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Connecticut River Valley farmers are inventive and hardworking businessmen and women and it has been an honor to work with them for the past 40 years. Given their ingenuity, and the important safety net crop insurance provides, the next 40 years should be exciting to watch.
I have been farming for almost four decades and have witnessed firsthand the difference crop insurance can make…As president of the Iowa Farm Bureau for the past five years, and a member for many years prior to that, I have also had the opportunity to learn why crop insurance works.
From a lending perspective, crop insurance and farm policy are enormously important because the mitigate another kind of risk: defaulting on a loan after a catastrophic event…
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.
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.
An average family farm in the panhandle of Texas farms between 1500 to 2500 acres and must borrow $500,000 to $1 million each year to produce a cotton crop. Because of the low price of cotton and the high input costs in 2015, many had farm losses exceeding $150,000.
The financial situation for many farming operations all across the country has deteriorated fast and many lenders are nervous about providing financing. This is why we need strong farm policy and crop insurance to help us manage things beyond our control like a natural disaster or a collapse in commodity prices.
The public needs to understand that growing food is a very risky business, and farmers are price takers, not price makers. Every year, the people who produce our food face numerous risk factors, like weather, high input costs, and the global market, for which they have no control over.
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.
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.