(INDIAN WELLS, CALIF.) Farmer leaders from across the country yesterday called crop insurance their “most important risk management tool” and said it is essential to keep agriculture strong and bring young farmers into an aging business.
Curt Friesen, a member of the Nebraska Corn Board, said his son-in-law, who is currently a university teacher, is coming back to his fourth-generation farm. And given the capital requirements and risk associated with farming today, he said, a strong crop insurance policy will be the key to his son-in-law’s ability to succeed.
“He sees a future in agriculture,” Friesen noted. “I’m excited to bring him back but a little scared because I know times aren’t always going to be this good – crop insurance is going to be critical down the road for me to help him get started.”
Crop insurance helps highly leveraged beginning farmers qualify for financing, he told the group at the 2013 crop insurance industry conference. Mark Nichols, a cotton grower from Oklahoma agreed, adding it is important for growers of all ages.
“In our area, whether it’s a guy 25 years old trying to get into farming, or a guy like me in his 50s, it’s not a choice whether we have federal crop insurance,” Nichols said. “Our banks look at it as our main risk management tool.”
Bill Bridgeforth, chairman of the National Black Growers Council, knows first-hand why banks look to insurance as a way to protect a farmer’s investment. A fifth-generation farmer from Alabama, Bridgeforth told the group that he “has used crop insurance every year since 1980.”
“We’ve had some pretty good years, and we’ve had some years that, if it hadn’t been for crop insurance, we probably wouldn’t be in business today,” he explained.
“Friesen applauded crop insurers for the speed in which claims were processed following the historic 2012 drought. But crop insurance isn’t just about obtaining financing or surviving disaster, it is also a useful marketing tool, he noted.
“It allows me to market my crop better,” Friesen told the group. “I use it to set a [price] floor. It makes me a lot more comfortable using Chicago Board of Trade futures to market grain. I can market early, I can adjust my positions and I know I’ll have a backstop with crop insurance as my base.”
When asked during a question and answer session about critics attacking crop insurance, panelists were quick to defend the public-private partnership, noting its cost effectiveness and the lack of expensive taxpayer-funded ad hoc disaster legislation following the 2012 drought.
Bing Von Bergen, a Montana wheat farmer and director of the National Association of Wheat Growers, also explained that in good years the government makes underwriting gains on crop insurance because farmers pay premiums.
He criticized legislative attempts to reduce crop insurance participation by attaching arbitrary benefit caps, income limits and duplicative conservation compliance mandates to the program. Such attempts, he said, could wind up increasing premium rates for all farmers.