrary to the claims in the Bloomberg News series, crop insurance companies are never guaranteed a profit; in fact they have suffered losses in a number of years. “Companies lost money last year, so I don’t think that they view this as a guaranteed profit.”

Zacharias explained that the lengthy series also failed to mention that crop insurance has taken $12 billion in funding reductions since the 2008 Farm Bill. “So there’s a laundry list of issues here” that Bloomberg failed to report correctly or completely omitted, he said.

“Unfounded, sensationalist headlines are uncalled for, it does not serve the public interest, nor the Bloomberg readership.”

Congressional Leaders, Academics, Government Leaders, Farm Leaders and Farmers Underscore Value of Crop Insurance

Over the last several years as the future face of U.S. farm policy has been debated, crop insurance has emerged as the best and most cost-effective risk management tool for farmers, ranchers and taxpayers. The debate over crop insurance, however, has not been confined to the halls of Congress. It has happened on the airwaves, in the newspapers, in academia and on tractors in the fields.

As a public-private partnership, crop insurance is a new hybrid risk management tool whereby farmers purchase policies that are partially discounted by the federal government. As Senate Agriculture Chairwoman Debbie Stabenow pointed out during the recent Farm Bill debate, when a farmer signs up for crop insurance, “the farmer gets a bill, not a check.” And many, many others have voiced their opinions too:

  • “Crop insurance payments made a huge difference for many farmers that suffered drought losses. U.S. crop insurance is easy and a comprehensive marketing tool that protects against yield losses and price declines. The program works.” — William Edwards, an agricultural economist at Iowa State University, Bloomberg News, January 15, 2013
  • “Over the last 15 years, crop insurance is where we have been trying to help move farmers in terms of taking advantage of risk management tools for their crops. It is still the central focus of where we think farmers ought to be able to have easy access to insure their crops and insure some type of revenue out of it. It makes the most sense to me and always has.” — Congressman John Boehner, Agri-Pulse interview, March 4, 2013
  • “After two years without rain, Kansas producers are dealing with a severe drought. It is critical that risk management tools like crop insurance are in place to make certain the United States remains the most food-secure country in the world. Crop insurance is an example of a public-private partnership that uses taxpayers’ dollars wisely and benefits farmers and consumers alike.” — Kansas Senator Jerry Moran, Topeka Capital-Journal, March 26, 2013
  • “But farmers aren’t the only group that has come to love crop insurance. Bankers love it too. That’s because when farmers approach bankers for production loans, bankers regard a crop insurance policy as a form of collateral. Additionally, bankers know that a farmer who has paid his own money for a crop insurance policy is a farmer who has risk management in mind.” — Bill Bridgeforth, a farmer from Tanner, Alabama, in the Athens News Courier, April 27, 2013.
  • “The federal government provides crop insurance subsidies to farmers in part to achieve high crop insurance participation and coverage levels, which are intended, according to USDA economists, to reduce the need for ad hoc disaster assistance payments to help farmers recover from natural disasters which can be costly.” — GAO Report on Crop Insurance, March, 2013
  • “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 Risk Management Agency (RMA) worked together in one of the worst droughts in the history of this nation.” — USDA Under Secretary Michael Scuse, February, 2013
  • “But there are those who are making uninformed and uneducated criticisms about crop insurance – and America’s farmers – in the midst of this national tragedy. According to the Washington-based Environmental Working Group, farmers have been “praying for drought, not rain.” Really? I’ve seen a lot of looks on the faces of my fellow farmers this past summer, as their crops and have withered despite their best efforts and their hopes for a great harvest have been dashed. — Mark Drewes, a farmer from Custar Ohio, in the Bowling Green Sentinel Tribune on September 18, 2012.

CROP INSURANCE IN ACTION: Tom & Mike Audet, Orwell, Vermont

Ledge Haven Farm might be one of those Vermont farms that would be most likely to end up on a postcard. The place is just about everything you would think of when you put the words Vermont and agriculture together. The 550-acre farm, owned by brothers Tom and Mike Audet, is a family-run dairy and maple sugaring operation located near the idyllic shores of Lake Champlain, just down the road from historic Mount Independence in Orwell, Vermont.

The Audet brothers have been in business together since 1972, having been raised on a farm just down the road that is still operated by yet another Audet brother. “We have been making pure Vermont Maple Syrup for over 40 years right here on our farm,” says Tom Audet. “It is an Audet family tradition with three generations of our family pitching in to make the final product,” he says.

