Crop insurance critical for farmers and consumers

The Farm Bill debate is heating up in Washington and that has me thinking back to 2015.

We received way too much rainfall in central Missouri that spring and my family’s farm in Boone County, like many across the state, suffered big losses. We were only able to plant 40 out of our normal 500 acres of soybeans. Statewide, more than a million acres of soybeans went unplanted.

Without crop insurance, an event like that would have financially broken our farm.

It would have been nearly impossible to stay in business for the following year because of overhead costs like equipment and land, not to mention the input costs required to raise a crop that were already applied.

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That was a tough year for my dad, Nathan, and me. We farm 1,000 acres raising corn, soybeans and occasionally small grains. My dad also runs a cow-calf operation.

Crop insurance, which is part of the farm bill, helped us that year but it doesn’t cover all of the costs. Prevented-planting coverage, in the 2015 example, only covered 60 percent of our per-acre revenue, minus the premium we paid.

But it’s certainly better than going out of business. And that’s something I hope Congress considers in the 2018 farm bill.

I grew up on a farm. I studied agricultural systems management at the University of Missouri and worked as a field test engineer for three years after college. I enjoyed it and was able to travel all over the United States and across parts of South America.

But you can only travel like that for so long, and I love farming. So, when an opportunity opened up back home I gladly returned to the family farm.

It’s an honor to grow food for America and the world. But it’s also much riskier than a paycheck from an employer, like when I worked as an engineer. Crop insurance for me, as a young producer, is a critical risk management tool.

Row crops especially are very capital intensive. The equipment, machinery, buildings and structures on the farm and the land all have costs. Then you add in costs like seed, fertilizer, pest protection and fuel, and it equals a significant investment per acre every year.

All of those dollars invested each year are subject to risk that farmers cannot control based upon the weather and the markets.

Crop insurance is a way we can mitigate risk and hopefully be able to continue to farm the following season if we do have a weather disaster that prevents us from being solvent.

Crop insurance is not unlike other forms of insurance. Whether it’s your automobile or health insurance, you don’t intend to ever have a claim or use the policy, but it’s a safety net when something goes wrong. It’s there as risk protection, and it’s something that is necessary to be successful in today’s farming operations.

That’s why it has become a cornerstone of the American farm safety net. It’s a public-private partnership that protects the investments farmers make in each crop and it protects taxpayers from costly disaster-relief bills.

It means when weather strikes in central Missouri, the insurance companies help cover the losses, not Congress. That’s why it is so strange that some lawmakers are angling to make crop insurance more expensive and less available.

I hope Congress remembers in the next farm bill that crop insurance is not only necessary for rural America, but that ultimately it protects the consumer. Without it, we would not be able to provide a safe, reliable and affordable food supply for America and the rest of the world.

Brian Martin raises corn, soybeans, and small grains with his father, Nathan, in Boone County, Missouri.

Crop insurance more important than ever to Missouri farmers

It is no secret that we are experiencing hard times in farm country — here in Missouri and beyond. In addition to the typical weather rollercoaster, farmers are facing yet another year of low prices in the marketplace.

Meanwhile, our input costs (farm equipment, fertilizer, land rent, etc.) remain the same. It doesn’t take a math whiz to see that the numbers just aren’t adding up for our nation’s farmers.

As a lifelong farmer myself, I haven’t seen this kind of downturn since the farm crisis of the 1980s. Many of my fellow farmers I have spoken with have shared this same sentiment. It is concerning, to be sure. But thankfully, a few things have changed since then that puts us in a better position to weather this latest storm.

One of the most important developments is the emergence of a strong crop insurance program. Crop insurance is a risk management tool that protects us against elements out of our control. It kicks in, for example, when we experience a loss of our crops due to natural disasters, or a loss of revenue due to market fluctuations.

Crop insurance works a lot like auto insurance or homeowner’s insurance. Banks often require farmers to purchase it, just as they require insurance from homebuyers. Farmers spend between $3.5 billion and $4 billion a year to purchase crop insurance sold through private companies.

Because of the unique risks involved in farming, the federal government also pitches in to reduce the cost to farmers. Without this federal support, crop insurance would not be affordable to a majority of America’s farmers and ranchers.

