Local View: Speed of Crop Insurance is Crucial

November 2, 2011

Sitting on a combine for 12 hours a day harvesting corn and soybeans gives a person a certain degree of clarity, combined with long blocks of time to think and analyze.

Looking at the corn I’m harvesting, I marvel at the fact that somehow, my family farm managed to dodge the many bullets Mother Nature shot at farmers this year.

I’m referring to massive droughts in the Southern plains, record flooding in the upper Midwest, wildfires in Texas, a devastating freeze in Florida, and hurricanes and tropical storms that still are on their way.

Unlike me, a lot of farmers in the United States were not so lucky. Thankfully, farmers are able to purchase crop insurance, a private-public partnership that is protecting about 80 percent of the eligible crops across the country.

And one of the greatest features of crop insurance — and an aspect that has made it a hands-down favorite among farmers of all types — is the speed of delivery of payments, that puts funds quickly into the hands of farmers who have lost everything in a natural disaster. This is possible because of large investments by private companies that have built the infrastructure that makes this delivery possible.

Crop insurance is a critical component of my risk management tool kit and one that most farmers like me rely on to face the unknown every year. Because I’m a young farmer getting started, should disaster strike and the crops be wipedout, we, like all other small businesses, are in need of capital.

That’s where the speed of delivery component of crop insurance comes in to play. The industry has invested dramatically to make the speed of delivery possible.

So while any farmer who has found himself in need of help from the government is thankful when the payment finally arrives, the payment can take a year or two to get into the hands of the farmer. If I had to wait a year or two to recoup the loss of an entire crop from a natural disaster, I’d be in bankruptcy court when the check finally came.

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.

Crop insurance is a key part of my farming operation because my agent and I evaluate in detail, prior to planting, the optimal coverage for what I’m planting. Once I’ve made that evaluation, crop insurance becomes the underpinning for financing from the bank.

Contrast that with some of the other government safety net programs that are conceived in a university laboratory, planned by a government bureaucrat who has never seen a cornfield, and administered by somebody behind a desk whose only connection to corn is his breakfast cereal. Need I say more?

There is another feature of crop insurance that makes this a terrific risk management tool stand out: We as farmers have to write a significant personal check to secure a crop insurance policy; it’s not a handout.

Could it be that this public-private collaboration, with the recipients — the farmers — having “skin in the game,” could be the shining example to the federal government of the best way to use tax dollars? I think so.

I’m the third generation of my family to farm this piece of land, and I strongly believe that a stable, viable, privately delivered crop insurance program holds the key to my future. It provides me the opportunity to efficiently and profitably produce the safest and highest-quality food in the world.

It doesn’t keep Mother Nature from jolting me with a disaster, but it does give me some protection and piece of mind should my farm take a hit.

About the author: Quentin G. Bowen is a farmer who raises corn and soybeans and lives in Humboldt.

This article appeared in the Nov. 1 edition of the Lincoln Journal Star