Crop insurance protects New York’s farm economy

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If you ask someone outside of the agriculture community to describe the typical American farm, chances are they will paint a picture of the amber waves of grain so prominent in the Midwest.
And while this is certainly a critical component, U.S. agriculture is much more diverse, and stretches far beyond our nation’s breadbasket.

Here in New York, for example, the agriculture industry pours in nearly $6 billion annually to our state. This is a major economic contribution that we couldn’t do without.

But, as we all know, farmers face challenges that most others do not. As a fourth-generation farmer myself, I have witnessed the wrath of Mother Nature on numerous occasions.

So it is critical that we have a risk management plan in place to help us deal with the many things we can’t control.

Crop insurance is at the heart of this effort. This cost-sharing, public-private partnership operates very much like other insurance policies. In total, farmers pay between $3.5 billion and $4 billion in premiums every year. We do so because you can’t put a price on peace of mind.

Part of the reason so many farmers have confidence in the crop insurance program is because many improvements have been made in recent years. The last farm bill, for example, took steps to make crop insurance more affordable and available to specialty crop growers, organic producers and young farmers.

Today, crop insurance is available for more than 130 commodities and has more than 62,000 county crop programs.

This is especially important to states with unique agriculture offerings like ours.
New York farmers – who, like our crops, are a diverse bunch – also appreciate the flexibility of the crop insurance program. Policies can be tailored to each farm’s crops, production methods and risk, and each farmer’s risk tolerance.

Farmers work closely with their crop insurance agents, many of whom are farmers like myself, to find the right fit for their needs.

Despite the effectiveness of the crop insurance program – or perhaps because of it – the program still has its critics.

As we begin to consider the next farm bill, and continued funding, I would remind these misguided critics that in the days before crop insurance, Congress had to deal with passing costly disaster relief, and taxpayers footed the bill.

Sometimes folks are quick to criticize crop insurance because they don’t realize that, like agriculture, the program touches every state in the nation. It has proven itself to be our most effective risk-management tool.

Let’s allow this program to keep working, not just for the farmers who put everything on the line year after year, but for the solvency of our state and national agriculture economies as well.

Steve Van Voorhis is a fourth-generation farmer in Monroe County and a crop insurance agent.

Don’t drain the crop insurance pool

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President Donald Trump was right when he said insurance is a complicated subject.

When explaining its finer points, I often describe insurance as a pool. The deeper and wider the pool — that is, the more people covered — the more insurers can spread risk, which makes insurance cheaper for everybody who’s swimming.

To ensure the pool is big enough, it’s important to attract people with low-risk levels to offset losses elsewhere. For example, safe drivers are needed in the auto insurance pool to make up for accident-prone motorists.

The exact same principle applies to crop insurance.

That’s why I was puzzled when I read a recent opinion piece in this paper [Crop insurance subsidies should be capped, May 16] urging Congress to increase insurance costs for larger farms. Doing so would inevitably reduce participation by agriculture’s least risky operations and essentially drain the crop insurance pool. That would drive up insurance costs for all, including small and beginning farmers who tend to be riskier and need coverage the most.

America hasn’t always had a good crop insurance system to protect farmers from the whims of Mother Nature. In the past, farmers had to go to Congress to ask for disaster aid. This wasn’t fair for taxpayers, who had to foot the whole bill, or for farmers, who often waited years for help to arrive.

So, Congress asked the private sector for help. Now, farmers visit a private-sector agent to design an insurance policy tailored to their individual operations. And when disaster strikes, a private-sector claims adjuster verifies the loss and a private company cuts an indemnity check in weeks, not years.

It’s so popular that farmers have collectively spent $50 billion from their own pockets since 2000 for coverage. Farmers must also shoulder at least 25 percent of a loss before receiving any help.

In other words, crop insurance ensures that farmers are active participants in funding their own safety net.

But farming is risky business and farm households have much more volatile income than non-farm households. Similarly, crop insurance is exposed to greater risk than other lines of insurance — a single drought can devastate farms from coast to coast, as we saw in 2012.

