As a fourth generation Mississippi farmer, I grew up knowing that I worked in a field full of risks. When the weather cooperates, prices dive. When prices are great, foreign markets collapse, sending prices into a sudden nosedive. It’s always something.
However, it wasn’t until I actually set out on my own in farming in 2011 that I fully understood just how financially exposed farmers are when they put a crop in the ground. That year, I had to borrow roughly $2.5 million to put 3,500 acres of mostly corn into the ground, fully knowing the financial consequences if things went awry.
Just as luck would have it, my crop insurance agent talked me into buying enough coverage that year to cover a loss – up to 85 percent of my crop – that was simply unimaginable to me. I wrote that $60,000 check knowing purchasing my crop insurance policy that year certain that I was buying coverage for a catastrophe that would never happen. And then it happened. And that’s the moment I realized that for me, crop insurance is not only essential, it’s the only reason I’m still in business today.
The concern that I had about what had become the drought of 2011 after I planted my crop quickly morphed into a lump in my throat as torrential rains came to the Mississippi delta and the local river spilled over its banks. Before I knew it, the levees had failed and the Yazoo River was knocking on my front door, flooding nearly my entire farm.
Crop insurance is a public-private partnership whereby individual farmers purchase policies out of their own back pockets for insurance that is specifically tailored for their tolerance to risk and the profile of their farm. Crop insurance is affordable to farmers, thankfully, because the federal government provides a discount, ensuring that all farmers, young and old, big and small, can purchase policies if they choose to.
Farmers buy crop insurance for the same reason drivers purchase auto insurance: because it gives you some degree of stability in times of disaster. If you wreck your car, your car insurance will replace it and you can go to work the next day. Why wouldn’t we as a nation also want to have an insurance policy on our food supply, since that, after all, is the most important thing we have?
Prior to the rise of modern day crop insurance, the wide-scale disaster that we experienced in 2011 would have necessitated a very expensive, ad hoc disaster bill from Congress. While anything is better than nothing when you literally lose the farm, those disaster funds usually took a year or more to actually land in the hands of the farmers who needed the help. A year or two is often just too late for some farmers, particularly young and beginning farmers.
Crop insurance, on the other hand, is administered by private insurance companies and help arrives in weeks or a month or two, not years later. In my case, as my farm was literally underwater, my crop insurance agent, the adjuster and the their supervisor were on site to get things moving for me.
In 2014, crop insurance covered nearly 90 percent of planted farmland in the U.S., costing farmers roughly $3.8 billion out of their own back pockets. Those policies protected 128 different crops including nearly all major commodities and a long list of specialty crops including apricots, bananas, blueberries, cherries, coffee, olives and tangerines.
Needless to say, if I hadn’t purchased crop insurance that first year I struck out on my own, I would be doing something else other than what I love and do best, which is farming. And me, my wife and kids would be spending the rest of our lives paying the bank back for that first production loan I borrowed. Don’t let anyone tell you anything differently: Affordable, available and viable crop insurance is essential for a healthy farm sector and plentiful, domestic food supply.
John Michael Pillow is a farmer from Yazoo City, Mississippi.