Relief Funds for Disasters Tied to Applying for Insurance

An oft-repeated line from proponents of the crop insurance program is that it prevents Congress from having to pass aid packages for farmers and ranchers after each natural disaster. But after a series of hurricanes and wildfires from California to Puerto Rico, Congress has authorized more than a $100 billion in relief spending, a portion of which was for the agriculture industry.

The USDA chief economist Robert Johansson told POLITICO that the fact that they hit areas of the country where produce and nuts are grown — which aren’t as widely covered by insurance as traditional commodities are — helped lead Congress to step in.

“A lot of producers only had catastrophic coverage,” Johansson told Pro Ag’s Catherine Boudreau during an interview on Friday at the USDA Agricultural Outlook Forum. “And even though they had CAT coverage, you need to have enormous devastation for indemnities to kick. So even with 30 to 40 percent losses, producers wouldn’t get indemnities.”

What farmers are expected to do: Johansson, who is also serving as acting deputy undersecretary of farm production and conservation, said that Congress, as part of the most recent disaster aid package, will require farmers who receive a payment to apply for some sort of insurance coverage for the next two years. That will be difficult to monitor, Johansson acknowledged, but it will be overseen by the USDA Farm Service Agency and Risk Management Agency.

“Hopefully it will develop some measure of comfort with using insurance products,” Johansson said. The department is continually working to bring premiums down so more specialty crop growers sign up, such as by gathering more data to better determine actual risk, he added.

Situation among Florida citrus growers: Citrus greening disease has ravaged through the Florida citrus industry for a decade, reducing yields of oranges, grapefruits and other products. That has made it difficult for farmers to make ends meet, he said. Because farmers are looking for ways to reduce their cost of production, many have cut down their levels of crop insurance coverage in order to reduce premium costs. The Florida citrus industry was among the most vocal in lobbying Congress for help.

Crop insurance during 2012 drought: Johansson pointed out that after a historic drought in 2012 Congress didn’t have pass an ad hoc disaster law because crop insurance was able to cover the damage. That was “a pretty significant event,” he said. He noted that the drought mostly affected row crop production across the South, the Plains and the Midwest, which can have upward of 80 percent coverage.

Source: Politico

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