As Farm Bill Discussions Get Underway, NCIS Unveils Updated Website

OVERLAND PARK, Kan., June 5, 2017 – National Crop Insurance Services (NCIS) is pleased to announce it has updated and redesigned the award-winning Crop Insurance in America website. The revamped website aims to effectively share crop insurance’s success story by offering visitors streamlined access to the latest news and information on crop insurance, as well as encouraging interaction on social media channels.

The site has a crisp, clean design, improved social media sharing tools, and increased security settings.

Features include an updated comprehensive question-and-answer resource, Just the Facts, that lays out the facts about crop insurance and dispels some of the most common arguments against crop insurance put forth by its critics.

The site also features a robust news section that houses recent press releases, the association’s What’s Cropping Up newsletter, relevant headlines, quotes, and other resources, including social media content for easy sharing.

Other items available on the site include updated fact sheets on the importance of crop insurance to individual states; farmer testimonials; a detailed history of the program; a look at the essential strengths of the program, and more.

“The crop insurance program is the cornerstone of the farm safety net and has a great story to tell,” said Tom Zacharias, president of NCIS. “We hope this updated website will provide visitors with a better understanding as to why crop insurance is so valuable, not just to farmers, but to taxpayers as well, and will encourage them to share its success story with others.”

NCIS launched this website in 2008 to better explain the benefits of crop insurance to farmers, taxpayers, and consumers, and to demonstrate how the program helps drive the nation’s rural economy.  In 2015, NCIS was honored to have the website selected by the United States Library of Congress (LOC) to be part of America’s historic collection of Internet materials.

Click here to explore the updated Crop Insurance in America site.


Don’t Throw Specialty Crops Under the Bus

It’s wonderful to extol the benefits of fresh fruits and vegetables, to urge them to be made more available in our schools and restaurant menus and to fight to better educate the public about the growing body of research that shows fruits and vegetables are critical to promoting good health.

But what about fighting for public policies that support the very farmers who grow fruits and vegetables? Specialty crop growers — those farmers who grow crops including apples, peaches and pears — are somewhat unique in agriculture in that they grow higher value, often perennial crops and are slightly more vulnerable than the average commodity farmer or rancher.

And while the last decade has seen a wide variety of farm policies that were devised to help the growers of the major commodities in times of weather calamites, one policy that has really worked for the specialty crop industry is crop insurance.

That’s why, as a crop insurance agent, it’s so distressing that the Senate passed an amendment to the farm bill that would subject crop insurance participation to a means test. The means test would essentially take insurance benefits away from many of the larger, well-established and highly profitable farmers and ranchers.

Crop Insurance Saved Taxpayers $10.4 Billion Since 2002

Federal crop insurance has come in under budget every year since 2002 – the last year of major revisions to the program – saving taxpayers more than $10.4 billion in projected spending, according to a new analysis of Congressional Budget Office (CBO) data.

The savings, taken as the difference between the projected cost of the crop insurance program by the CBO and the actual cost of the program, shows that in some years, the CBO overestimated the cost of crop insurance by more than 45 percent.

Year CBO   Estimate($ bil.) CBO Actual($bil.) Difference($ bil.)
2002 2.876 2.818 0.058
2003 3.179 2.906 0.273
2004 3.682 3.366 0.313
2005 3.626 2.242 1.384
2006 3.864 3.291 0.573
2007 4.670 4.374 0.296
2008 7.746 4.146 3.600
2009 7.496 6.767 0.729
2010 7.784 4.547 3.237
Total   Savings $10.4   billion

For example, the difference between projected and actual cost ranges from being 6.3 percent too high in 2007 to 46.5 percent too high in 2008.  In 2010, the most recent year for which final data are available, the CBO estimated the cost for crop insurance would be $7.784 billion, but the actual cost of the program was $4.547 billion, or 41.4 percent lower than projected.

The constant discrepancy is due to the fact that the CBO always assumes that the gross premiums—which include what the farmers pay and the government premium subsidies—will be equal to the indemnities paid out, which in the real world, is almost never the case.

Whenever the gross premiums exceed the indemnities paid, this excess is called the “gross underwriting gain.”  This excess is divided between the Federal Crop Insurance Corporation (FCIC) and the private insurance companies.  When the government’s share of the underwriting gains are positive, they help offset the cost of the premium subsidies provided to farmers.  Such positive gains reduce the actual cost of the program to the taxpayers below what CBO had expected.

