Crop Insurance Vital to America’s Family Farms

Just before the end of 2018, the Economic Research Service at the United States Department of Agriculture released a report analyzing data from a 2017 survey of farmers across the country. This report – titled “America’s Diverse Family Farms” – presents the facts behind farming in America.

According to the USDA:

  • Ninety-eight percent of U.S. farms are family farms, and they account for 87 percent of farm production.
  • Family farms categorized as midsize or large produced 62 percent of America’s food and fiber and accounted for 6 out of 10 harvested acres in 2017.
  • One-third of U.S. farm goods are produced under forward contracts to help manage price and production risks.
  • Seven in 10 American farms have an operating profit margin in the “red zone,” indicating a high risk of financial problems.
  • Farm income has declined almost 40 percent since 2013, and more than 40 percent of farms are now relying on income generated off the farm to make ends meet.

The crop insurance system that protects these family farms and makes forward contracting possible in today’s difficult financial environment was also mentioned in the report.

Two-thirds of midsize farms and three-fourths of large farms participate in crop insurance, the report found.

National Crop Insurance Services has traveled the country for the past year hearing first-hand from family farmers in Iowa to Colorado to North Carolina and elsewhere about their experiences. The message has overwhelmingly been that crop insurance is an invaluable tool for America’s farmers and ranchers, and that policymakers should “do no harm to crop insurance.”

Be sure to check out their stories and learn more about crop insurance’s importance to your state at www.cropinsuranceinmystate.org.

Crop Insurance Program Integrity Continues to Improve

Crop insurance’s already-low improper payment rate — a closely-watched standardized measure of waste and efficiency – improved again in 2018.

Martin Barbre, Administrator of the USDA’s Risk Management Agency (RMA), delivered the good news this week while addressing the crop insurance industry’s annual convention.

The FY2018 rate of 1.81 percent marked the fourth consecutive year it declined, falling from 2017’s 1.96 percent and 2.02 percent and 2.20 percent in 2016 and 2015. The USDA and private-sector insurers made program integrity improvement a top priority following an improper payment rate of more than 5 percent in 2014.

“RMA has continued to improve program integrity for federal crop insurance through an effective public-private partnership with our Approved Insurance Providers,” Barbre said.

Improper payments occur when funds go to the wrong recipient; when the correct recipient receives too little or too much; or when the recipient uses funds in an improper manner. Many errors are simply rooted in data entry and reporting mistakes.

The government closely monitors improper payments for all major federal spending programs, and the last time a government-wide figure was posted, it was twice as high as crop insurance’s rate.

Tom Zacharias, the president of National Crop Insurance Services, which sponsored this week’s meetings, said the news illustrates the power of the crop insurance system’s unique public-private partnership and is a testament to investments made in recent years.

“Crop insurers enjoy a tremendous partnership with the USDA, and we work closely together to ensure that we are good stewards of taxpayer dollars and are constantly improving efficiencies for America’s farmers and ranchers,” he said.

Zacharias noted that the partnership fosters investment in data collection, education and training, monitoring and new research and technology to continually improve.

“In addition to the USDA’s hard work, the private sector is spending millions every year to maximize program integrity,” he concluded. “This new data is proof that crop insurance is a highly efficient, well-run public-private partnership.”

2018 Farm Bill Strengthens Crop Insurance

As policymakers, commodity leaders, and insurers gathered this week for the crop insurance industry’s annual convention, recent legislative changes to the federal crop insurance program was one of the top discussion topics.

The Agriculture Improvement Act of 2018, commonly known as the Farm Bill, included several provisions that strengthened crop insurance and solidified its position as an important risk management tool.

“Passing Congress with the largest margin of any farm bill in history, this legislation demonstrated that preserving the farm safety net is an issue that transcends partisan lines,” said National Crop Insurance Services (NCIS) President Tom Zacharias. “We thank Capitol Hill for listening to rural America and working diligently to ensure that crop insurance remains affordable and widely available for our farmers and ranchers.”

The Farm Bill strengthened crop insurance by directing research for new products, promoting coverage for underserved producers, and improving the availability and workability of various insurance programs.

