For the past several years, throughout the tumultuous debate that finally resulted in the Agriculture Act of 2014, farmers, commodity organizations and some members of Congress continued to chant what became a familiar mantra: “Do no harm to crop insurance.”
When the dust finally settled last week, President Obama signed into law legislation that had been plowed, cultivated, laid by and buried so deep folks had about given up on the prospect of seeing a meaningful law come to fruition.
Despite different parties and various factions within parties often tugging in opposite directions, U.S. agriculture has a new farm program, and not only did the sometimes warring schisms do no harm to crop insurance, they made it stronger.
Passage of the Farm Bill “cemented crop insurance as the cornerstone of farm policy,” says Tim Weber, Chairman of the American Association of Crop Insurers and National Crop Insurance Services. Weber says strengthening crop insurance proves how much farmers believe in the products.
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Popularity among farmers has reached an all-time high, he said at the annual conference sponsored by National Crop Insurance Services and the American Association of Crop Insurers.
“If I had to sum up the story of the crop insurance industry in one simple statement, I think it would have to be ‘We’ve made a lot progress but our best years remain ahead of us.’”
USDA’s Risk Management Agency (RMA) Administrator Brandon Willis agrees. Willis, who also addressed the industry’s annual convention, said cooperation between the agency and crop insurers would be essential during implementation.
He said crop insurance is now the “lynchpin” of the farm safety net. He said RMA is now focused on quickly implementing the new law.
“There is not an agency that I would rather implement a farm bill with than the team that we have at the RMA. I have a high degree of confidence that the staff we have will get this done right,” he said. “Throughout the process, we will work with our [private sector] partners, because I know you bring valuable experience…and a perspective that we don’t have,” he said.
Crop insurance has evolved
Since its inception in 1938, crop insurance has evolved and today protects 90 percent of planted cropland in America. The industry won widespread praise in agricultural circles and on Capitol Hill for helping rural America quickly rebound after the devastating droughts of 2011 and 2012.
“There can be no question that when it comes to managing the risks posed by Mother Nature or volatile world markets, Federal crop insurance has no equal,” Weber said. “This success was achieved while overall federal spending on farm programs has trended down.”
In order for crop insurance to remain viable as farmers’ primary risk management tool, the crop insurance infrastructure must remain financially strong, he said. Additionally, effective risk management tools, program integrity, and widespread participation will be paramount. For crop insurance to remain successful it must remain affordable and available to all.
“I truly believe that 10 years down the road, when we look back at the 2014 farm bill, it will be elevated to one of the major legislative initiatives that established landmark developments for crop insurance and production agriculture.”
Willis echoed the sentiment. “There is one simple reason why crop insurance has lasted for over 75 years while other programs have come and gone,” he concluded. “It’s because it makes sense…for consumers, for taxpayers, and for farmers.”
He said RMA will prioritize implementation based on those programs that affect the most growers. He said ensuring a 2015 signup for the STAX program that provides enhanced insurance protection for cotton farmers and the new Supplemental Coverage Option for growers of other crops will be priorities.
Constantly improving crop insurance availability, program integrity, and communicating with farmers and the general public should be top goals of both the industry and RMA moving forward, he said.
Other observers have also voiced appreciation for strengthening crop insurance.
Texas AgriLife Extension economist-management Jason Johnson, who works out of the Texas Research and Extension Center in Stephenville, agrees that the farm bill breaks new ground as far as providing a farm safety net. “The farm bill is no longer a safety net,” he said. “Farmers will get the safety net from crop insurance and marketing plans.”
Garrett King, an aide to Rep. Frank Lucas (R-Okla.) and Chairman of the House Committee on Agriculture, said at a recent conference that the farm bill achieves a “landmark transition” from direct payments to emphasis on insurance, a change he cited as “revolutionary.”
King said the bill not only “does no harm to crop insurance,” but strengthens it. It also makes livestock support permanent.
In a recent Delta Farm Press article, Jeffery Hall, an agriculture policy consultant and crop insurance agent with Silveus Insurance Group of Little Rock, Ark., said he expects to see little change in crop insurance and those changes will be positive.
“The SCO (Supplemental Coverage Option) is going to enhance crop insurance. It will be very interesting to see how the rice margin insurance shakes out and see what scenarios it will cover.”
He expects farmer will find it cheaper to insure by enterprise units. “The farm bill says, ‘Okay, you can choose enterprise units and put all your dryland acres in one unit and all your irrigated acres in another unit. And you can still get your enterprise discount. That’s a huge deal for farmers that have both dryland and irrigated cropland in the same commodity.”
He also finds it interesting that the bill’s commodity title is reduced by $14 billion while crop insurance funding has been increased by $7 billion.