And these government underwriting gains and overestimates in the cost of the program have been consistent in recent years, and may continue into the future,    while overestimates are the long running pattern and may continue in the future, although 2011 may prove to be one of the exceptional years given the record indemnities due to drought, floods, hurricanes and freezes.

Despite the size of the nation’s food and agriculture sector and the fact that agriculture has been a major economic factor in lifting this nation out of the long recession, federal investment in crop insurance is less than one-tenth of one percent of overall federal spending.

Crop Insurance A Key to Credit Access, Bankers Tell House Subcommittee

Several witnesses representing key agriculture lending institutions and credit agencies told members of the House Agriculture Committee’s Subcommittee on Department Operations, Oversight, and Credit that access to credit is essential for farmers and crop insurance plays an important role in that access. The hearing, held May 10, went largely unnoticed but is pertinent given the need for most farmers to secure credit.

“Crop insurance is important to the adequate supply of credit to farmers and ranchers as it provides assurance that farmers will be able to repay their operating loans in the event of weather or price related calamities,” said Jeff Gerhart, a banker and chairman of the Independent Community Bankers of America.  Gerhart noted that crop insurance was a good risk management tool that their farm customers have learned to use to better manage risk. “The dramatic evolution of crop insurance in meeting the needs of most of our nation’s farmers has been truly impressive,” he said.

Bob Frazee, president and CEO of MidAtlantic Farm Credit, one of 87 Farm Credit cooperatives that is owned by more than 10,500 farmers from the region told the committee that crop insurance gives lenders the peace of mind to loan to farmers in a very risky environment.  “It is extremely important as a lender to agriculture that we know our customers have insured their production,” he said.  “This protects the farmer and it protects lenders as we provide credit to farmers to cover their operating expenses.”

Matthew Williams, testifying on behalf of the American Bankers Association, told the committee that crop insurance provides his customers with “the certainty they need to make responsible planting decisions and provides my bank with the confidence we need to extend credit to our customers.”  Williams reminded the committee that input costs to plant crops today are “staggering,” and explained that his customers use credit to get their crops planted and harvested.  “If federal crop insurance was in some way diminished, our ability to lend – in some cases – would be curtailed,” he added.

Subcommittee Chairman Jeff Fortenberry underscored the importance of access to credit and the essential role it plays in maintaining the United State’s abundant and affordable food supply.  “Ensuring a stable food supply is directly connected to farmers and ranchers having access to steady sources of credit,” he said.

Crop Insurance: No Good Deed Goes Unpunished

When the levees broke and the floodwaters came rushing toward many Midwest towns, government officials asked me to make an enormous sacrifice.

They needed soil from my farmland to extend and build up a levee to hold back an unprecedented wall of water. If I said yes, it would save millions of dollars for businesses, homes and possibly lives in Hamburg, Iowa. But saying yes also meant centuries of fertile soil would be removed from my farm, essentially ruining everything my family had worked for and guaranteeing I’d have to start over.

Sacrificing my farm was an easy decision. It was the right thing to do. And after a long conversation with my crop insurance agent, I knew that I’d at least have a chance to pick up the pieces when the waters receded.

Stepping up is nothing new for agriculture. With a rising tide of debt caused by runaway spending flooding our country, agriculture offered up cuts to its policies to help get the country back on track.

All told, more than $15 billion in spending was sacrificed, and ironically, more than $12 billion of that came from the crop insurance system that is in place to guard against things like floods. Crop insurance, which is purchased by individual farmers with some backing from the government and is serviced by efficient private companies, has become our most important risk management tool.

But like the old saying goes: No good deed goes unpunished. Despite being one of the only industries to answer the budget bell for the country’s betterment, farmers are again in cutters’ sights…..

About the author: Michael Woltemath is a fourth-generation grower who has actively farmed for 16 years and owns a farm adjacent to the Hamburg levee in Iowa.

What Does 2012 Hold for Crop Insurance? 

With 2011 indemnities quickly approaching the all-time record of $10 billion, and farmers preparing to plant another impressive crop just months after the worst weather year in U.S. history, the current crop insurance system is earning high praise from agricultural leaders and lawmakers alike.

But in a new peer-reviewed analysis that appeared in January’s Choices magazine, former USDA Chief Economist Keith Collins and Harun Bulut, National Crop Insurance Services (NCIS) senior economist, explained that many proposals to alter crop insurance policy in the 2012 Farm Bill could hold serious ramifications for farmers and taxpayers, and could weaken the very system that proved so crucial last year.