NCIS staff Troy Brady and Mickey Paggi outlined some of the most significant changes in a recent article for Crop Insurance TODAY magazine, noting that these provisions “will increase crop insurance’s role as a key component of farm policy.”

Notable provisions included:

  • Improvements to the Whole Farm Revenue Protection (WFRP) policy that will provide more meaningful risk protection, especially for small and beginning farmers.
  • Additional research on topics including new irrigation practices, existing citrus fruit policies, and the development of policies to better address low-frequency, catastrophic losses due to weather events such as hurricanes.
  • An annual review of research regarding the development of insurance for new crops and how to improve crop insurance coverage in existing programs.

“Speedy and accurate implementation will be important for farmers… as they look to their most important risk management tool to help rebound from the extreme weather and a slumping rural economy that plagued 2018,” the authors wrote.

NCIS will be working closely with the United States Department of Agriculture’s Risk Management Agency to efficiently put the Farm Bill’s crop insurance provisions into action.

Farm Groups Defend Crop Insurance Budget

Farmers and legislators celebrated the end of 2018 with the passage of a bipartisan Farm Bill that preserves the farm safety net and provides farmers with the tools they need to manage the unique risks of farming.

As Congress begins the annual appropriations and budget process, America’s agricultural community joined forces to ensure that the crop insurance program receives the full funding that it requires to be successful.

Sixty organizations, ranging from farm groups to conservation organizations and lenders, sent a letter yesterday to the House and Senate Budget Committees, as well as Agriculture Secretary Sonny Perdue, urging them to protect crop insurance during the budget process in recognition of its central importance to farmers and the rural economy.

Trying to balance the federal budget on the backs of farmers and ranchers would be a mistake, they wrote, with disastrous consequences for America’s heartland.

USDA has projected that 2018 farm profitability will be lower than it has been in over a decade, and farm income dropped more than 45% in five years. An over-reliance on budget savings from the agriculture community and from crop insurance will unquestionably undermine rural economies.  It’s also important to note that in a time of uncertainty in the farming and ranching community – from natural disasters to trade disputes to government shutdowns – the public-private partnership that is crop insurance has been a consistent and reliable risk management tool.  The certainty of federal crop insurance also offers lenders the assurances they need to continue to provide capital to America’s hard-working farmers and ranchers….

Cuts to crop insurance during this difficult time for rural America should be avoided.  Farmers and lawmakers agree that crop insurance is a linchpin of the farm safety net and is crucial to the economic and food security of rural America. The importance of crop insurance was just reaffirmed less than two months ago with the passage and signing of the 2018 Farm Bill, and we urge you to oppose cuts to crop insurance during this year’s budget process. 

Crop insurers and their allies in agriculture have been successful in fending off past attempts to weaken the farm safety net by harming this vital risk management tool. The overwhelming support crop insurance received during the 2018 Farm Bill debate is a testament to how popular the program has become – covering a record 334 million acres.

Crop Insurance Sets Record, Saves Money, Protects America’s Heartland in 2018

More than 334 million acres of farmland were protected by crop insurance in 2018, a 20 million acre increase over 2017 and an all-time high. And, crop insurance came in $2 billion under original federal budget projections for the year.

Jim Korin, chairman of National Crop Insurance Services (NCIS) and president of NAU Country Insurance Company, noted these accomplishments, among others, in his opening remarks at the crop insurance industry’s annual meeting this week.

With more than 1.1 million crop insurance policies sold to farmers across the nation, Korin credited the growing popularity of crop insurance to the exceptional service provided by private-sector insurers and the unique working relationship they share with the government.

“The public-private partnership that defines crop insurance has been successful in providing the important safety net for our farmers and the rural areas where they live,” Korin said. He noted that the crop insurance industry has been able to quickly pay claims while routinely coming in below budget projections, saving taxpayers billions.

Under the successful crop insurance model, farmers invested in their own protection by paying $3.7 billion in premiums and shouldering a significant portion of losses through deductibles.

This public-private partnership was further reinforced with the overwhelming passage of a bipartisan Farm Bill in December that strengthened crop insurance and firmly rebuffed efforts by some critics to make the program less affordable and available to farmers.

“With everything that occurred during the year, nothing defined the world of agriculture more than the debate and passage of the 2018 Farm Bill,” said Korin. “This process saw congressional field hearings from coast to coast and a steady call from farmers across the nation to ‘do no harm’ to the crop insurance safety net.”

