The National Crop Insurance Services (NCIS), Overland Park, Kan., makes a good case for continuation of a strong crop insurance program and continued robust government support. Tom Zacharias, in a recent editorial for Roll Call/CQ, explained that farmers, even with government assistance on crop insurance premiums, bear a significant burden and “shouldered nearly $17 billion in losses in 2012.”

Some $12.7 billion of that total came “before farmers saw a dime in crop insurance indemnity payments as part of their deductibles…. When combined with the $4.1 billion farmers paid out of their own pockets to purchase crop insurance last year, total farmer investment neared $17 billion,” Zacharias said.

He said those numbers are important because of the ongoing assault on the “the men and women who put food on our tables and clothes on our backs” over their purchasing of crop insurance. “Critics called crop insurance a farmer bailout and said things like farmers were ‘laughing all the way to the bank’ and were ‘praying for drought, not praying for rain.’ Farmers even have been compared to cheap drunks at an open bar and told to pay their fair share.”

The article points out some undisputed facts of what transpired after the worst drought in decades:

  • Indemnities to farmers cost about $17 billion, but “thanks to crop insurance’s design, these indemnities were not completely borne by taxpayers because farmers and insurers picked up a major portion of the costs and sustained significant economic losses.”
  • “This was the sixth time since 1983 that crop insurers lost money. Compare that to the property and casualty insurance industry, which has lost money only once as far back as data is available.”
  • “When crop insurance premiums exceed losses, the government sees underwriting gains that help offset payments in bad years. In fact, the government experienced nearly $4 billion in gains from 2001-2010. Congress was not asked to fund an ad hoc disaster bill despite the historic devastation endured by our agricultural producers.”

Zacharias said, “Lawmakers and the American public deserve an intelligent conversation about the future of agriculture.”

And 2013 is shaping up to be another year that underlines the critical importance of crop insurance. A bi-weekly crop insurance update from NCIS highlights the ongoing drought.

“The 2012 drought – the worst this country has seen in decades – is now becoming the 2013 drought with 47 percent of the continental U.S. – including a good portion of the nation’s breadbasket – still in some stage of drought, compared to roughly 37 percent a year ago, according to the April 30, 2013 U.S. Drought Monitor.

“In other words, many farmers are starting off 2013 in worse shape than they were at the start of 2012.”

For instance, 77 percent of the state of Nebraska is experiencing “extreme” drought or worse. Nearly every county in Arizona, California, Colorado, Kansas, Nevada, New Mexico, South Dakota, Texas, Utah and Wyoming are either abnormally dry or in some level of drought.

With those alarming early-season trends, farmers are purchasing crop insurance policies to protect themselves against potential losses. As of May 6, 2013, more than 240,000 policies had been purchased, protecting nearly 88 million acres and representing nearly $20 billion in liabilities. Farmers’ premiums totaled $800 million. These numbers will climb as the season progresses.