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

Crop insurance helps multi-generational farm weather the ‘perfect storm’

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My family, which farms 21,000 acres of wheat, alfalfa and vegetables in Benton County, often jokes that our great-grandfather Lenzie Berg should have perhaps thought twice before he decided to stake his claim in one of the driest regions west of the Mississippi.

We are kidding, of course — we wouldn’t have it any other way. Farming is a way of life for the Berg family. It is in our blood, so much so that my brothers and I came back home to help our father on the farm after we completed our educations. We know farming isn’t something we will ever get rich doing, at least not in the fiscal sense, but we take great pride in the role we play in feeding and clothing our growing world.

You do, however, have to get creative when you are farming in an area that, on average, only gets seven inches of rain a year. Our conversion from dryland to irrigated farming, for example, was by no means an easy or inexpensive undertaking, but essential to preserving our family farm for the next generation.

Year after year, we apply the real-life lessons passed down by our father and grandfather, our own unique expertise and lots of old-fashioned sweat and tears to the task before us — producing a bountiful harvest.

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But sometimes, that task can be insurmountable, no matter the level of education, experience and resiliency.

Farming just isn’t like other businesses out there. There are a number of factors out of our control — and at the top of that list is Mother Nature. As most of us are painfully aware, we have experienced a historic drought here in Washington over the past three years, and farmers have been fighting an uphill battle every step of the way.

In addition to the beating we have taken by Mother Nature, commodity prices, which are also out of our hands, are about half of what they were a few years ago. Meanwhile, the cost of farming just continues to go up.

In short, we have faced a “perfect storm” of challenges that would have, quite frankly, forced us to close our doors had we not purchased crop insurance.

Crop insurance — a unique public-private partnership that is the cornerstone of the farm safety net — is something we purchase every year. It operates in a very similar way as other insurance policies. We pay a premium to an insurance company based on the value of our property, and anticipated risk, to insure its worth. If the property is damaged, we take a hit for a portion of the loss and the insurance company covers the remainder through an indemnity payment.

Farmers collectively pay between $3.5 billion and $4 billion a year out of our own pockets in premiums. And we absorb hefty deductibles (on average, 25 percent of loss).

As is the case with other insurance policies, we purchase crop insurance in the hope that we never have to use it. And, when disaster strikes, we use the policy to pay our bills. It isn’t close to what we would collect from a healthy crop, but it allows us to keep farming.

Crop insurance also 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 disaster bills from Congress.

Thankfully, those days are behind us.

As we begin negotiations around a new Farm Bill, I for one will be an outspoken advocate for crop insurance. It is not just an “insurance policy” for farmers, but also an “insurance policy” against disruption and financial instability in the food production sector, which could have widespread negative repercussions affecting every American.

I encourage anyone who prioritizes a safe, stable and affordable food supply to join me.

Nicole Berg is a partner in Berg Farms of Paterson.

Maine farmers know crop diversity is key to success. Our farm policies should reflect that.

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“Diversify, diversify, diversify.” This is the mantra of most financial advisors—a popular approach to protect investors in the face of volatile market swings.

The same strategy also has served agriculture—another unpredictable market—quite well.

Here in Maine, we have established one of the most diverse agriculture “portfolios” in the nation. Growing everything from potatoes to apples and plenty of things in between, our farmers contribute more than $825 million to our state’s economy every year.

It’s exciting to see the potential that this diversified approach holds for the future of farming.

But those in agriculture face challenges that are simply incomparable to other industries. Farmers certainly can’t control the weather, which is often unforgiving, and they also have no sway over markets or the moves of foreign competitors. So it is essential that we have a safety net that protects the small percentage of individuals we enlist to feed and clothe our nation.

Unfortunately, the kind of crop diversification in Maine has not always been reflected in farm policy discussions. Farm policies of the past often focused primarily on a few crops commonly grown in the South and Midwest, while leaving others, such as specialty crops like blueberries, for example, with little support.

That’s no longer the case thanks to improvements to crop insurance. Now, crop insurance is available for more than 130 commodities and has more than 62,000 county-crop programs. Premium support discounts are the same across commodities for each plan of insurance.

