Rep. Costa: Crop Insurance is Vital Component to U.S. Agriculture Industry

April 28, 2016

By Rep. Jim Costa

Editor’s Note: Farm Policy Facts is pleased to publish a guest editorial from Rep. Jim Costa on the importance of maintaining a strong safety net for farmers. Congressman Costa is a senior member of the U.S. House Committee on Agriculture and also served as a conferee during negotiations of the 2014 Farm Bill. We applaud his efforts in supporting American farmers and ranchers.

From working to get a five-year Farm Bill passed to fighting for water for California’s farmers, protecting and growing America’s agricultural economy is one of my top priorities in Congress. This includes preserving a robust farm safety net for producers.

During the latest Farm Bill negotiations, Federal crop insurance was the topic of much conversation, especially relative to the role that direct payments play in modern agricultural production. Some Members and special interest groups attempted to create a narrative that the program is an inefficient “handout” to rich farmers and turn popular opinion against our farm communities. Luckily, we successfully beat back that false rhetoric and passed a farm bill. However, despite how untrue it is, the sentiment that began to develop against farm risk reduction programs like crop insurance has festered.

The truth is that crop insurance is a highly successful public-private partnership between the federal government and private insurance companies. It functions as a risk management tool for farmers to mitigate the numerous risks – financial, meteorological or the like – that they take to produce the finest food and fiber in the world. In 2015, crop insurance providers sold policies for more than a 120 different crops valued at $102 billion and covering 298 million acres. Farmers deserve the opportunity to purchase the same security provided by crop insurance in a similar way that homeowners can protect themselves in the wake of a natural disaster.

As areas of the United States deal with drought conditions, particularly areas such as California’s San Joaquin Valley, crop insurance is very important to a farmer’s bottom line if they are unable to plant or to harvest their crops.

When Congressional leadership negotiated the omnibus budget deal in October 2015, they failed to consult with the House Agriculture Committee and included a provision to drastically reduce the rates of return that crop insurance companies would receive. At a time when rural America is facing challenges, and especially as California is dealing with devastating drought conditions, those cuts would have would have been detrimental for farmers throughout the country and real harm would have been done to the agriculture industry.

House Agriculture Committee members and I successfully urged the budget negotiators to strip the provision in the final deal that would have crippled insurance companies by making it too expensive to provide insurance products. To ensure continued support and success of the crop insurance program, Members of Congress, community leaders, farmers, and consumers who purchase meat, dairy, fruits, vegetables, and nuts at the grocery must express the importance of the program. If not, we may one day see the program cease to exist, and with that, we will see lost revenue, higher prices at the grocery store, and increased unemployment.

Crop insurance also provides help to beginning farmers and ranchers, as well as socially disadvantaged and veteran farmers and ranchers. It is critical that these individuals have access to the farm safety net, especially as the average age of the American farmer continues to inch higher and higher.

The public needs to understand that growing food is a very risky business, and farmers are price takers, not price makers. Every year, the people who produce our food face numerous risk factors, like weather, high input costs, and the global market, for which they have no control over. With more and more people demanding that rural America produce higher yielding and safer products at lower prices, we need to utilize every tool available in our toolbox, like crop insurance, to help those who sacrifice every day to produce the food and fiber we consume.

Rep. Jim Costa (D-CA-16) is a senior member of the U.S. House Committee on Agriculture and the Ranking Member of the Subcommittee on Livestock and Foreign Agriculture. He also served as a conferee during the 2014 Farm Bill negotiations.