The brothers manage their risk using one of the gold medal standard rules of modern agriculture: Diversify. The brothers milk 270 dairy cows, attend to another 280 young stock and breeding stock, manage 450 acres of corn, hay and alfalfa, as well as tapping hundreds of maple trees on the 50 wooded acres of the property. “Diversifying is our first line of defense in managing risk, and crop insurance is the second,” said Audet.

Read Tom and Mike Audet’s story here.

Crop Insurance Keeps Rural America Healthy and the Country Fed

Hearings are already starting in Washington on the next Farm Bill, and major decisions will soon be made about which tools best manage the many risks faced by farmers. I count myself as one of the many farmers who will stand together and urge Congress to “do no harm” to crop insurance.

Crop insurance has become the frontline risk management tool for farmers in virtually every corner of this great nation. Crop insurance is a public private partnership whereby individual farmers, like myself, put some “skin in the game,” by purchasing crop insurance policies to manage the many risks we face in this line of work. It does not guarantee profits, nor does it ensure farmers cannot fail. It protects farmers against circumstances beyond their control but does not prevent poorly managed farms from going under. In essence, it allows market forces to work.

Farmers gladly purchase crop insurance, and last year spent $4.1 billion out of their own pockets to do so. And how well is crop insurance working? Last year, most of the Midwest sizzled under a heat wave and drought that cut harvests in half for some farmers and virtually destroyed entire crops for others. When all was said and done, it was the worst drought this nation had seen in decades.

In the past, such widespread destruction in the Food Belt would have ignited a massive call for disaster assistance from Washington. Forty-two such emergency disaster bills in agriculture cost taxpayers $70 billion since 1989, according to the Congressional Research Service. Curiously, after last year’s drought, there wasn’t a single widespread call for disaster assistance for cropland.

And the simple reason why is that 86 percent of planted cropland was protected last year by crop insurance. But crop insurance isn’t just a risk management tool for farmers and a disaster management tool for the federal government; it’s also a rural investment engine for small-town America.

In fact, according to a new study by economists in Lincoln, Nebraska, indemnity payments from farmers who purchased crop insurance generated off-farm economic impact of nearly $2.2 billion across Iowa, Nebraska, South Dakota and Wyoming. That figure includes $721 million of labor income that preserved 20,900 off-farm jobs in the region.

The economists noted “the income from crop insurance payments can play a key role in stabilizing local economies both in the year of the drought and in subsequent years. In agricultural states such as Iowa, Nebraska, South Dakota and Wyoming, crop insurance can also play a key role in stabilizing the statewide economies.”

Here in Illinois where the losses were steep in 2012, nearly $3 billion in indemnity payments flowed back into the state to cover the losses from the drought. And because farmers need to buy seed, equipment, energy, fertilizer and services, they are constantly reinvesting back into their communities. On good years, that money comes from their harvests. On bad years, that money comes from crop insurance.

You see, crop insurance is not only a risk management tool, but also a working capital insurance tool. In short, unlike farmers in other countries, American farmers aren’t forced to bank all of their money on the good years to weather the bad. Instead they can reinvest in their farm and by extension in their communities year after year, generating wealth for other families and much-needed rural development.

For many farmers who are highly leveraged, purchasing a crop insurance policy is nearly a requisite to obtaining a production loan from a bank. And for farmers who are well established and not in need of production loans, the ability to purchase a crop insurance policy allows farmers to pay off other loans faster, generating much-needed economic activity in other sectors. I would not be paying down my debt as quickly if I were required to hold cash reserves in the absence of crop insurance to account for Mother Nature’s whims or volatile futures markets.

There are few things you can count on in farming, and that’s why we are all hoping for a new, five-year Farm Bill. And at its centerpiece, let’s hope there is a strong, vibrant crop insurance policy, a policy that helps keep the ag sector moving when Mother Nature throws us a curve ball; a policy that provides food security to the nation, and the world.

Andrew Bowman is a fifth-generation farmer from Oneida, Illinois.

This op-ed appeared in the Peoria Star Journal on May 18, 2013.

Crop Insurance Costs Americans Two Cents Per Meal, According to CBO Data

Americans will spend ONLY two cents per meal on crop insurance – the risk management tool most used by farmers to protect themselves from the whims of Mother Nature – through FY 2023, according to CBO’s latest 10-year budget projections. That figure is up from one cent per meal, which was the average cost for the period of FY 2000 to 2011.

Those estimates might come as a surprise to many Americans, who are watching ongoing Congressional action surrounding the five-year, $100 billion per year Farm Bill. But most of that money actually goes towards spending on domestic food programs, with roughly 15 percent directed to farm programs and crop insurance.

The cost per meal figure is derived from CBO’s projected crop insurance program outlays, the Census Bureau’s projections of total U.S. population, the Department of Commerce’s data on consumption spending on food, and the assumption that consumers eat three meals a day.