This has translated into more farmers from outside the traditional farm country purchasing risk protection. Here in Maine, for example, there has been a more than 20 percent increase in acres insured over the past decade, providing the state’s farmers nearly $30 million in additional protection, according to U.S. Department of Agriculture data. Overall, almost 90 percent of farm acres in the U.S. are covered by crop insurance.

For many farmers, crop insurance offers peace of mind. A crop insurance check will never come close to what a farmer will reap from a good harvest, but it does help them keep farming year after year. And for our beginning farmers, crop insurance is even more critical. It would be almost impossible to receive the needed credit from financial institutions without some assurance that beginning farmers would be able to pay it back if a natural disaster struck.

Taxpayers have benefited as well. 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. Now, when disaster strikes, farmers receive an indemnity check.

But just to be clear, crop insurance is not a handout—it’s far from it. To gain coverage, farmers have to put skin in the game. In fact, since 2000, farmers have spent $48 billion out of their own pockets to purchase crop insurance protection. They only collect an indemnity after they have suffered a verifiable loss and fallen below their guarantee.

It’s a win-win for both farmers and taxpayers, yet some farm policy critics would like to send us back to the days of unbudgeted, taxpayer-funded and after-the-fact disaster aid. Legislative proposals like those presented during the last Farm Bill negotiations to limit participation and cap insurance benefits to some farmers would disproportionately affect specialty crop growers and organic farmers whose crops tend to have higher values and therefore are more likely to have higher premiums for coverage. That’s a really bad idea, especially when you consider how important crop insurance is to allowing our producers to stay competitive with the rest of the world.

Crop insurance treats all farmers equally, regardless of operation, size, region, or crop. For Maine farmers, in particular, it is crucial that we protect this safety net that does not discriminate.

E.J. Dorsey is a crop insurance agent with United Insurance in Fort Fairfield. He has more than 22 years experience in the crop insurance field.

How critics of U.S. farm policy have it wrong

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Editor’s Note: Farm Policy Facts is pleased to publish a guest editorial from Congressman Kevin Cramer of North Dakota that examines the challenges facing America’s farmers and ranchers and the path for keeping American production agriculture competitive in a global market increasingly distorted by high and rising foreign subsidies, tariffs, and non-tariff barriers to trade.

By Representative Kevin Cramer

When it comes to U.S. farm policy, some folks who don’t know much about risks of farming and ranching want to cut twice before measuring once. Common sense says we should measure things first.

Net farm income is down by 42 percent from just three years ago, the largest plunge since the start of the Great Depression.

Yet, under these very tough economic conditions the current Farm Bill’s commodity title — crafted to deal with market forces beyond a farmer’s control ‎such as depressed prices brought on by unfair predatory trade practices of foreign countries — is helping farmers while saving taxpayer money.

In fact, the 2014 Farm Bill’s commodity provisions are saving an estimated $16 billion when compared to an extension of the previous law.

And, crop insurance outlays are also down — by a whopping $9 billion — as compared to the Congressional Budget Office’s (CBO) estimates during the Farm Bill’s consideration.

Despite these policy successes the fact remains times are very difficult for our nation’s farm and ranch families. In announcing the issuance of Farm Bill commodity title support for farmers recently, the U.S. Department of Agriculture (USDA) acknowledged the help is in response to roughly $28 billion in losses sustained in just one year alone.

The Farm Bill and Crop Insurance ‎will not make our farmers and ranchers anywhere near whole from these heavy losses. But these policies will help hard working families — who feed, clothe, and increasingly fuel us in a manner unrivaled in history — to repay their loans and secure financing for the coming year.

Still, as we look forward to the next Farm Bill, we are going to need to focus on shoring up the farm safety net in places where it really needs some work. For instance, I often hear from my farmers about problems with the Agricultural Risk Coverage (ARC) option and dairy, and my colleagues in southern states tell me cotton policy must also be fixed.

These are areas where current policies must be strengthened or otherwise exchanged for more durable risk management tools our farmers can more effectively use during hard times like these. And, of course, any changes we make must be made while honoring the mantra of nearly every farmer in the country — first, do no harm to crop insurance.

But, far beyond any alterations to farm policies that are designed to mitigate the symptoms of much larger problems, we must actually tackle at least some of the larger problems themselves.

