TOPIC | CONGRESS


A Broad Spectrum of Voices from All Corners of Agriculture Sing the Praises of Crop Insurance

September 2011

The recent Farm Bill hearing in Wichita, Kansas has been called “a crop insurance pep rally” by some who point to the fact that when a panel of farmers and producers were asked by Senate Ag Committee Chairman Debbie Stabenow (D-MI) what they thought was the most important farm policy, the answer was “crop insurance.”

This panel isn’t the exception but the rule. In fact, over the last six months, a large swath of rural America has praised the farm policy that has truly become rural America’s most cherished tool for hedging risk: crop insurance.

These quotes are just a sampling from the opinion pages, newswires and radio stations from coast to coast.

National Farmers Union President Roger Johnson explains in an Omaha World Herald op-ed on May 31, 2011 why crop insurance is so important in a time of tight budgets and serious fiscal constraints:
“Crop insurance — which is the most important component of the farm safety net for specialty crop producers and growers of most major crops — was specifically created to ensure that private insurance companies, not taxpayers, shoulder the burden of funding payouts following crises.”
In an op-ed appearing in The Hill on June 8, 2011, Congressman Larry Combest and reigning Miss America Teresa Scanlan spoke about the role of farm policy in shielding farmers from what is otherwise a very risky business:
“That is where our nation’s farm policy comes into play — to provide some stability for our farmers and for the country’s food and fiber supply while limiting taxpayer exposure. A good example of this is crop insurance. Farmers buy policies, made possible with government investment, to act as a cushion. When disaster strikes, private insurance companies cover the bulk of the losses, shielding taxpayers from tremendous risk exposure. But, without the public partnership, multiple peril insurance on a crop — something we take for granted on our cars and homes — would not be possible.”
During an interview on Agri-Pulse’s Open Mic on June 13, 2011, USDA’s Chief Economist Joseph Glauber notes the importance of crop insurance to the nation’s farmers:
“Most farmers now see [crop insurance] as a primary tool for risk management. An important tool for risk management.”
The Dallas Morning News recently featured an op-ed by Texas farmer Matt Huie that says lenders require the type of assurance found in strong farm policies to make loans to farmers, particularly young ones like him.
“Because of the many challenges, all young farmers depend on components contained in the 2008 Farm Bill—most notably crop insurance—to provide lenders with the confidence and collateral they need to extend loans. Politicians continue to put these components to the test, even though without crop insurance, farmers throughout the South, Midwest, and various other parts of the country, would have been left with no crop—and no starting point on which to rebuild—due to the range of floods, droughts, tornadoes and frosts, this year alone.”
Former Agriculture Secretary and Nebraska Senator Mike Johanns (R) recently told an agriculture policy group that although crop insurance has been cut by more than $12 billion in the last several years, there is no telling what policies will be slashed during the on-going budget discussions:
“Crop insurance is the real safety net,” he said. Johanns explained that with the government not having to make loan deficiency payments and counter-cyclical payments due to higher crop prices, the key component to the Farm Bill, especially as a safety net, is crop insurance. He added that,“the battleground here is to keep crop insurance in place and do everything we can to improve it.”
In an op-ed appearing in the Fargo Forum on April 24, 2011, Roger Widner, Chairman of American Crystal Sugar Co. in Minnesota discusses federal spending on farm policies and what Minnesota farmers rely on most for hedging their risk:
“Meanwhile, the policies in place to help the state’s corn, soybean and wheat growers hedge risk continue to operate under budget and represent less than one-quarter of 1 percent of federal spending. Then there’s arguably the most important tool to Minnesota farmers: crop insurance. Crop insurance was specifically designed to shield taxpayers from mega-payouts that could result from catastrophic situations such as commodity price collapses and weather disasters.”
The American Farm Bureau Federation’s Mary Kay Thatcher explains to radio listeners across the country on May 13, 2011, the value that farmers place in their crop insurance policies:
“It’s just a real good risk management tool. We’re able to have famers pay part of the premium and have government pay part of the premium to make it affordable and it just ensures that if we have tough weather – especially like we’re having now – lots of wildfires in Texas and a lot of flooding in the Midwest, that farmers are able to indeed get enough assistance that they can farm for another year.”
After touring a drought-ravaged part of his home state of Kansas, Sen. Pat Roberts commented about the need to ensure that the 2012 Farm Bill contains effective farm policies:
“If there is anything we want to preserve and strengthen, it is crop insurance.”
Alan Rosendahl, a Senior Vice President at Iowa State Bank and a farmer in Iowa wrote an op-ed in the July 13, 2011 edition of the Cedar Rapids Gazette which detailed the value that banks place on crop insurance when making loans to farmers:
“As a banker and a farmer, I can tell you that federal crop insurance is the only thing that makes it possible for us to loan money to small farmers in Iowa. Banks, like other businesses, need to turn a profit to stay in business. But loaning money to small and beginning farmers can be very risky, because they often have less net worth, and tighter cash flows. Coupled with the fact that small banks are inherently risk-averse, particularly after the banking implosion of 2008, and you can see the dilemma.”
A reporter with the Argus-Leader noted that at a regional meeting, South Dakota farmers told Senator John Thune (R) that access to reasonably priced crop insurance is their safety net and is necessary to safeguard their futures:
“It makes sense to make this the centerpiece of ag policy.”
USDA’s Risk Management Agency notes the importance of the crop insurance program to farmers on their website:
“More farmers and ranchers participate in and have more at stake in the crop insurance program than any other USDA program.”
As Mother Nature wreaks havoc on the U.S. this year, with hurricanes on the East Coast, droughts in the Southwest and floods throughout the heartland, it’s no wonder America’s leaders are speaking out about the importance of crop insurance. A plan to manage risk is something that farmers in the U.S., and everywhere else for that matter, will always need.