Total government spending on crop insurance is projected at roughly $8.5 billion per year, with farmers paying $4 billion out of their own pockets to purchase their policies. With the elimination of direct payments in the Farm Bill currently being discussed, crop insurance will be the primary risk management tool available to many farmers, and the only risk management tool available to some farmers, like specialty crop growers.

But crop insurance faces some hurdles in the upcoming House and Senate debate, which could leave it strained or incapable of handling upcoming farm crises. “The U.S. experienced the worst drought in decades last year and we didn’t have a crisis in agriculture,” said Keith Collins, former USDA chief economist. ““Do we want to risk unraveling that?”

Because most farmers carry crop insurance, despite back-to-back years of poor harvest due to weather anomalies, the U.S. farm sector remained vibrant and was one of the driving forces that pulled the U.S. out of the prolonged, deep recession.

Learn more about crop insurance here.

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 they 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.

Jimmy Miller’s blueberry farm, which is well south of the Mason-Dixon line in Interlachen, Florida, in an exception. 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 blueberries developed by the University of Florida that tolerate the summer heat and mild winters.

Miller explains that one of the main issues for blueberry growers in Florida is that the plants require at least 200 hours every winter where the temperature dips below 45. If that doesn’t happen, fruit production can tumble quickly.

But the primary risk is a freeze or hail. “We never had a real loss until this year,” said Miller. “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.

The next day, the Miller clan was hopeful that the crop would be okay, “but we also knew that it could be catastrophic,” he said. Thankfully for Miller, he always purchases crop insurance, so if the blueberries didn’t look better in a few weeks, he knew he’d be filing his first-ever claim.

Read Jimmy Miller’s story.

Good Farming Practices Aren’t Always Enough

It is hard to talk about the state of Alabama without mentioning agriculture. Alabama boasts more than 48,000 farms, covering roughly 28 percent of the state.

But being a farmer in the Deep South – given our weather patterns – is like owning an unpredictable dog. One day it loves you, the next day, it bites you.

In farming, when that dog decides to bite you, it comes in the form of powerful thunderstorms, hurricanes or droughts. That’s why for every year of the last thirty-five years that I’ve farmed, I purchase crop insurance. In fact, I can’t even conceive of farming without crop insurance.

In the past, when large-scale natural disasters hit farmers, Congress was immediately pressured to pass expensive, ad hoc disaster bills that were completely paid for by the public. Such disaster bills, while appreciated by farmers, took up to a year or more to arrive. But farmers need money in hand quickly after disaster strikes, because they must start planning, and purchasing inputs, for the next season.

That’s the beauty of crop insurance. First of all, taxpayers aren’t stuck footing the whole bill if and when disaster strikes. Crop insurance is purchased by each individual farmer, tailored specifically to the crops grown, the land the farm sits on and the farmer’s tolerance for risk.

Crop insurance isn’t cheap by any stretch of the imagination. The policies I purchase cost several hundred thousand dollars a year. But I consider that just a cost of production, because if disaster strikes, I can expect my crop insurance indemnity in about a month or less, not the years it takes for federal help to arrive. Those months saved can mean the difference between success and failure in farming.

Farmers across the country spent $4.1 billion purchasing crop insurance policies in 2012. The policies purchased insured 271 million acres, or roughly 86 percent of all planted cropland in the U.S.

But farmers aren’t the only group that has come to love crop insurance. Bankers love it too. That’s because when farmers approach bankers for production loans, bankers regard a crop insurance policy as a form of collateral. Additionally, bankers know that a farmer who has paid his own money for a crop insurance policy is a farmer who has risk management in mind.

Of course like any other public policy, crop insurance has its enemies. Some of those groups used last year’s historic drought to not only criticize the availability of crop insurance, but to also attack the character of farmers like me, who purchase it. One group said that farmers were “praying for drought, not rain,” implying that farmers would get rich from their crop insurance policies.

I was one of those farmers who suffered from the drought last year and let me set the record straight: We do everything we can to have the highest production possible every year. We select a good variety of seed, purchase the best fertilizer and do everything we can to protect the crop. If there ever were any farmers trying to live off of crop insurance, they’re long gone. The cost of production is just too high.

But if America is going to continue to enjoy its plentiful and affordable food supply, the country must also focus on helping the next generation of farmers to gain their footing and learn the trade. To that end, I am a founding member and Chairman of the National Black Growers Council, which serves as a network for black men and women who are involved in agriculture. Our mission is to improve the viability and profitability of the black row crop farmers, and to develop black talent for the next generation of farmers.