Among these problems that make it difficult for farm and ranch families to make ends meet are regulations, including the Environmental Protection Agency’s (EPA) Waters of the U.S. and the so called Clean Power regulations, which drive up the cost of doing business.

Tax burdens‎ on our farmers and ranchers must be reduced and, in the case of the death tax, repealed. And, unfair predatory trade practices by our largest foreign competitors need to be tackled aggressively and head on.

Recently, the U.S. government finally challenged China’s excess subsidies on just three crops — corn, wheat, and rice — totaling $100 billion in a single year. Put in perspective, in 2015 the U.S. spent about $11 billion on the safety net for all commodities.

Not long ago, U.S. sugar farmers sued Mexico, a country that owned one-fifth of its industry and heavily subsidized the rest, for dumping sugar onto the U.S. market at below Mexico’s cost of production. The International Trade Commission unanimously ruled in favor of our sugar farmers.

Similarly, my colleagues in southern states say China drove the price of cotton up to $2.20 before altering policy and subsidizing its domestic farmers, driving world cotton prices into the 50-cent range.

These examples are not notable exceptions to the rule that trade is somehow free and fair. These examples are very much the norm our farm and ranch families must contend with every day.

Some have argued the United States should simply unilaterally disarm our farmers and ranchers, repealing U.S. farm policy and even our trade remedies currently available against cheaters, and that foreign countries, moved by our good deed, will follow suit. This is Pollyanna.

During the Doha Round negotiations the U.S. offered to repeal 70 percent of its domestic support in exchange for meaningful market access for our farmers and ranchers to other countries. The answer from our foreign trading partners was a resounding no.

We saw this during the 2014 Farm Bill when the U.S. was cutting domestic support for farmers and ranchers, foreign countries not only did not follow suit, but they doubled down on subsidies, tariffs, and non-tariff trade barriers.

‎I believe the sound approach to creating free and fair markets in agricultural trade around the globe can be found in the zero-for-zero legislation authored by Rep. Ted Yoho of Florida. The bill would repeal U.S. sugar policy when major sugar producing countries around the world fully repeal their subsidies and protections. The one change I would make to this legislation is apply it to all agricultural commodities.

We need to negotiate from a position of strength if we really want truly free and fair world markets.

Federal crop insurance and livestock disaster aid will always be necessary because Mother Nature will always throw curveballs. And, protection from multiple peril losses is not available in the private market because of the high risks involved in farming and ranching.

But, what if we could truly open up foreign markets and create a level playing field for our farmers and ranchers that actually passes the smell test? If we also reined in taxes and regulations, the natural effect could be Farm Bill safety net costs would fall even more as markets recover and farmers and ranchers get a decent return on their investments.

Now, that’s a win for taxpayers, consumers, and America’s farmers and ranchers.

Rep. Kevin Cramer is North Dakota’s only member of the U.S. House of Representatives. He serves on the House Committee on Energy and Commerce.

Crop insurance: What a difference four decades make

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For nearly four decades I have worked with Connecticut River Valley farmers to help protect their livelihoods. Over that time, I’ve seen many changes, both in the make-up of farms and the tools farm families have to manage uncontrollable risk.

As our population has grown, the amount of available farmland has gotten smaller. This means our farmers have had to adapt to survive. More and more local farmers today also work jobs off the farm to help support themselves, meaning we have more part-time farms. We’ve also seen an increase in diversified farms here. Many of our dairy farmers, for example, are growing their own crops for feed to help improve their bottom lines.

Our farmers—those with a passion for the land often stretching back generations—have proven to be amazing innovators in the face of challenges. But even for the best agricultural innovators, there is one thing that always remains out of their control: Mother Nature.

Here in the Connecticut River Valley, we know this all too well. We’ve seen spring seasons that have been too dry or too wet for planting. We’ve seen hailstorms come through the Upper Valley like tornadoes, bringing destruction to one area, while miraculously sparing another area just a few miles down the road. We’ve even seen hurricanes, like Irene in 2011, and blizzards in recent years.

Thankfully, as a crop insurance agent, I have also witnessed positive changes to the crop insurance system, enabling many of our farmers to protect their operations against circumstances beyond their control.

