As the House Agriculture Subcommittee on General Farm Commodities and Risk Management prepares to hold a hearing later this week, National Crop Insurance Services (NCIS) today released the second in an ongoing series of educational videos on crop insurance.  This video puts a sharp focus on the risk that Texas farmers – who received roughly one-quarter of all indemnities in 2011 – faced in last year’s historic and ongoing drought.  

The video, titled “2011 Southwest Case Study,” contains an overview of the catastrophic drought by NCIS President Tom Zacharias, highlighting the extent of the damage throughout the state and the role crop insurance played in mitigating that damage.  Additionally, two Texans were interviewed to better explain farmers’ ability to survive the drought and bounce back to plant again in 2012. 

Rick Boyd, a banker with First United Bank in Lubbock, explains that many banks require farmers to purchase crop insurance to secure their loans.  Boyd said without insurance, many Texas farmers might not be back in their fields planting again this year.   “2011 was such that, with the insurance, we did not have any farmers that actually went out of business, and over 90 percent of our customers had to draw on their insurance claims,” he said.  “The programs were in place that allowed them, not to make a profit, but to actually get a lot of their expense money back and that was enough to enable them to get financing for the upcoming year,” he added.

Texas farmer and rancher Matt Huie says that while 2011 started out hopeful, his crops and pastures eventually withered away and he was eventually forced to import hay from out of state to feed his cattle.  “What we learned from the drought of 2011 is that good policy can create survivors in an industry that otherwise would have no survivors,” he adds.

Crop insurance indemnities from 2011have surpassed $10.7 billion and continue to rise.  “The fact that there has not been a single call for disaster assistance from farmers – despite the fact that we just endured one of the worst weather years in history – is proof perfect that crop insurance is a smart, cost effective policy for taxpayers and critical risk management tool for farmers,” said Zacharias.