In the midst of an economic downturn all across farm country, two leaders in the Farm Credit System (FCS) are speaking out about the importance of crop insurance for farmers during these times.
In an interview with Agri-Pulse, new CEO and President of the Farm Credit Council, Todd Van Hoose said, “crop insurance is absolutely essential and…is probably the backbone of the risk management strategy of most farmers in America today.”
While Scotty Elston, the Chief Credit Officer at AgTexas Farm Credit in Lubbock, Texas, recently wrote in a Southwest Farm Press editorial that crop insurance “can literally make the difference between farming another year or losing so much a farmer must call it quits.”
That’s because farming is a capital-intensive business and many farmers borrow in one year more than most Americans borrow in a lifetime. Crop insurance provides security for both the farmer and the lender.
“From a lending perspective, crop insurance provides a guarantee of a minimum income for a lender to rely on to repay loans should a farmer lose a crop,” stated Elston. “This insurance guarantee makes it much easier for producers to obtain the financing they need to farm.”
Considering that the FCS holds nearly 41 percent of the farm sector’s total debt and has the largest share of farm real estate loans, according to a Congressional Research Services report, the role of crop insurance helps enable sound lending practices and ensures farmers have a dependable source of credit. All of these factors are crucial as producers struggle with depressed commodity prices, high input costs, and falling farmland values.
“The important message we can talk about is, keep crop insurance whole,” said Van Hoose. “It is worth the investment of the federal government in helping farmers manage the risk.”