With it, however, many farmers are able to plant another year.

Crop insurance is especially critical for beginning farmers, who generally have less credit and capital. Going into farming these days is a daunting proposition all around, but crop insurance does provide some important peace of mind to both the young farmer making the investment and the banker making the loan.

But it isn’t just farmers who benefit from a robust crop insurance program. Crop insurance is critical to the broader rural economy as a whole. It provides a backstop to the whole farm supply chain, and to our communities. A calamity on the farm doesn’t have to mean a calamity across the board.

Taxpayers also benefit from a strong crop insurance program. In fact, before crop insurance was widely available like it is today, the cost of natural disasters fell directly on U.S. taxpayers by way of emergency legislation. Now, unlike many other industries, taxpayers aren’t on the hook for bailouts when the bottom falls out.

Farm policy critics would do well to remember that every American consumer relies on agriculture. We all want healthy, fresh food for our families. We also want affordable food. In today’s difficult farm economy, crop insurance provides an important measure of stability. Access to affordable crop insurance allows American farmers to continue to provide affordable food for America and the world. Without it, I can guarantee you it wouldn’t take long for it to hit everyone’s pocketbook at the grocery store

I encourage our lawmakers in Washington to also keep this in mind as they develop the next Farm Bill, and urge them to work together preserve a strong crop insurance program.

Afterall, as the famous saying goes, those who do not learn from history are doomed to repeat it. And that’s something none of us can afford.

Dorian Culver is a soybean farmer and crop insurance agent from Harrisonville, Missouri.

Crop insurance policies are crucial for farmers

As someone who has spent more than four decades managing a fourth-generation farm and the past 10 years building my family’s crop insurance agency, I believe I have valuable perspective worth sharing regarding how essential today’s federal crop insurance policies are to America’s farmers and consumers.

Specifically, I would like to explain how essential the harvest price option has become to the modern agricultural producer. The harvest price option insures a crop at its actual harvest-time value.

Think of it like a homeowner’s insurance policy: If your home appreciates in value after you purchase it, you are protected at the home’s current value if it burns down and you have to rebuild.

Unfortunately for agriculture, this policy that makes rebuilding possible has come under fire from those who misunderstand the unique risks for farmers who are constantly exposed to the ravages of Mother Nature.

It is important to note that farmers pay an additional premium for this type of protection, and it supports their risk management in two distinct ways. First, a farmer often prices a large percentage of his anticipated — or before-harvest — crop using forward price contracts with a local elevator. If a natural disaster strikes and causes production to fall short of the quantity sold, the farmer would need to purchase enough of the crop to fulfill his contractual obligation. In the meantime, the price of the commodity likely will have have increased because of the overall drop in production after the disaster. Consequently, the remaining crop available to purchase is priced much higher than what was covered under the spring contract.

By purchasing the harvest price option as part of his crop insurance policy, the farmer is able to meet his contractual obligations either by buying grain to deliver under the contract or by making a financial settlement with the purchaser.

A second way the harvest price option becomes essential to producers is if the grain being produced is intended to support the farm’s future animal feed needs. If a natural disaster destroys the grain that is to be harvested, then the producer will be forced to purchase feed instead. If there is a widespread short crop, the feed costs will be much higher.

With the harvest price option on the producer’s crop insurance policy, the farmer will be paid the actual harvest price on his lost production. This, in turn, allows him to purchase the feed needs for his livestock operation and still maintain a viable business.

In fact, allowing farmers to maintain a viable business when the unexpected happens is what crop insurance is all about. The beneficiary is not just the farmer, but also the American consumer.

Crop insurance enables farm families such as mine to pick up the pieces after a disaster and continue to produce food and fiber without significant price increases or supply shortages for consumers.

The fact that Americans spend less of their disposable income on food than any other country speaks volume as to how critical it is that farmers have risk-management tools such as crop insurance.

The critics would do well to try to understand the link between a viable crop insurance program and an affordable, stable food supply before proposing measures that would destroy it — in other words, before biting the hand that feeds them.

By: Gary Riekhof, Missouri farmer and crop insurance agent