Last week, newspapers in two different and diverse regions of the country featured editorials on the importance of crop insurance, which highlights how it has become the risk management of choice for farmers nationwide.
Steve Baccus, a family farmer from Kansas and the former president of the Kansas Farm Bureau, wrote in the Wichita Eagle that while many things have changed about farming through the years, one thing that remains is the risk.
“A lifetime’s worth of work and every penny you have can be wiped out” by a single weather event, wrote Baccus. “The reason why the food supply in the U.S. remains abundant is that we have tools in place to make sure that when farmers are knocked to their knees by the whims of Mother Nature, they have a policy tool in hand to pick themselves back up and plant again.”
Meanwhile, a little farther south in the Sunshine State, the Fort Myers News-Press published an editorial from the president of the National Crop Insurance Services (NCIS), Tom Zacharias, which discussed the importance of agriculture to the state’s economy and how crop insurance is the key to protecting the industry from disaster.
“Crop insurance was long viewed as a tool primarily used by corn, soybean and wheat farmers in the nation’s midsection,” explains Zacharias. “But lately, specialty crop participation along the coasts is growing and insurance protection is available on more than 100 different crops nationwide.”
Both editorials emphasized the need to keep crop insurance affordable and available while maintaining the viability of private-sector delivery.
The full editorials are linked and printed below:
Farmers Need Protection of Crop Insurance
When the homesteaders came to Kansas, they were looking for land to farm and a chance at the American dream. If they were like my family, they arrived here in a covered wagon, and many of us still live on the land where they began to build their dreams.
But Kansas can be a cruel place to farm. On the turn of a dime, a lifetime’s worth of work and every penny you have can be wiped out by a single hailstorm, a heat wave or drought, a springtime flood or frost, or a market crash that erases any chance of profit regardless of how well your crops do that year.
And that, in a nutshell, is why the vast majority of Kansas farmers purchase crop insurance every year, and why it must remain available, affordable and viable. In fact, with the passage of the 2014 farm bill, crop insurance is the primary risk management tool available to commodity farmers and the only risk management tool available to many specialty crop farmers.
One thing that has dramatically changed in agriculture since my family homesteaded in Minneapolis, Kan., is that farming has now become an incredibly capital-intensive venture. It takes so much money just to put a crop in the ground and harvest it at the end of the season that anyone farming without crop insurance might as well be playing Russian roulette.
I’ve had lots of friends tell me over the past several years that if it weren’t for crop insurance, they would not have been able to put a crop in the ground the next year. Crop insurance is a public-private partnership whereby farmers purchase private policies from participating companies that sell and service the policies. One of the government’s main roles is to discount the policies to a degree that they are widely affordable to most farmers.
In 2014, about 90 percent of planted cropland was protected by crop insurance, paid for out of the back pockets of farmers to the tune of $3.8 billion. Nationally, more than 1.2 million policies were purchased, protecting almost 294 million acres of food, feed, fiber and fuel crops that accounted for more than $110 billion in liabilities.
With the cost of farming so high, most farmers have to actually show proof of having purchased crop insurance in order to secure a production loan from a bank. The farmers get to sleep better at night because they have purchased the protection of crop insurance, and banks are able to make production loans to folks who might otherwise be judged too risky.
Some think that crop insurance is a freebie. Let me set the record straight right now: It’s not. Farmers have skin in the game when they pay their premiums, which is not pocket change. I bet the farmers I know spend $35,000 to $40,000 every year to purchase their policies. And in many years, they don’t collect a dime.
The reason why food supply in the U.S. remains abundant is that we have tools in place to make sure that when farmers are knocked to their knees by the whims of Mother Nature, they have a policy tool in hand to pick themselves back up and plant again. Let’s make sure that crop insurance remains affordable, viable and available for generations to come, to ensure a continued legacy of abundance in America.
Steve Baccus of Minneapolis, Kan., is the immediate past president of the Kansas Farm Bureau.
Crop insurance important for state’s ag industry
Fort Myers News-Press
Pop quiz: Next to tourism, what Florida industry is the state’s largest employer?
The answer isn’t healthcare, transportation, technology or even government. Agriculture is Florida’s second biggest job supplier, according to the University of Florida.
“Two million jobs can be traced to the state’s agriculture, natural resources and related food industries — and not just on our 47,500 farms. Income from $142 billion in annual sales gets spent around the state to create jobs in restaurants, department stores and car dealerships, too,” Jack Payne of the University’s Institute of Food and Agricultural Sciences said during a recent media interview.
Despite their importance, farmers and all they support are at the mercy of a multitude of uncontrollable forces.
A year of hard work and investment can be wiped out in an instant by a late-season hurricane, an early frost or an unexpected outbreak of insects or plant disease.
And the ever-looming prospect of a changing climate could be “potentially catastrophic,” according to Payne, as it wreaks havoc on water supplies, soil conditions and land use.
So how do farmers gain some control over the uncontrollable and add stability to the region’s economy.
Crop insurance is key.
Farmers purchase protection from weather disasters and price volatility, while private-sector insurers underwrite policies, verify claims and speed assistance to farmers when it is needed most.
The government, in turn, helps discount premiums to promote farmer participation and shield taxpayers from unbudgeted disaster aid that would be necessary without the private-sector insurance structure.
Crop insurance was long viewed as a tool primarily used by corn, soybean and wheat farmers in the nation’s midsection. But lately, specialty crop participation along the coasts is growing and insurance protection is available on more than 100 different crops nationwide.
More than $1.3 billion in annual insurance protection is being purchased for Florida orange trees alone with another half a billion for nursery crops. And thank goodness farmers are purchasing these policies.
In the back-to-back disaster years of 2004 and 2005, for example, more than $400 million in indemnity checks flowed to farmers in the state to help them pick up the pieces following hurricanes.
More can be done, too, to make insurance even more attractive to Florida’s farming community and help growers buy higher coverage levels to shield against tomorrow’s disasters.
The 2014 Farm Bill took initial steps by strengthening insurance for organic growers and making it more accessible for beginning farmers. Other provisions boosted protection for livestock producers and will help bring new insurance products to the marketplace.
From Feb. 8-11, leaders from the crop insurance industry, American agriculture and the federal government will be at the Hyatt Regency Coconut Point Resort in Bonita Springs to discuss risk protection in the 21st century and what can be done to continually improve the system.
Among the key discussion points: Keeping crop insurance affordable for all farmers regardless of their size or planting choices; ensuring widespread availability of insurance across all states and numerous crops; and maintaining the viability of private-sector delivery, which is far more efficient and effective than a government-managed alternative.
It is a packed agenda, and as the cornerstone of today’s farm policy, crop insurers have a lot to discuss. However, I fully expect us to do our part in supporting the other major Florida employer – tourism – while we are in town.
Tom Zacharias is president of National Crop Insurance Services, based in Overland Park, Kan.