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.