Farmers in the northwest need access to affordable crop insurance

When the 2014 Farm Bill became law, it marked a pivotal moment in the history of U.S. farm policy. The new Farm Bill eliminated direct payments and reduced some of the price support policies of the past in favor of expanding crop insurance, which allows farmers to purchase varying levels of protection for their crops.

Gone are the days when farmers got a check every year regardless of weather or market conditions. Gone are the days when large-scale natural disasters would trigger wildly expensive disaster bills aimed at helping farmers get back on their feet. From here forward, farmers who want risk protection will receive a bill, not a check, when they sign on the dotted line every year.

This is a good thing for several reasons. First, crop insurance ensures farmers have a risk management plan in mind early in the year. In addition to that plan, they must put their money towards purchasing a crop insurance policy. This is no small amount of money for many farmers, who in 2014 spent roughly $3.8 billion on crop insurance premiums.

All told, those policies protected 295 million acres of farmland valued at $129 billion. Today, 90 percent of planted cropland is protected by federal crop insurance, which protects more than125 different varieties of crops in all 50 states.

The evolution to crop insurance has effectively moved risk management away from the public sector, funded exclusively by taxpayer dollars, and toward the private sector, where farmers and crop insurance companies help shoulder part of the cost of natural disasters. This is good for taxpayers because it takes them off the hook for the entire bill when disaster strikes, good for farmers who must always keep their risk management plan in mind, and good for rural America because farmers are the engines that generate economic activity.

Crop insurance has been around since 1938, but it wasn’t until Congress decided to make it affordable and ubiquitous that farmers really began to sign up. And when disaster struck – as it does nearly every year somewhere here in the Northwest – farmers turned to their crop insurance policy and their insurance company, not their member of Congress, for help.

The demographics of farming can be rather scary, with the age of the average age of the nation’s 3.2 million farm operators at 58 years old and rising daily. For young and beginning farmers, access to affordable and reliable crop insurance is honestly a make-or-break issue. For those just entering farming, the costs are high and their ability to sustain a loss is very limited. For them, purchasing a crop insurance policy not only protects their crops, but their careers paths as well.

Crop insurance is very popular here in the Northwest, with farmers and ranchers in Washington, Oregon and Idaho spending more than $96 million out of their own pockets last year to purchase the peace of mind offered by crop insurance. Those policies protect the region’s apples, potatoes, sugar beets and a long list of other crops from the ravages of Mother Nature and volatile market swings.

In the old days, farmers largely relied on disaster assistance from the federal government in times of crisis. According to the Congressional Research Service, some forty-two ad hoc disaster assistance bills cost taxpayers $70 billion since 1989.

With access to affordable, available and viable crop insurance policies, farmers have the backstop they need to bounce back when our rapidly changing climate throws them a curve ball. That’s good for farmers, good for consumers who eat their produce, and good for the rural economy, which is largely supported by local farmers and ranchers.

Kent Wright is president of Northwest Farmers Union. This op-ed appeared in the Tri-City Herald on May 30, 2015.

No crop insurance would mean no food

We are blessed in this country to have the ability to grow our own food and have enough to export to other nations.

In fact, that is what inspired me to farm. I had a passion for growing food and, in the case of my home state of Washington where wheat is a highly exported commodity, I had the satisfaction of knowing that my work as a farmer contributed to feeding people not only at home, but all across the globe.

The food security we enjoy in this country is made possible in no small part through United States farm policy. With the 2014 Farm Bill, Congress shifted the focus of farm policy to risk management. It made crop insurance the centerpiece, and quite rightly. It helps farmers recover from natural disasters and volatile market fluctuations. It enables them to plan and budget for the long term in the most effective and efficient way.

Farming is an inherently risky business. Even my wheat farm, which is located in the rolling hills above the Palouse River, and considered some of America’s most fertile ground, is vulnerable to serious weather events that can devastate my crops in any given year. I have been farming for more than three decades and I can say, without question, if it weren’t for crop insurance I would not be in business.

And, crop insurance is good for consumers and taxpayers, too.

Without effective and affordable crop insurance, catastrophic production losses would sap the rural economy by setting in motion a series of harmful events: farm failures and consolidation, job losses, financial stress on rural banks and reduced investment in U.S. agriculture.

Emergencies can happen to all of us. There have been enormous emergency bailouts for victims of floods, hurricanes, earthquakes and other disasters. But because of modern crop insurance, farmers have survived some of the worst production years in memory without that kind of disaster relief. Crop insurance fills the need.