Therefore, the government has a role to play. To save taxpayers money, and to ensure farmers keep paying for part of their safety net, Congress incentivizes participation by discounting premiums and helping pay administration costs that would otherwise fall to farmers. It also encourages the expansion of coverage options so that insurance works as well for growers of green beans as it does soybeans.

Unfortunately, some critics of farm policy want to upend the whole system by capping insurance discounts or even excluding larger — and less risky — farms altogether. It makes for an easy talking point, but it would carry unintended consequences.

By removing your most established farms, and all the acreage associated with those farms, you are doing the same thing as excluding the healthiest people from life insurance. You are draining the pool, making insurance costlier and less available for everyone left.

Crop insurance works well because it is a tool available to farmers of all sizes in all geographic regions.

Congress should not upset this delicate balance by discriminating against one group of growers and weakening their ability to manage risk. Doing so would throw small farmers, and ultimately taxpayers, in the deep end.

Bill Pearson, Chairman, Independent Insurance Agents of Iowa

Farm Credit and Crop Insurance Essential for Our Nation’s Farmers

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It is planting season in south Texas right now and we are working long days and nights in the fields. As a third-generation farmer, if there is one lesson I have learned it is that when it comes to getting seed in the ground, time is of the essence.

As such, there’s not much that can tear me away from my farm this time of year. Recently, though, I traded my overalls and work boots for my best suit and tie and headed to Washington, D.C., to testify before Congress about an issue very dear to farmers like me — the importance of reliable financing and strong farm policies that reflect the unique challenges our nation’s farmers face.

For cotton farmers like me, this will be the fifth year of tough prices. We can’t control the markets any more than we can the weather, so we need a lender that works hard on our behalf even during the toughest of times. Thankfully, Farm Credit is that lender. Its most important mission, assigned by Congress more than 100 years ago, is to ensure that farmers like me have a consistent source of financing irrespective of economic swings or vagaries of the financial markets.

As I put together my farm operating plan for this year, I knew – just like thousands of other farmers around the nation know – that Farm Credit has the financial strength and strong desire to finance that plan and to help me succeed.

Equally critical to farmers, as Congress begins to work on the next Farm Bill, is protection of a strong and affordable federal crop insurance program. This program is key because it provides both farmers and our lenders some protection from many of the inherent risks involved in farming.

When it comes to obtaining credit, the vast majority of crop loans incorporate crop insurance in their operation plans, and coverage is a requirement for many loans. Without it, credit would be limited to those with the strongest balance sheets. Given the recent price trends and outlook for commodity prices, there just aren’t many farmers who fall into this category.

For beginning farmers, crop insurance is even more critical and often a prerequisite to getting operating loans to start farming. I am 64 years old, which is the average age of a farmer in the U.S. As baby boomers retire, we are relying on the next generation of farmers to follow in our footsteps. They will need crop insurance to do that.

But crop insurance doesn’t just support farmers. It benefits the broader rural economy as well. Insurance premiums that we pay out of our own pockets, which have tallied nearly $50 billion since 2000, help shield suppliers, processors and cooperatives, as well as our communities, from economic calamity after a disaster.

Last but certainly not least, taxpayers also benefit from a strong crop insurance program. Before we had crop insurance, the cost of natural disasters that destroyed our fields would fall to taxpayers as Congress approved ad hoc disaster assistance programs. This happened repeatedly before the widespread use and availability of crop insurance.

The current downswing in agriculture means the next Farm Bill will be more important than ever. American farmers are the most efficient in the world, but we need strong farm policies that give us the right tools, like reliable credit and a vibrant crop insurance program, in order to keep meeting our growing global food, fiber and energy needs.

Jimmy Dodson is the chairman of the Farm Credit Bank of Texas. He raises cotton, corn, wheat, hay and grain sorghum on his family farm near Corpus Christi.

Kansas blizzard highlights importance of crop insurance

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The foot of snow that fell recently left wheat stalks bent and broken across western Kansas. The damage is heartbreaking. Estimates show as many as 1.7 million acres could be affected.

As I survey the damage, I think back to what it must have been like when my grandfather started farming in western Kansas in 1928. He built his home and had only his hands, and his family, to rely on. It was a tough life.

My father was born in 1934, and my grandmother changed the wet tea towels covering his crib every half hour to keep the dirt from the Dust Bowl out of his lungs.