Among the shortfalls they highlighted: Displacing private-sector crop insurance with duplicative government-run programs; saddling farmers and taxpayers with greater risk exposure; increasing program complexity; increasing taxpayer cost; and reducing farmer participation and coverage levels.

“With deficit reduction in prospect for years to come and insurance so fundamental to risk management in all economic areas, the long-term most sustainable safety net program for farmers may be enhanced crop insurance,” the authors wrote.

Collins, who attended an annual convention sponsored by NCIS, urged people to consider the past and present before writing the future.

“Let’s not lose sight of the fact that the current system took three decades to build and is working as designed,” he said at the conference. “The public-private partnership was created to reduce taxpayer risk by encouraging farmers to purchase insurance from professionals skilled in delivering private-sector payments quickly.”

Since modern-day crop insurance was first created in 1980, participation and coverage levels have grown dramatically. Nearly 265 million acres were insured by $114 billion worth of liability coverage in 2011, up from 45 million acres and $6 billion in coverage in 1981.

“My advice moving forward,” Collins concluded, “consider all consequences before restructuring crop insurance. The unintended consequences could harm three decades of success and upend some of the essential strengths that make the current system so great for farmers and taxpayers.”


Nation Cotton Council CEO Says Key Crop Insurance Strength Is Private Sector Delivery

While a record amount of indemnities – approaching the $10 billion mark – are being paid to farmers for 2011, one of the key aspects of crop insurance that makes it a favorite among farmers is its private sector delivery, which sets crop insurance apart from all other policies, said Mark Lange, president and CEO of the National Cotton Council.

During a recent interview with the National Association of Farm Broadcasters, Lange pointed out that crop insurance’s speed of delivery was well on display in 2011 in West Texas – where many growers didn’t even see their fields sprout – but they had their indemnities in hand quickly, allowing them to farm yet another year. “They are dry land growers, and they are seeing crop indemnities paid prior to Labor Day,” he said.

Lange noted that another strength of crop insurance, from the growers’ perspective, is that “crop insurance policies come in a vast array of styles and coverage and the grower can very closely tailor the specific policy that they are acquiring to their specific farm situation.”

Lange says that Congress has a daunting challenge, since crafting a Farm Bill with elections fast approaching and with budgets declining will not be easy. But he believes that what emerges will preserve the public-private partnership of crop insurance and ensure the long-term viability of America’s food and fiber supply.

“I think it’s clear that the delivery of insurance or revenue programs from the government has a very chilling effect for agricultural producers,” he said, and it takes far too long for help to arrive into the hands of the farmers. “The SURE program, is just now providing benefits for losses that occurred in 2009,” he said. “So here it is in early 2012 and they’re just getting the benefits. That’s just too long.”

To listen to Lange’s interview in its entirety, click here.

Kansas Farmer: One Size Doesn’t Fit All When it Comes to Risk Management

When it comes to risk management, one size does not fit all, said Kansas farmer Jay Armstrong during a recent radio interview with the National Association of Farm Broadcasters that ran nationally in early December. Armstrong noted that his 2,700-acre family farm is split between upland and bottomland. In years of drought, the upland withers while the bottomland blossoms. In years of wet weather, it’s the opposite.

“So no matter what extreme Mother Nature throws at me I will suffer losses,” he said, adding “my story is the story of many thousands of farmers across this country, who grow our nation’s food, feed, and fuel supply while dealing with Mother Nature’s tantrums, year in and year out.”

Armstrong says most farmers would agree that the single most important item in their risk management tool kit is crop insurance. He says that before federal crop insurance became widely available several decades ago, farming on land like his felt like playing Russian roulette. “It was nearly impossible to get any kind of coverage for managing risks on my farm where flooding or drought was an occasional occurrence because the private sector just wouldn’t offer it.”

“But federal crop insurance took the universality of the public sector and made these important risk management tools available to everyone willing to pay for them,” he said. Armstrong called crop insurance “the quintessential tool” for managing farms risks because each farmer can choose the plan that makes the most sense for their operation

Armstrong also said that crop insurance has made him a better businessman, allowing him to market his grains, including corn, soybeans and wheat, well in advance because they are insured. “If my crop comes up short at the end of the year because of poor weather – or fails altogether – the insurance indemnity is there to purchase the grain to fulfill my marketing contracts at the end of the year.”