Larry Heitman, chairman of the American Association of Crop Insurers and senior vice president of NAU Country Insurance Company, also addressed the convention and said maintaining this kind of support from farmers will continue to be important moving forward.

“As tempting as it may be to relax until the next Farm Bill negotiations begin again, let’s remember our program is a target for those that want to redirect agricultural funds to their own causes or programs,” he told the group. “We must continue to maintain and strengthen our partnership with agriculture commodity associations and conservation and wildlife protection groups to work together for a coalition to benefit all Americans – rural and urban.”

Heitman and Korin explained that the industry’s attention will now turn to working with the U.S. Department of Agriculture to ensure a smooth implementation of the 2018 Farm Bill, while continuing to serve rural America.

Korin concluded, “We must remember our purpose: To provide exceptional coverage and service to farmers and ranchers to help them do what they do best…feed and clothe the world.”

Crop Insurance Sets Record, Saves Money, Protects America’s Heartland in 2018

SAN DIEGO – More than 334 million acres of farmland were protected by crop insurance in 2018, a 20 million acre increase over 2017 and an all-time high. And, crop insurance came in $2 billion under original federal budget projections for the year.

Jim Korin, chairman of National Crop Insurance Services (NCIS) and president of NAU Country Insurance Company, noted these accomplishments, among others, in his opening remarks at the crop insurance industry’s annual meeting today.

With more than 1.1 million crop insurance policies sold to farmers across the nation, Korin credited the growing popularity of crop insurance to the exceptional service provided by private-sector insurers and the unique working relationship they share with the government.

“The public-private partnership that defines crop insurance has been successful in providing the important safety net for our farmers and the rural areas where they live,” Korin said. He noted that the crop insurance industry has been able to quickly pay claims while routinely coming in below budget projections, saving taxpayers billions.

Under the successful crop insurance model, farmers invested in their own protection by paying $3.7 billion in premiums and shouldering a significant portion of losses through deductibles.

This public-private partnership was further reinforced with the overwhelming passage of a bipartisan Farm Bill in December that strengthened crop insurance and firmly rebuffed efforts by some critics to make the program less affordable and available to farmers.

“With everything that occurred during the year, nothing defined the world of agriculture more than the debate and passage of the 2018 Farm Bill,” said Korin. “This process saw congressional field hearings from coast to coast and a steady call from farmers across the nation to ‘do no harm’ to the crop insurance safety net.”

Larry Heitman, chairman of the American Association of Crop Insurers and senior vice president of NAU Country Insurance Company, also addressed the convention and said maintaining this kind of support from farmers will continue to be important moving forward.

“As tempting as it may be to relax until the next Farm Bill negotiations begin again, let’s remember our program is a target for those that want to redirect agricultural funds to their own causes or programs,” he told the group. “We must continue to maintain and strengthen our partnership with agriculture commodity associations and conservation and wildlife protection groups to work together for a coalition to benefit all Americans – rural and urban.”

Heitman and Korin explained that the industry’s attention will now turn to working with the U.S. Department of Agriculture to ensure a smooth implementation of the 2018 Farm Bill, while continuing to serve rural America.

Korin concluded, “We must remember our purpose: To provide exceptional coverage and service to farmers and ranchers to help them do what they do best…feed and clothe the world.”

NCIS Fosters Next Generation Through Agriculture Scholarships

Our nation’s farmers come from every walk of life. Our workforce should reflect that fact.

National Crop Insurance Services is exceptionally proud to help foster the next generation of America’s agricultural community and promote diversity through the NCIS 1890 Scholarship Program.

Since 2010, NCIS has distributed nearly two dozen scholarships to students at historically-black 1890 Land Grant Universities in order to assist these students in completing their education and preparing for a career in agriculture. This scholarship program is a key part of a broader effort to proactively increase diversity in the crop insurance industry in recognition of the vibrant and varied communities we serve.

This year, NCIS awarded scholarships to five students who had demonstrated their academic prowess and an interest in agriculture. These deserving recipients were highlighted in December’s issue of Crop Insurance Today magazine.