To that next generation of farmers who is seeking my advice, one of the first things I’d tell them is to make sure crop insurance is a line item in your annual budget. Because all of the best farming practices in the world aren’t going to stop Mother Nature from raining on your parade, at least every now and then.

Bill Bridgeforth farms corn, cotton, soybeans and canola and lives in Tanner, Alabama.

This op-ed appeared in the Athens News Courier, on April 26, 2013.

CROP INSURANCE IN ACTION: Keith Miller, Great Bend, Kansas

Wheat CropGreat Bend, Kansas, farmer Keith Miller looks at the big picture. Crop insurance, he declared, is not just an agricultural safety net for the farming community. It is an economic imperative.

“I do feel that the general public doesn’t understand that 95 percent of all farmers are trying to do the right thing,” he said. “If we didn’t have crop insurance in some form, the cost of food would go up considerably.”

“Crop insurance was a significant part of our operation,” he said, “even before the drought.”

Kansas, the biggest wheat-producing state in the country, has been ravaged by the worst drought to hit the Great Plains in a quarter century. All 105 counties experienced drought conditions, according to Gov. Sam Brownback as he appealed to residents to conserve water. Loss from the long-running arid condition beginning in 2011 was estimated at more than $2 billion.

Crop insurance has allowed the farmer to survive and get to the next planting season. Said Miller, “For the most part every farmer tries his best to raise a crop so we can feed the hungry people around the U.S. and the world.”

A third-generation farmer, Miller began with 400 acres of wheat farms in the 1970s. Today, he is farming land equivalent to acreage being farmed for a dozen of his father’s neighbors, the survival and expansion made possible by his hardy farming smarts, the grace of the Lord, and his insurance coverage.

“When I started, a tractor was $20,000 new and today they are $300,000 plus,” he said. “Today I am farming land that 12 of my dad’s neighbors were farming.”

His insurance coverage was able to cushion the blow, so to speak, when he experienced a “100 percent loss” from a major late freeze on his wheat crops.

“It froze when the wheat was pollinating and killed the plants,” he explained. He added that he was also covered for hail “and other disasters.”

The Farm Bill is extremely important to preserve a constant supply of safe food for the economy of the U.S., Miller said, echoing what almost every farmer acknowledges as a personal creed.

“If we were to lose the Farm Bill, the family farmer would start going by the wayside because they would not be able to stand all of the risks incurred in the farming industry,” he warned. “It would be the beginning of the end as we know [it for] the family farmers.”

Senate Passes Five-Year Farm Bill, Begins New Era for U.S. Farm Policy

The Senate overwhelmingly passed the 2013 Farm Bill with a very strong of vote of 66 to 27, with 93 senators voting. The passage of the bill represents an historic pivot in U.S. farm policy, away from the era of direct payments to large numbers of commodity farmers to crop insurance, which must be individually purchased by each farmer and offers financial support – in the form of a crop insurance indemnity payment – only when they incur a verifiable loss, including weather damages or commodity price fluctuations.

The issue is now in the House of Representatives where the debate continues. Both bills pare overall Farm Bill spending, with the Senate version projecting $24 billion in savings over ten years and the House version projecting $40 billion in savings over the same period of time. Eighty percent of Farm Bill expenditures will go to food assistance programs and roughly 20 percent goes to farm programs, including conservation, renewable energy, commodity programs and crop insurance.

The dramatic shift in farm policy was best encapsulated by a quote made by Senate Agriculture Committee Chairman Debbie Stabenow (D-MI) during the debate. “Crop insurance is insurance. The farmer gets a bill, not a check,” she said. The Senate bill would cut $24 billion from farm spending over 10 years, and includes a provision tying the ability of a farmer to purchase crop insurance to conservation compliance requirements.

Prior to the bill’s passage, USDA Acting Deputy Secretary Michael Scuse pointed out that the performance of crop insurance during last year’s drought was clear proof of the program’s value. “We provided insurance for about $116 billion worth of crops last year,” he said. Scuse added, “We’ve paid about $17 billion in indemnities. I think that shows this program worked and it worked as it was intended. We got the money out to the producers and it’s going to help an awful lot of people stay in business that, had we not had a really good crop insurance, may not have been farming this year.”

Despite strong opposition from Chairman Stabenow, the bill contains an amendment sponsored by Senators Dick Durbin, (D-Il) and Tom Coburn (R-OK) which would reduce the premium discount for farmers in higher income brackets or those from larger or more successful farms. Chairman Stabenow said the amendment would raise premium costs by 40 percent for the affected farmers and would reduce the amount of acreage that must comply with federal conservation standards.

Neither the conservation compliance measure nor the premium subsidy limit is in the bill passed by the House Agriculture Committee.