Attacks on Crop Insurance Misguided

U.S. Farmers receive more from the marketplace than

U.S. farmers and ranchers receive a higher percentage of their gross farm income from the marketplace than rather than government supports.

With the House and Senate Agriculture Committees jumping back in the throes of developing a new farm bill, one program in particular is under a greater microscope than most. With direct payments likely out of the mix, farm bill critics have turned their focus and angst toward crop insurance, the safety net that is most likely to become the foundation of a new farm bill. Like a piñata at a kid’s birthday party, the shots at crop insurance are coming fast and furious from every direction, including from those on the right and left.

Farm Bureau has been extremely sensitive to the fact that farm bill programs are coming under greater scrutiny and the pressure to cut spending from the agriculture safety net has never been higher. In a letter to members of Nebraska’s Congressional delegation sent earlier this month regarding farm bill negotiations, Farm Bureau indicated its interest in making sure the next farm bill works for farmers as well as American taxpayers. We continue to advocate for a new farm bill that provides a strong and effective safety net along with risk management programs that don’t guarantee a profit, but protect producers from catastrophic occurrences. Those of us involved in farming and ranching understand better than most that the potential for a drought or market downturn is just around the bend.

As crop insurance has become a punching bag for farm bill critics, they might be wise to keep in mind a few things. Yes, the USDA reported crop insurance indemnities of roughly $17 billion for the 2012 crop year. Listening to the naysayers one would think that was $17 billion directly out of the taxpayers pocket. That simply isn’t true. National Crop Insurance Services (NCIS) President Tom Zacharias set the record straight in a recent editorial for Roll Call/CQ pointing out that even with government assistance on crop insurance premiums, farmers bear a significant burden. Zacharias noted that some $12.7 billion of the $17 billion total came “before farmers saw a dime in crop insurance indemnity payments as part of their deductibles…” and that “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.”

Taking one year of record indemnities to try and make the case that crop insurance is an undue financial burden on taxpayers is shortsighted and fails to recognize how the program truly operates. When crop insurance premiums exceed losses, the government sees underwriting gains that are meant to offset payments in bad crop years. According to Zacharias, the government experienced nearly $4 billion in gains under the crop insurance program from 2001 to 2010. A fact largely ignored in pundits criticisms. The fact we have a crop insurance program also helped avoid the need for Congress to fund an ad hoc disaster bill in 2012, despite a drought of historic proportions that stretched from coast to coast.

Not only does crop insurance help farmers, but rural communities as well. A recent study conducted by University of Nebraska officials and underwritten by Farm Credit Services of America indicates that investments made by farmers’ in crop insurance saved an estimated 7,450 off-farm jobs in Nebraska that would have gone away without crop insurance. The study goes on to show that in agriculture states, like Nebraska, crop insurance not only stabilizes local economies but the statewide economy as well.

Again, from a big picture perspective, the farm bill and crop insurance are still about ensuring a viable food supply. With 360 million-plus people in the U.S. looking to eat every day and growing global demand for food, it’s good news for them and us that crop insurance has better than a punchers chance to withstand the rhetoric.

–Steve Nelson, president, Nebraska Farm Bureau Federation

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