Scholarship recipient Aaron Dore, from McDonough, Georgia, is majoring in economics with a concentration in agribusiness and a minor in business logistics at Fort Valley State University. Notably, Aaron has made the Dean’s List while playing cornerback for the FVSU Wildcats and conducting student research on organic vegetables.

Aaron wasn’t the only FVSU Wildcat to receive an NCIS scholarship. Hailing from the town of Louisville, Georgia, Jerstashia Sims is hoping to use her degree in agricultural economics to help lift up others from economically depressed rural communities.

“There have been semesters where I couldn’t take many classes due to how much financial aid I had. I would like to thank [NCIS] because that scholarship helps get me closer to graduation,” Jerstashia said.

Ashli Holloway is majoring in animal science at Alcorn State University. Originally from Stockbridge, Georgia, Ashli plans on working in the animal care industry and has dedicated time during her summer vacations to attend the Veterinary Science Training, Education and Preparation Institute at Tuskegee University.

Fellow animal science major Mary Mitchell grew up in the tiny town of Kremlin, Oklahoma, population 255. Now a junior at Langston University, this NCIS scholarship provides Mary with unique opportunities to continue developing her exceptional leadership skills.

Wesley Adair Maximilian Benson, known to most as just Max, is from Ardmore, Oklahoma, and is studying natural resources management at Langston University. Max is a positive role model for his peers, volunteering to help students who are struggling in classes and promoting mutual respect among his classmates.

Each of these students will bring their unique understanding of the issues facing our rural communities to their future careers in agriculture. NCIS congratulates them for receiving this hard-earned scholarship opportunity and we look forward to celebrating all of their future accomplishments.

New to Crop Insurance? Here’s How it Works

Every day, farmers spend long hours working the land and caring for livestock so they can provide high-quality food at an affordable price for all Americans across the nation.

This amazing feat would not be possible, however, without the critical safety net that crop insurance provides.

Farming presents a unique set of risks and a farmer’s financial well-being relies on factors as unpredictable and varied as changes in weather, the spread of disease, or the rapid fluctuation of market conditions.

With such a wide variety of potential risks and the likelihood that any particular event is geographically concentrated – an entire county could see their growing season ruined within mere moments by a tornado or freeze – the traditional private industry insurance model simply would not work for crop insurance.

The government developed the public-private partnership of federal crop insurance in order to protect and support farmers and thereby helping to stabilize the economies of the rural communities that rely on agriculture, without leaving taxpayers solely on the hook financially.

Under this successful model, farmers contract with any one of the 15 private insurance companies authorized to sell crop insurance by the United States Department of Agriculture’s Risk Management Agency, paying a premium in order to protect their crops. These insurance companies, or Approved Insurance Providers (AIP), work hand-in-hand with the federal government to help manage costs that would otherwise make coverage unattainable for the average farmer.

While the government sets rates and rules for the plans that can be sold and provides program oversight, it is the responsibility of the AIPs to write policies, as well as adjust and process claims. That means when disaster strikes, private industry can react quickly to assess damages and issue payments due, providing farmers and the communities who rely on their income with relative stability.

This public-private partnership requires farmers, private insurance companies, and the federal government to share the burden of risk and incentivizes private companies to reduce fraud, waste, and abuse.

Today, federal crop insurance protects more than 130 types of crops covering more than 330 million acres in all 50 states. So, from clams to cranberries, soybeans to sunflowers, our farmers can rest a bit easier knowing that this safety net exists.

And while farms and agriculture-related industries add over $900 billion annually to the American economy and create work for 21 million Americans, the cost for federal crop insurance represents just one quarter of one percent of the federal budget.

This seems like a worthwhile investment to ensure our farmers can continue providing food and fiber for our nation.

Family Farms in Iowa Find Crop Insurance Invaluable

The Swanson family has been rooted in Wapello County, Iowa for over 170 years. Don Swanson and his brother, Bill, grew up watching their fathers work the land. “It’s just a passion that we grew up with,” Don said.

It’s a passion that Don and Bill hope to pass along to their children and grandchildren.

But modern-day farming is more than the inherent satisfaction that comes from harvesting a crop planted from seed or raising the next generation of livestock.

