Farm policy is essential to maintaining ag production in the U.S.

If there is one place that, in recent years, overwhelmingly demonstrates the need and importance of U.S. farm policy, it is California. For the past four years, this top agricultural producing state has experienced record drought conditions and for farmers like my husband and me, it has taken a toll on our operation.

We have been growing rice in the Sacramento Valley for 30 years and we have never seen a weather event this relentless. Although the arrival of El Nino has provided much needed rain, the effects are marginal because of the intensity of the drought.

Operating loans are essential for every farmer because of the cost of producing crops, but for my family they have enabled us to keep going to the next year despite depressed yields and prices, and in some cases the inability to plant a crop at all.

We would not be able to receive this crucial financing without crop insurance and farm policy in place. Farming is an inherently risky business and bankers want assurances that we will be able to pay back the loan if disaster strikes. We were not born into farming – we built our operation from the ground up – so we still have land and equipment payments to make regardless of whether we have a good or bad growing season, or whether a natural disaster wipes out our crops altogether. Crop insurance is something we purchase each year to manage this risk and we only receive an indemnity when we suffer a verifiable loss. Even then, it doesn’t make us whole, but it does soften the blow from a bad year.

It’s important to have this kind of safety net in place for all farmers, all across the country. And, I am always alarmed by the calls in Washington to cut what remains of the farm safety net, especially from those who have no idea what it takes to grow food and fiber. We need risk management tools now more than ever to help us overcome unpredictable weather events.

Additionally, we need policy in place to combat unfair practices with our foreign competitors like China and Thailand whose support for their rice growers far exceeds that of the United States and actually violates agreements under the World Trade Organization (WTO). While the U.S. was reforming its policy in the 2014 Farm Bill, other countries were ramping up support for their farmers, in some cases by more than a 100 percent. Their policies are trade distorting and leave American growers at a competitive disadvantage.

American farmers can and do manage extraordinary risks, year in and year out, but we cannot manage the challenges associated with unpredictable and sustained natural disasters, volatile markets, and trade distorting policies of our foreign counterparts without risk management tools like crop insurance and farm policy.

Lawmakers in Washington should consider this reality. If they want to continue to have agricultural production in this country, and in California in particular, they need to invest in it.

Lorraine Greco serves on the California Board for the U.S. Rice Producers Association. She grows organic rice with her husband in northern California.

Insurance on crops boosts farms of all sizes

It is no secret that farm demographics demonstrate an alarming trend in American agriculture.

The average age of the American farmer is rising while the number of beginning farmers is decreasing.

These beginning farmers are typically younger than their more established counterparts with less access to credit and capital.

I see this reality every day as a banker at one of the largest agricultural lending institutions in Indiana. In general, all farmers need access to credit to operate and manage a farm, but it is even more crucial for a young farmer because of the enormous startup costs.

It is not an exaggeration to say that farmers borrow more in a single year to grow a crop than some Americans borrow in a lifetime.

And, frankly, banks can be wary of lending to a young farmer just starting out because of the combination of a short credit history and the inherent riskiness of the business.

The one factor in their favor is crop insurance. By purchasing a policy, young farmers enhance their ability to obtain financing because banks have the assurance they can make payments even during tough times.

But opponents of farm policy in Washington are proposing legislation that, if enacted, would threaten the viability of this important risk management tool and make it harder for young, beginning farmers to survive.

These farm policy critics would have you believe that barring producers with large operations from participating in crop insurance helps smaller farmers.

Actually, it does the opposite.

Pooling of risk is essential for any viable insurance program. Because every farmer of every size in every part of the country can purchase crop insurance, the risk pool is large and diverse, which makes crop insurance affordable for all farmers and minimizes the financial exposure of the bank, the farmer and the taxpayer.

Similarly, car insurers want older, more experienced drivers in the same risk pool as those who are younger and potentially more accident-prone.

Eliminating the more established farmers from the mix shrinks this pool and undermines the entire system, making it harder for smaller, beginning farmers to get insurance coverage and, subsequently, agricultural financing.

Statistics already show us that farming is a hard life with fewer and fewer people willing to try it.

Now is not the time to make starting a farm even more difficult by destroying the viability and affordability of crop insurance.

Now is the time to protect the one thing beginning farmers and their bankers can count on.

By: Joe Kessie, Sr. Vice President, Lake City Bank, Indiana