During the 1980s, which marked the beginning of the public-private partnership between the U.S. government and private insurance companies, I was among the first crop insurance agents in the region. And the program experienced plenty of growing pains.

Participation was lacking due to high costs, spotty service and slim margins. Congress was spending considerably more each year cleaning up messes after disaster struck than beforehand on protection. Lawmakers also paid far more attention to traditional Midwest crops than those specialty products more prevalent in New England.

Even as late as the early 1990s, crop insurance participation rates nationwide hovered in the 30 percent range.

Things began to change in the mid 1990s, with the passage of the Federal Crop Insurance Reform Act of 1994, which dramatically restructured the program by strengthening the partnership between the federal government and private insurers. Through premium discounts we also started to see increased participation.

Then in May 2000, Congress approved another important piece of legislation: the Agricultural Risk Protection Act (ARPA). The provisions of ARPA made it easier for farmers to access different types of insurance products including revenue insurance and protection based on their own historical yields.

All of this has resulted in more crop insurance participants than ever before, but there was still work to be done. The Farm Bill of 2014 made crop insurance a cornerstone of U.S. farm policy and took steps to make it more affordable and available to specialty crop growers, organic producers and young farmers.

Today, crop insurance protects more than 90 percent of planted acres nationally. And it’s so popular that farmers are willing to collectively contribute about $4 billion a year from their own pockets to purchase protection and help remove some degree of risk from a very volatile business. That cost-sharing structure makes it a good investment for taxpayers as well, replacing expensive disaster bills of the past, while ensuring a safe and plentiful food supply.

No, a crop insurance check will never come close to what a farmer can get from a good harvest. Like homeowner’s insurance, farmers don’t collect a dime without a verifiable loss and paying a deductible. But crop insurance does offer farmers some peace of mind, which allows them to focus on producing higher-yielding, better-quality crops.

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.

Randy Odell is a Vermont crop insurance agent who has been in the industry for four decades.

This much is certain: For farmers, crop insurance is essential

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There are a number of certainties in life. I know, for example, that every morning on my farm, the sun will rise in the east, and that every evening it will dip beneath the west horizon. And we know Iowa summers will be warm, the winters will be harsh and when the soil has thawed, spring growth will begin anew.

But a life of farming is also full of uncertainties. We can’t control the markets, nor the role Mother Nature will play in bringing our crops to harvest. Let me tell you, farmers are always in a constant negotiation with Mother Nature. Some years, Mother Nature is a farmer’s best friend. In other years, it can be our worst enemy. And in those years, there is no substitute for the risk protection that crop insurance provides.

Crop insurance allows farmers to pay a premium to alleviate some degree some of the uncertainties involved in farming. A crop insurance check will never come close to what a farmer can get from a bountiful harvest, but it does provide some peace of mind.

I’ve been farming for almost four decades and have witnessed firsthand the difference crop insurance can make. In fact, in 1977, my first year full-time farming, we suffered a major drought that resulted in a pitiful 28-bushel corn yield. Crop insurance and other assistance is what kept me going after that first disastrous year.

As president of the Iowa Farm Bureau for the past five years, and a member for many years prior to that, I also have also had the opportunity learn why crop insurance works. It succeeds, in no small part, because of its diverse participation. By spreading the chance of loss among a wide and varied group of insured farmers, premiums become less expensive for everyone. It’s a concept known as a “risk pool” and it is what makes things like auto insurance and homeowners insurance work, too. None of these programs would work if only a few folks participated.

But it hasn’t always been this way. Farm leaders across the country have worked with legislators effectively in recent years to strengthen crop insurance by expanding the size of the “risk pool” through encouraging and incentivizing increased participation.If you need evidence that this approached worked, just look at the numbers.

Today, almost 90 percent of farm acres in the U.S. are covered by crop insurance. It has become the primary safety net for today’s farmer. Because of this, it has also become one of the biggest targets for anti-farm policy critics.

Crop insurance’s detractors — many whom have never negotiated with Mother Nature — often weave a tale about farmers resting on our laurels and laughing all the way to the bank. But that’s all it is: a tall tale. These critics are especially prone to calling out a policy known as revenue protection, which shields farmers in periods of extreme market volatility. But crop insurance, no matter what type, is far from a handout. And having revenue protection doesn’t necessarily equal an indemnity payment, even in years with low crop prices. In 2015, for example, of total indemnities paid to growers, including revenue protection as well as coverage from weather events, only 3 percent were the result of low prices.