Crop insurance was designed by Congress to shield taxpayers from costly weather-induced bailouts that became commonplace in past decades – and Armstrong says it’s working. 2011 might be regarded as one of the worst weather years on record, with crop insurance companies paying out more than $6 billion. But Armstrong points out that with roughly 80 percent of eligible acres covered by crop insurance, there is no need for disaster bills.

Crop Insurance: Private Sector Participation Enhances Policy Efficacy

Most would agree that the private sector excels at some tasks while the government is better-suited for others. This melding of the private and public sectors has yielded a crop insurance policy with affordable premiums, personalized risk management solutions and a private delivery system that puts needed monies into the hands of farmers when timing is critical.

Crop insurance covers 128 crops, including all major grain crops and cotton, nursery, citrus, rice, potatoes, and livestock. Farmers can cover their crops for all natural disasters, including wildfire, earthquake, volcanic eruptions and even irrigated water issues. Because the policy is personalized, each farmer tailors the policy to match his specific risk and desired coverage.

To date for 2011, the crop insurance program has paid out over $5.7 billion in indemnity payments to America’s farmers and ranchers, and that number will continue to rise over the next few months.

Corn and soybean farmer Quentin Bowen, who operates a family-farm in Humboldt, Nebraska, says that when disaster strikes, the difference in delivery of benefits when comparing government-run programs to the private sector’s handling of crop insurance, is like comparing night to day. “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,” he said in a recent guest column.

Following the submission of recommendations to the Super Committee for cuts in agriculture, major farm groups made clear their strong feelings on crop insurance.

In a letter to House and Senate Ag leaders, The National Association of Wheat Growers (NAWG) stated that “our highest priority for federal investment in agriculture programs is the portion of crop insurance premiums subsidized by the federal government, the public part of one of the most well-functioning public-private partnerships undertaken by our government.” NAWG also reiterated its conviction that crop insurance is the cornerstone policy for risk management, adding, “We believe crop insurance is essential to the farm safety net and the reliable production of an abundant food supply.”

A similar statement from the National Corn Growers Association noted, “the highest priority for NCGA is securing a strong crop insurance program.”

And crop insurance is apparently working quite well this year for America’s farmers, particularly those farming corn, cotton, grain sorghum, soybeans and other crops in drought-ravaged Texas. The October 23 Houston Chronicle reported that more than 41,000 farmers in Texas have received $1.65 billion so far from the national crop insurance program to help compensate for disastrous low yields and other damage caused by the state’s worst drought in history.

“The crop insurance is the linchpin and heartbeat of recovering and muscling through the disasters,” said Karis Gutter, the U.S. Department of Agriculture’s acting deputy undersecretary, who oversees all federal disaster relief efforts and foreign exports. “It will help folks get back to a semblance of normalcy in their lives.”

When farmers are trying to pick up the pieces after disaster strikes, an inefficient payment or delivery system is the last thing they need to be dealing with.

Living on a Prayer

By John Thamert

Agriculture is collectively holding its breath as the “super committee” meets to determine where the $1.2 trillion worth of federal budget funds will be cut. Having already shouldered more than $12 billion in cuts for deficit reduction in the past several years, farmers and ranchers feel the pain that other sectors have yet to experience.

With this massive overhaul on the horizon, the Senate Agriculture Committee traveled to Wichita, Kansas, late last month to hear from farmers, bankers and local elected officials about what they thought were the necessary components of a strong and viable Farm Bill.

Farmers representing every crop from corn to cotton, bankers who loan to businesses of all sizes, and key elected officials all delivered one main message that was eventually heard all the way back to the halls of Congress: Crop insurance is one of the most important components of farm policy—it should not be touched.

Senator Debbie Stabenow (D-MI), the committee’s chair, recognizes that the upcoming farm bill will not only impact farmers and ranchers; it will also affect those workers who process, package and market agricultural products and services.

This is no small item when you consider that there are over 21 million jobs tied directly to the U.S. agricultural industry.
Obviously, crop insurance is not a policy used by every American—particularly those in urban areas who write about it. But as a banker, a farmer, and a resident of rural America, I see firsthand the benefits of crop insurance and its essential place in a farmer’s arsenal of risk management tools. “Some folks question the need for a Farm Bill with commodity prices where they are today,” Senator Pat Roberts (R-KS), the committee’s ranking member said. “I don’t have to tell this crowd that prices can fall much more quickly than they rise.”