This reality is why I am always concerned by those who criticize farm policy or, worse, advocate for its demise, usually by spreading misinformation about the cost and mechanics of farm policy and crop insurance.

One of the misconceptions is that crop insurance is a handout to farmers. Actually, farmers spend $4 billion a year out of their own pockets for insurance protection. They only collect an indemnity after they’ve suffered a verifiable loss and they’ve shouldered their deductible.

Another attack includes barring farmers with large operations from participating in crop insurance. This would be foolish policy because any risk management pool needs a large and diverse group of participants. We want the most productive farmers in the pool to spread the risk. In the same vein, car insurers want safe drivers to buy insurance to help balance losses from more accident-prone drivers.

A financially healthy rural economy requires a financially healthy farm production sector. And that sector relies on a safety net when catastrophic events happen. It is a modest investment considering the return, which is a stable and affordable national food and fiber supply.

Brett Blankenship is the president of the National Association of Wheat Growers. He farms winter wheat in southeast Washington.

Why America’s cotton producers need access to affordable crop insurance

The volatility of weather and commodity markets necessitates government assistance with crop insurance premiums so that our nation’s farmers have access to affordable and dependable crop insurance products.

Crop insurance products were improved in the recent farm bill because Congress recognized that these products are a necessity for farmers, regardless of size. To me, a federally-supported crop insurance policy is defensible because a portion of the product’s cost is borne by the farmer.

I am one of those farmers. I raise cotton, corn, soybeans, wheat, peanuts and cattle in north Mississippi. Crop insurance is my most important risk management tool absent the direct payments that were available under previous farm law programs. Effective crop insurance products have allowed Congress to move away from providing ad hoc disaster assistance, thus reducing pressure on the federal budget.

We all have witnessed how farmers across the country have suffered from historic droughts, flooding, hail and other severe weather. Many cotton producers, in fact, have incurred particularly excessive yield losses the past three years from these weather events.

Without a doubt, the volatility of weather and commodity markets necessitates government assistance with crop insurance premiums so that our nation’s farmers have access to affordable and dependable crop insurance products.

Regarding cotton, the Stacked Income Protection Plan, known as STAX, is an insurance product that was included in the 2014 federal farm law and is available to upland cotton producers beginning with the 2015 crop year.

The U.S. cotton industry believes that STAX, like all other insurance products, should not be subjected to limits or eligibility restrictions. With cotton’s safety net now comprised solely by the marketing loan program and crop insurance, the U.S. cotton industry is especially concerned by any attempt to eliminate or place limits on key crop insurance tools.

Farm policy generally, and cotton policy specifically, was substantially reformed, funding reduced, and market orientation increased in the 2014 farm law, so now is not the time for further changes that will only undermine production agriculture’s risk management foundation.

The bottom line is that America’s farmers need an affordable and dependable insurance policy if they are going to continue producing safe, abundant, and affordable food and fiber – which is essential to our national security. Affordable and dependable crop insurance will provide the stability needed for U.S. cotton producers – and undergird an industry that provides employment for some 200,000 Americans and produces direct business revenue of more than $27 billion. Accounting for the ripple effect of cotton through the broader economy, direct and indirect employment surpasses 420,000 workers with economic activity well in excess of $100 billion.

Sledge Taylor is a farmer from Como, Mississippi, and chairman of the Memphis-based National Cotton Council of America.

Oklahoma farmer: Affordable crop insurance is critical

I started farming and ranching with my father and grandfather in southwest Oklahoma and the Texas panhandle 40 years ago, and I am the fourth generation to farm cotton, peanuts, wheat, corn, milo and cattle on our family’s land.

I was 17 when I started farming on my own, and although I have four decades of experience under my belt, the many issues we face today on the family farm — worked by me, my son, my brother-in-law and my son-in-law — are no less challenging than they were when I began. In most careers, things get easier as you move along. In farming, since the weather and prices are so unpredictable, it really never gets easier.

With few risk management tools available in the early days, it could take years to recover from a hailstorm, an early freeze or any of the many other natural perils that could be thrown at you. When I first learned of crop insurance, I didn’t purchase it because premiums were unaffordable and margins were too slim to afford it. Thankfully, Congress made crop insurance more available and affordable — by partially discounting the premium — and now I wouldn’t farm without it.

Since the passage of the 2014 Farm Bill, crop insurance is the best tool farmers have to manage risks and revenue. It’s not cheap, but it is something that we budget for annually and can’t imagine not having.