The safety net that crop insurance provides is essential and is more important now than ever before. Not only does the average American farm feed about 168 people worldwide, but one in five Iowans go to work because of agriculture. But our farm economy has seen better days, with farm income projected to decrease again.

Farming is a tough job and perils are many, especially in today’s environment. Crop insurance provides a measure of stability and is an investment in both today’s farm economy and our future. Without it, we’d have a whole lot less American farmers growing affordable food for America and the world. That much is certain.

Craig Hill of Milo is the president of the Iowa Farm Bureau Federation. His family grows corn and soybeans and raises livestock.

A competitive & innovative farm sector requires a sustained investment

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Editor’s Note: Farm Policy Facts is pleased to publish a guest editorial from Todd Van Hoose on the importance of our continued investment in farm policy and crop insurance. Van Hoose is the president and CEO of the Farm Credit Council and a strong advocate for America’s farmers and ranchers.

I did not pursue a career in agriculture. It pursued me. Although I grew up in the middle of Kentucky surrounded by farms, I was not a farm kid. But, an internship in Washington, D.C. at the U.S. Department of Agriculture (USDA) three decades ago, combined with my roots in rural America, gave me a glimpse of an industry that is vitally important to the progress and economic success of our country. I quickly realized that I wanted to work and advocate for the men and women who provide us with our daily needs of food and fiber.

Agricultural production in this country is the envy of the world. One of the reasons it has been successful is because of the investments we have made in farm policy and crop insurance through the years.

Crop insurance, in particular, has grown significantly that today roughly 297 million out 328 million acres of American farmland are insured. This includes the gamut of agriculture from traditional row crops to fruits and vegetables, from big operations to small and medium-sized farms, and from conventionally to organically grown crops.

It has become a modern tool that farmers rely upon year after year to help them manage price risk, weather risk, and all the other perils that go along with producing our nation’s food and fiber supply. From a lending perspective, crop insurance and farm policy are enormously important because they mitigate another kind of risk: defaulting on a loan after a catastrophic event.

Farming is capital-intensive and most farmers cannot self-fund their operations. Many farmers across the country rely on Farm Credit for loans and other financial services to help their businesses succeed.

The Farm Credit System holds nearly 41 percent of the farm sector’s total debt and has the largest share of farm real estate loans. Our farm operating loans are, in essence, unsecured because the only real security is the lien on the crop. If there is no crop because of a catastrophic event, then there is no way to repay the loan.

With crop insurance and farm policy, farmers and lenders have something that manages the risks involved. This in turn allows farmers to obtain financing because lenders know that they will have the ability to repay the loan, especially right now when we are experiencing a down cycle in the farm economy.

For most farmers this is the second or third straight year of declining prices while inputs have not followed the same trend. With a 56 percent drop in net farm income, there is a lot of pain in farm country right now and we are seeing a lot of farmers limiting or foregoing equipment purchases and recalibrating other expense controls to balance their operations against the new commodity price level. This is why maintaining strong farm policy and keeping crop insurance affordable are critical.

Part of that affordability includes the federal discount on premiums that farmers pay for coverage. Crop insurance is a sizable investment for farmers and they only receive an indemnity when they suffer a considerable loss. Many farm policy critics like to distort this fact and advocate for eliminating this discount or excluding certain large operations from receiving it, but the end result would be to undermine the effectiveness of crop insurance by shrinking the risk pool and making crop insurance unavailable for some farmers and unaffordable for others. Either way, it would make an already risky endeavor more difficult while America’s farmers and ranchers try to feed a growing, hungry world.

American agriculture has come a long way since my internship at USDA, but the one constant has been our ability to produce a secure and affordable food and fiber supply that we all rely upon. The role that farm policy and crop insurance plays in enabling that production cannot be overlooked or dismissed. In order to maintain and support a healthy, vibrant, competitive, and innovative farm sector, we must continue to invest in it.

Todd Van Hoose is the President and CEO of the Farm Credit Council.