So let me explain why farmers and agricultural lenders from all corners of the country are crying out in unison for maintaining crop insurance.

Crop insurance is a public-private partnership that combines the flexibility and efficiency of the free market with the support of the public sector, to ensure that a modest government investment is able to provide an economic “safety net” for a very unpredictable and high-risk industry.

In so doing, when farmers and/or ranchers experience a severe reduction in their cash flow due to a natural disaster they can depend on crop insurance to cover some of the loss. Any claim paid to a farmer or rancher will create dollars that can be used to cover operating loans from their bank, to pay for fuel, crop and machinery costs; all of which flow through the economies of our country’s small towns and rural communities.

Farmers need crop insurance as an economic “safety net”. Consumers need crop insurance so that they can take comfort in knowing that one of our nation’s premier industries, which provides an abundant and affordable food supply, will remain viable. And lenders need crop insurance in order to be confident that their investment in agriculture will be sound—and around it goes.

One other important consideration is helping the next generation of farmers and ranchers continue our nation’s dominance in food production. Finding a lender willing to invest in a young farmer is hard enough as it is. More often than not, they have very little capital. In these times of rising input costs, a volatile world economy and unpredictable weather patterns, the one thing that lenders and their young farm customers are able to rely on is the crop insurance policy.

“Certainly, farmers here in Kansas know the importance of a strong farm safety net,” Senator Stabenow said at the hearing. “You’ve been dealing with a record drought this year that is devastating crops and livestock production. Suffice it to say, if we ever needed a reminder about the risks farmers face, we got it this year.”

She’s right. Without crop insurance, I’m not sure that my operation would still exist—and the same goes for many of my neighbors—not just in Kansas but in the Texas panhandle where they haven’t seen a drop of rain since October 17, and Missouri, where flooding has left thousands of acres under water and unproductive.

The Senate Agriculture Committee asked for our input: “What are the risk management tools that farmers in the great state of Kansas need? What should an effective farm safety net look like? What are your priorities? What programs can we streamline or consolidate?” And the answer was nearly unanimous: No more cuts to one of the few remaining – and in most farmers’ judgment, the best – risk management tools. If you must cut from agriculture, do not cut crop insurance.

To our farmers and ranchers dealing with severe drought or other natural disasters, these are very trying times; to see high prices without any product to sell and yet have to put out next year’s crop with record high input costs. Without crop insurance, these producers would go out of business as well as cause economic harm to a number of their business providers. I would ask my fellow farmers and bankers to contact their senators and representatives and convey the magnitude of our concerns. Farming without strong farm policy, is nothing but living on a prayer.

John C. Thaemert is a Vice President & Trust Officer at Citizens State Bank & Trust Co. in Ellsworth, Kansas as well as past president of the National Association of Wheat Growers. Thaemert is a third generation farmer who resides in Sylvan Grove, Kansas.

This op-ed appeared in Agri-Pulse on September 6, 2011.

Ag Singled Out for Budget Cuts

With the floodwaters rising and the nation’s attention focused on the looming Midwest destruction, government officials asked me to make an enormous sacrifice.

They needed my farmland to extend and build up a levee to hold back an unprecedented wall of water. If I said yes, it would save millions of dollars for businesses, homes and possibly lives in Hamburg, Iowa.

Sacrificing my farm was an easy decision. It was the right thing to do.

Stepping up is nothing new for agriculture. With a rising tide of debt caused by runaway spending flooding our country, agriculture stood alone in offering up cuts to its policies to help get the country back on track.

All told, more than $15 billion in spending was sacrificed. It came mostly from the crop insurance system that, ironically, is in place to guard against things like floods.

Farmers and ranchers didn’t whine about these cuts. Blessed with generally decent prices and production, we swallowed hard and accepted them, crossing our fingers that the bottom didn’t fall out of the farm economy.

But like the old saying goes: No good deed goes unpunished. Despite being one of the only industries to answer the budget bell for the country’s betterment, farmers are again in cutters’ sights.

This past week, President Barack Obama unveiled a plan to hack another $8 billion out of crop insurance, and even more out of other policies in place, to help provide stability to the men and women who deal with unforeseeable weather and market-related risks every day.

Author: Mike Woltemath, a fourth-generation farmer grower who owns a farm adjacent to the Hamburg levee in Iowa.