I’m proud of the adversity my family has overcome to build our successful farming operation, and I’m proud to carry on that tradition as the third generation.

My dad, and my grandfather, taught me an important lesson about farming: We are only stewards of the land. Our job is to care for it and leave in better condition for the next generation. As farmers, we are at our best when we plant successful crops that feed our families, and the world, while conserving the land.

But who takes care of the farmers while we are caring for the land and growing the food? Who helps us when an unexpected April snow destroys our crops and threatens our way of life?

In my father’s day, and certainly my grandfather’s, farmers were mostly on their own. Back then, farmers faced bankruptcy and would have to ask Congress for ad-hoc disaster relief to save their farms.

The politicians would then debate, and years might drag on before farmers got relief at taxpayer expense. Oftentimes, that relief was too late.

Thankfully, things have changed since then.

Today, modern crop insurance means farmers who lost wheat in the storm won’t lose everything they invested in the winter season. It means aid is on its way in weeks, not years. And it means taxpayers don’t have to cover the whole cost.

Some critics claim crop insurance is a way for farmers to pad profits in lean years. But that’s simply not true.

Crop insurance is very expensive. Farmers pay a lot every year out of our own pockets for policies specifically tailored to our operations. We also have to shoulder a percentage of the loss as a deductible – usually about 25 percent – before we get any help. In other words, we are active participants in our own farm policy.

Crop insurance is something you hope you never have to use. It doesn’t pay for the total cost of planting a crop of wheat. But it will keep farmers in business for the next season – and that’s the whole point of a safety net.

Congress and the new administration have promised to protect American jobs. A great way to accomplish that is to maintain an affordable and widely available system of crop insurance in the next farm bill. Our recent hardship in Kansas shows just how important it is.

David Schemm is the president of the National Wheat Growers Association. He farms in Sharon Springs.

Crop insurance critical to farmers

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Here in central Nebraska, raising corn is a way of life.

I got started when I was 21 with 160 acres I bought from my grandmother. Today, my wife, Linda, and I farm 3,000 acres of corn. I’m 66 now, and I’ve seen a lot of changes in farming over the years.

Farms are much more productive thanks to advancements in technology. But it takes a lot more land, equipment, planning and investment to grow a modern corn crop and get it to market at a price that allows a family to make a living.

Luckily, we’re pretty efficient in Nebraska.

Last year, we grew $6 billion worth of corn across the state. Of course, that $6 billion in output means farmers had to spend billions of their own money growing the crop.

That’s a lot of risk, and without a strong crop insurance system in place, we couldn’t do it. We couldn’t obtain the capital needed to farm today without lenders being confident that we’re properly managing weather and market risk.

Crop insurance is a unique public-private partnership that protects my investments and protects taxpayers, who no longer have to fund all of the farm safety net.

Before crop insurance, farmers went to Congress after every disaster and asked for help through expensive, unbudgeted relief bills. That wasn’t fair to taxpayers, who picked up 100 percent of the tab.

And because the legislative process took so long, it wasn’t fair to farmers, who needed help immediately.

That is why farmers are willing pay a lot from their own pockets for a crop insurance policy that is specifically tailored to their operation.

In fact, a full-time corn farmer might spend tens of thousands of dollars for a policy and the peace of mind it provides.

Even though we invest a lot in these policies, we hope we never need to cash them in. Because if we’re filing an insurance claim, it also means we’re shouldering a deductible and will have a loss that year. Crop insurance is designed to help you pick up the pieces, not profit.

I’ve seen this firsthand in the drought of 2005 and the violent hail storms in 2014 that brought moderate to severe damage to 16 out of 18 of our fields. I didn’t make any money those years, but I also didn’t go out of business.

That is a far cry from the tough times in the 1980s, before crop insurance was as popular as it is today. Back then, prices were low and farmers feared for their livelihoods.

Prices are also low today, but modern crop insurance takes the fear out of farming. No wonder crop insurance is the top policy priority for most farmers in this upcoming farm bill.

The new administration has promised to protect American jobs and American farms. Keeping crop insurance affordable and widely available is a great way to live up to that promise.

Jim Obermiller, Nebraska corn farmer