“I wish I had time to do what lay persons consider farming – driving the tractor, feeding the cows,” Don laments. “It’s a full time job for me just managing the books, managing the risk, forward planning and strategic planning.”

National Crop Insurance Services has traveled across the country to talk to farmers and agriculture lenders on the ground to learn what crop insurance means to their farms, families, and communities. For the Swanson family, they would be left vulnerable without the safety net that crop insurance provides.

“Crop insurance protects that bottom line… It’s by far the best government program we have, hands down,” Don said.

Another multi-generation Iowa farmer, Dustin Johnson, enjoys being able to share the rewards of his labor with his children and expose them to the first-hand educational experiences that a working farm provides.

“In a world where technology has kind of taken over, it’s still nice to be able to bring the kids out, ride around in the tractor, get to see first-hand what Dad does every day,” he noted.

When Dustin started farming, the amount of capital required for essential items was daunting. Especially when his income relied not only on his hard work, but the hazards of unpredictable weather, and market fluctuations.

“The risks go way beyond anything that I can control,” Dustin explained. “Which is a really good thing to have crop insurance for.”

Crop insurance gives Dustin the peace of knowing that even in a down year, “we’re still going to have a safety there that we’re going to be able to farm next year.”

For many Iowa towns, agriculture is not only an integral part of the community but also critical to their economic success.

Erica Wuthrich from Bloomfield, Iowa, explains, “The majority of the families around here are farmers… if we didn’t have the farming operations around here, it wouldn’t be good – it would be awful.”

As young farmers, Erica and her husband, Brent, rely on the stability that crop insurance provides in order to keep their farm running. “We don’t make money from it, but it helps us sustain our operation,” Erica said.

Another young Iowa farmer, Colin Johnson, echoes this sentiment, “A component like crop insurance and the assistance that we get, as a young farmer, that helps me know I can continue farming another year. I have been farming for nine years on my own, and… I probably wouldn’t have lasted two years without my crop insurance support.”

Iowa farmers know first-hand that farming does not mean an easy harvest or quick profit. Jared Lyle, Senior Vice President and Senior Loan Officer for Iowa State Bank and Trust in Fairfield, stresses to his agriculture customers the importance of protecting their farms by purchasing crop insurance.

“It’s more a matter of a safety net to keep them from not losing quite as much money and keeping them in business,” Jared explains.

Weakening the public-private partnership of federal crop insurance would be detrimental to the Iowa families that Iowa State Bank and Trust serves.

“There will be less farmers in business for sure, if they lose that safety net,” Jared said. “Ag is very important. I would hate to see anybody underestimate that.”

New Farm Bill with Strong Crop Insurance Becomes Law

President Donald Trump today officially signed the 2018 Farm Bill, making the five-year bill a law.

The American Association of Crop Insurers, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Independent Insurance Agents and Brokers of America, National Association of Professional Insurance Agents, and National Crop Insurance Services issued the following joint statement in response:

 It’s been a difficult year for farmers and ranchers from coast to coast, but rural America is ending 2018 on a high note with this farm bill. The new law keeps crop insurance affordable and widely available for agriculture, and it provides much-needed certainty heading into 2019.

 President Trump and Secretary Sonny Perdue have been vocal champions of the farm safety net and crop insurance, and they helped deliver in a big way for farmers and ranchers with this new law. Likewise, congressional leaders from both parties should be commended for their dedication in passing a bipartisan bill that provides the tools farmers need to manage their unique risks.

Senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI), and Congressmen Mike Conaway (R-TX) and Collin Peterson (D-MN) worked tirelessly throughout this farm bill process to make U.S. agriculture stronger. On behalf of the entire crop insurance industry and the customers we serve, thank you.

Crop insurance, which is delivered by the private sector, has become a key component of U.S. farm policy. Each year, farmers spend between $3.5 and $4 billion to purchase protection on the crops they grow, ensuring taxpayers are not shouldering all the risk. When disaster strikes, insurance aid is distributed quickly to help farmers pick up the pieces and plant again.

This year, 1.1 million crop insurance policies provided $106 billion in protection on more than 130 types of crops covering 311 million acres.

Efforts by farm policy critics to weaken agriculture’s primary risk management tool were soundly rejected by Congress, which heeded farmers’ advice to “Do no harm to crop insurance.”