Everyone Wins with a Strong Crop Insurance Policy

It’s no great surprise when a well-funded libertarian think tank full of Washington policy wonks pushes for the belief that the federal government should not be involved in crop insurance and other key farm policies.

But those of us in farming know better. All we need to do is to remember the recent floods, droughts and other natural disasters that, without some government help, would’ve left our towns, our jobs, our economy and our lives in ruin.

The simple fact is that everyone wins with a strong crop insurance policy. It’s good for farmers because we’re not faced with losing our farms every time a natural disaster occurs. But it’s also good for consumers, particularly those in urban areas who rely on others to grow all of their food.

And it’s good for developing countries, which depend on us to help feed their growing numbers. Crop insurance ensures stability and reliability in the food supply.

But don’t take my word for the effectiveness of crop insurance. It happens that just last week, the Senate Agriculture Committee called together farm groups, elected officials and bankers in Kansas to ask what agriculture policies they thought were the most important.

During testimony, the governor of Kansas, every farm leader and two local bankers all agreed that crop insurance is the most important farm policy now.

Kansas Gov. and former Sen. Sam Brownback, no big fan of big government, said, “crop insurance is an important risk management tool to producers.” A spokesman for the Kansas Soybean Association called crop insurance “a vital part of the farm income safety net for soybean farmers.” His colleague with the Kansas Cotton Association agreed, calling crop insurance “an essential risk management tool for cotton producers.”

Karl Esping with the Kansas Sunflower Commission said that growers need crop insurance to manage their risky business. “As you look at priorities in this new farm bill, please consider that producers still need a safety net for crop failure and disaster. Crop insurance has been and still is the best tool for these situations.

“Full funding for the crop insurance program is the highest priority for sunflower growers, and I suspect that it is the case for all commodities.”

In fact, when all was said and done, groups representing corn, wheat, cotton, sunflowers and sorghum all sang the praises of crop insurance. But it didn’t stop there.

The director of High Plains Farm Credit promised to “continue to work hard to ensure that our customers and others have access to the crop insurance policies they need to protect their investment in their crop and farming operations.” The CEO and chairman of Western State Bank discussed the various proposed cuts in farm policies and urged members of the Senate to make sure that federal monies are spent on efficient and effective policies.

“I think the most efficient program is the crop insurance program,” he said.

While these testimonials come from a hearing in Kansas, the script would have been identical if the hearing was held in Minnesota, North Dakota or any other big agricultural state.

What most libertarians don’t like to admit is that crop insurance is a great example of a public-private partnership that combines the strengths of both sectors and increases the amount of good done by a modest government investment.

For skeptics who thought that the flexibility and efficiency of the free market could never be combined with the universality and affordability of the public sector, this policy proves them wrong. Crop insurance was bought for more than 80 percent of America’s principal crop acreage, with 256 million acres under policies worth $80 billion in total coverage.

There’s no denying that agriculture’s support for crop insurance is strong and deep. That might not be a tune libertarians want to hear, but it’s music nevertheless.

Author: Greg Schwarz, President, Minnesota Corn Growers Association

This op-ed first appeared in the Grand Forks Herald on September 20, 2011