Crop Insurance Industry Celebrates Successes, but Looks to Future Challenges02/21/2019
Ask a farmer about the most important farm bill provisions for his or her operation and you’ll likely hear the words “crop insurance.” The public-private partnership continued to expand last year, covering more than 334 million acres of farmland in 2018 — a 20 million-acre increase over 2017. Other industry successes:
- Crop insurance came in $2 billion under federal budget projections for the 2014 farm bill.
- With more than 1.1 million policies covering 551 crops and livestock, farmers paid $3.7 billion in premiums last year.
- Improper payment rates declined again, dropping from 1.96 percent in 2017 to 1.81 percent in fiscal 2018.
- The 2018 loss ratio is projected to be 0.58, as of Feb. 4, 2019. That’s slightly above the 2017 loss ratio of 0.53 but far below the 2012 drought year’s loss ratio of 1.57.
“The public-private partnership that defines crop insurance has been successful in providing the important safety net for our farmers and the rural areas where they live,” said Jim Korin, chairman of National Crop Insurance Services (NCIS) and president of NAU Country Insurance Company during the Crop Insurance Industry Convention in San Diego earlier this week.
“If I had one takeaway from this past year, it would be that we, as an industry, should be humbled by the support we have received as evidenced by the outcome of the 2018 Farm Bill,” added Tom Zacharias, President, National Crop Insurance Services. “This result should motivate the industry to work even harder in the coming year in order to maintain this support going forward.”
But critics remain steadfast in their determination to gut the program, according to several speakers attending this week’s Crop Insurance Industry convention.
“If anyone thinks the fight against crop insurance is over, they are nuts,” emphasized Joe Outlaw, a professor and extension economist in the Department of Agricultural Economics at Texas A&M University.
Larry Heitman, chairman of the American Association of Crop Insurers and senior vice president of NAU Country Insurance Company, agreed about the need for continued vigilance.
“As tempting as it may be to relax until the next Farm Bill negotiations begin again, let’s remember our program is a target for those that want to redirect agricultural funds to their own causes or programs,” he emphasized.
Industry groups are already working to counter expected proposals from the Trump Administration to further cut crop insurance as part of the president’s 2020 budget proposal, due out next month.
In a letter addressed to Agriculture Secretary Sonny Perdue Tuesday, a coalition organized by the Crop Insurance and Reinsurance Bureau which included about 60 groups argued that now is not the time to ask for more cuts. “An over-reliance on budget savings from the agriculture community and from crop insurance will unquestionably undermine rural economies,” the letter says. “It’s also important to note that in a time of uncertainty in the farming and ranching community — from natural disasters to trade disputes to government shutdowns — the public-private partnership that is crop insurance has been a consistent and reliable risk management tool,” the letter goes on. A similar letter was sent to the House and Senate Budget committees.
Threats are likely to come in a lot of different forms, noted Rep. Dan Kildee, D-Mich., during his convention address. “As we go through the appropriations process, some members will take a run at crop insurance.” Congress is expected to raise the debt limit again later this year and approve a new budget deal by the end of September.
Robert Guenther, senior vice president for public policy at United Fresh, was one of several trade association leaders addressing the group. He encouraged the formation of coalitions to drive stronger political impact.
“It is a constant effort to help members understand crop insurance,” Guenther said. “Half of Congress turned over in the last five years and there are over 100 new members this year.”
Sam Willett, the National Corn Growers Association’s Senior Director for Farm, Risk and Tax Public Policy, acknowledged that crop insurance will continue to be a target in Congress. “When you have $22 trillion in federal debt, there will always be efforts to save money,” he said. “Everything that has a cost to it is going to be a target.”
Both Guenther and Willett noted that farm bill provisions for urban agriculture could offer new opportunities to shore up inner city influence that has not traditionally been engaged. Similar coalition building opportunities could exist with hemp growers.
The 2018 farm bill legalized hemp at the federal level and authorizes the development of hemp crop insurance. However, Risk Management Agency Administrator Martin Barbre told the group that there is currently no coverage for hemp and did not offer a specific timeline for policy development. First, he said USDA’s Agricultural Marketing Service must develop regulations for producing industrial hemp and then states must approve hemp regulations.
Barbre said his agency is in the process of working on several crop insurance changes that were included in the 2018 farm bill, including the new Multi-County Enterprise Unit endorsement that could impact over 42,700 entities operating in more than one county within a state. The farm bill also creates Specialty Crop Liaisons in each RMA Regional Office and requires the agency to create a dedicated Specialty Crop website, among other changes.
Source: Sara Wyant, Agri Pulse