Expanding coverage for all producers

Editor’s Note: Farm Policy Facts is pleased to publish a guest editorial from Brandon Willis on the successful efforts since the 2014 Farm Bill to expand risk management tools to more agricultural producers all across the country. Willis oversees the government agency that partners with private-sector companies to deliver crop insurance coverage that is a strong component of the farm safety net.

By: Brandon Willis

As the Administrator of the Risk Management Agency (RMA), I have the opportunity to talk to farmers and ranchers all across the nation about the federal crop insurance program. I am struck by how frequently they share with me the same message – that without crop insurance they would no longer be farming.

The program keeps family farms in the family, even after a bad year, and provides a safety net that allows beginning farmers to pursue their dream of farming. In addition, federal crop insurance provides access to credit and oftentimes lower loan interest rates, which makes obtaining the capital needed to farm more obtainable – especially for those who are just starting out.

Federal crop insurance has become an essential part of the farm safety net due to its ability to provide dependable protection and grow with the needs of farmers and ranchers. Congress recognized its importance by strengthening the program through the 2014 Farm Bill. New tools like the Supplemental Coverage Option and the Actual Production History Yield Exclusion were implemented as a result of the 2014 Farm Bill, providing new options for major row crops, as well as fruit and nut producers.

The number of acres covered by crop insurance has increased from 264.7 million in 2009 to 297.0 million in 2015. The variety of crops covered increased as well, going from 438 in 2009 to 543 in 2015. RMA estimates that 85 percent of planted acreage for major crops is now covered by crop insurance. Even with coverage for most crops greater than ever before, RMA has continued to listen to farmers and ranchers and expand options that meet the needs of diverse farm operations nationwide.

By working with stakeholders, RMA developed Whole­Farm Revenue Protection as a way for smaller diversified producers to insure all of the crops and livestock on their farm under one policy. This policy was first offered in 2015, and by 2016 it was available in every county of every state in the country. Its nationwide coverage is a first for federal crop insurance.

In addition to expanding programs, RMA recently announced changes that will offer American farmers greater flexibility with crop decisions. Some of these modifications relate to the practice of double cropping. Other options provide flexibility for organic producers and those transitioning to organic – a traditionally difficult time for producers to find coverage that matches the costs and price expectations of their commodities.

In order to provide the crop insurance options that work for all producers, the Agency must ensure that its programs are well run. We took steps to cut the Agency’s improper payment rate by more than 50 percent, down from 5.58 percent in 2014 to 2.2 percent in 2015. That figure is half the government average of 4.39 percent. And, by taking further steps, there will continue to be stronger oversight of program dollars.

As farming and farm products change to meet market needs, crop insurance will continue to adapt and expand to meet the needs of our producers. Whether it’s through improvements to existing programs or the introduction of new products, RMA will do its part to find additional ways to strengthen the farm safety net for our rural communities.

Brandon Willis serves as the Administrator for the U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA).

Crop insurance preserves S.D. farm economy

South Dakota’s history is deeply rooted in agriculture, perhaps more so than any other state in the union. From the homesteaders who came here in the 19th century, with little more than a plow and a dream, to their descendants who still work the land, agriculture is the way of life for many South Dakotans.

As the president of the S.D. Farm Bureau and a livestock, corn and soybean farmer myself, I can tell you firsthand that our state’s farmers personify a work ethic and a sense of pride and purpose that we are seeing less and less of outside of agriculture these days.

But agriculture is more than just a proud tradition — it’s also S.D.’s top industry, with a $25.6 billion economic impact each year. Our farmers and ranchers generate 20 percent of our state’s economic activity and provide jobs, directly and indirectly, to 122,000 residents.

It’s essential that we preserve S.D.’s farm economy, not just for our own economic well-being, but for all Americans. Our nation’s farmers play an indispensable role in ensuring a safe, affordable and stable food supply. And this role is becoming increasingly important as we struggle to meet the needs of a growing world population. In short, food security is a vital part of our national security and that’s something we need now more than ever.

Unfortunately, our farm economy has seen better days. Our farm families are facing a year of projected below-cost returns on corn, soybeans and wheat. Overall, farm income is also projected to decrease again in 2016. This will be the third consecutive year of declining farm income, following sharp drops in 2014 and 2015 totaling 56 percent in those two years. If the 2016 income projection comes to fruition, it would mark the lowest farm income level since 2002.

This is why having a sufficient farm safety net — with crop insurance as the cornerstone — is more critical than ever. Crop insurance provides protection against the one thing that even the most resilient farmer cannot defeat — the wrath of Mother Nature.

Crop insurance is a unique public-private partnership that not only supports farmers, but eases the burden on taxpayers. Prior to the emergence of crop insurance as the top risk management tool for farmers, natural disasters regularly resulted in very expensive, unbudgeted ad hoc disaster bills from Congress. Now, when disaster strikes, farmers receive an indemnity check.

Let’s be clear, crop insurance is not a handout — far from it. To gain coverage, farmers have to put skin in the game. In fact, since 2000, farmers have spent nearly $30 billion out of their own pockets to purchase crop insurance protection. We only collect an indemnity after we’ve suffered a verifiable loss and met our deductible.

We purchase crop insurance for our family farm every year and have never filed a major claim. But that’s hardly the point. Like our fellow farmers, we purchase crop insurance for the same reasons we purchase home insurance or car insurance — with the hope we’ll never need it. But we’ll keep purchasing it every year because some day we might. Crop insurance gives us peace of mind, and if we ever experience a major crop disaster, would provide us with the resources to keep farming.

Farmers have faced tough times before and rest assured we will get through them again. Old fashioned hard work, innovation and smart farm policies like crop insurance will help ensure that the proud S.D. farming tradition will live on for many future generations, and, in turn, will secure a bright future for us all.

Scott VanderWal is a third-generation family farmer from Volga. He is president of the South Dakota Farm Bureau and vice-president of the American Farm Bureau.