The key to crop insurance’s success has been its affordability, its availability and its viability. Last year, farmers spent nearly $4 billion on crop insurance policies that protected 90 percent of planted cropland in the United States. I’d bet that many of the farmers in our area wouldn’t be surviving the current drought — which started in 2011 — if it wasn’t for crop insurance.

Despite the fact that agriculture’s safety net programs took a huge cut in the last farm bill, some in Congress seem to think we need to give more. I wonder if some of those people have any idea where their food and clothes come from or what it takes to get it from the farm to their plate or closet.

It seems almost daily that someone in Congress is proposing a bill to cut the premium support on crop insurance. It would not serve anyone to cut these risk management tools to farmers, as they allow farmers to concentrate on producing higher-yielding, better-quality crops that reduce the costs to the consumer.

Crop insurance is not a gift but insurance, just like homeowner’s insurance, that farmers buy. And like homeowner’s insurance, we don’t collect a dime without a verifiable loss and paying a deductible. Without crop insurance, many farmers couldn’t get financed and it would be almost impossible for a beginning farmer to get started.

Crop insurance is critical in meeting these challenges, and guarantees the American consumer a safe, affordable supply of quality food and fiber that is unsurpassed anywhere in the world.

By: Kelly Horton, Oklahoma farmer and rancher

Evolution of farm policy benefits farmers, taxpayers

Some stereotypes about U.S. farm policy just won’t die.

For example, the belief that farmers get paid for not growing; or that benefits just go to big agribusinesses; or that farm spending is out of control.
Such criticisms make splashy headlines but are no longer relevant thanks to the significant evolution of farm policy over the past 20 years. Over that time, government control of agriculture has given way to a system where farmers take more responsibility, make decisions based on market forces, and are asked to help fund their own safety net.

The most significant reforms occurred in the 2014 farm bill, which is projected to reduce farm spending by billions over the next decade.

The farm bill repealed direct payments – checks that some farmers received every year no matter the market conditions or how crops fared. In their place are crop insurance policies made available to all growers regardless of size, geographic location or cropping decision.

With crop insurance, most farmers get bills in the mail instead of government checks, and because producers are now paying more of the farm policy tab, spending has trended downward over the years (to less than three-tenths of 1 percent of the federal budget).

Here’s how it plays out on my sugar beet, soybeans and wheat farm.

Every year, I analyze input costs, market prices and yield trends. Then I purchase crop insurance tailored to the unique risks on my farm.

Most years, my crops succeed and no insurance check is collected, meaning insurance companies and the government keep my premiums to offset other policy costs.

In disaster years when we suffer from drought, frost, flood, hail or a host of other calamities, insurance only kicks in after I’ve shouldered a sizable deductible, meaning I share the cost of aid.

Collectively, farmers spend about $4 billion out of their own pockets every year to buy insurance. They do this because the government ensures policies are affordable and widely available and because an efficient infrastructure maintained by the private sector speeds assistance to us much faster than old government disaster programs, which were 100 percent taxpayer-funded.

Crop insurance is just part my story. Our farmer-owned cooperative also takes out government-backed operating loans on our sugar crop. These loans help cash flow the operation as the sugar is sold over the course of the year, and, like any other business loan, it is repaid with interest.

As a result, sugar policy typically operates at no taxpayer expense and is projected by the U.S. Department of Agriculture to cost $0 over the next decade.

Admittedly, agriculture’s transition to lower costs isn’t fast enough for some detractors. But, as a farm leader involved in the 2014 farm bill debate, I can attest that tremendous headway has been made, and I know that it is vital to remove remaining stumbling blocks to further reform.

For example, unnecessary environmental regulations on agriculture breed bureaucratic inefficiencies, drive up costs of production and make it difficult to compete.

And, while U.S. farm supports are getting smaller, foreign subsidies are rapidly increasing abroad and distorting global markets.

In the case of sugar, foreign subsidies have created the most volatile commodity market in the world, where global prices currently cover just half the cost of producing the crop. In other words, exporters would lose 50 cents for every $1 worth of sugar sold if it weren’t for subsidies propping them up.

Putting an end to the domestic and foreign policies that stifle U.S. agriculture’s competitiveness should take top priority in the years ahead as the current farm bill is implemented.

And as we wage that fight, taxpayers can take comfort in the fact that they are shouldering less risk and that U.S. farm policy is headed in the right direction.

Erickson is immediate past president, American Sugarbeet Growers Association, and farms with his son near Hallock, Minn.