Do you like federal crop insurance?Then now’s the time to show it, industry official says.
By: Jonathan Knutson, Agweek
FARGO, N.D. — Despite strong support from most farmers and farm groups, the federal crop insurance program is getting a bad rap in Washington, D.C., a veteran crop insurance official says.
“People are saying that crop insurance is too expensive to deliver and the agents and companies are getting rich at the expense of the government,” says Rick Gibson, business strategy consultant with the Ramsey, Minn.-based NAU Country Insurance Co.
With the next farm bill still to be written, agents and others involved with the federal crop insurance program need to promote its benefits to policymakers, he says.
Gibson spoke Jan. 21 in Fargo, N.D., at the 20th annual North Dakota State University Crop Insurance Conference. Sponsored by the NDSU Extension Service, the event drew about 230 people, most of them involved with crop insurance.
The federal crop insurance program, administered by the U.S. Department of Agriculture’s Risk Management Agency, seeks to protect crop producers from “unavoidable risk” associated with bad weather, crop disease and insects, according to information from the federal government.
Crop insurance policies are sold and serviced through private companies. The federal government subsidizes the program to keep it affordable. Last year, the federal government spent about $9 billion on the program, according to published reports.
The U.S. government’s financial problems and the 2012 drought have increased public scrutiny on federal crop insurance, Gibson says. Much of the scrutiny comes from determined critics such as the Environmental Working Group.
So supporters of federal crop insurance need to step up and promote their cause, he says.
“This is not a time to back off from either participating with your company or in other associations to make sure you have representation in Washington. You need to represent your views about what we have to sell, about what farmers want.”
Many changes over time
The program has grown steadily through the years, with 282 million acres insured nationwide in 2012, according to USDA RMA figures.
Crops valued at $117 billion were covered by the program with corn ($54 billion), soybeans ($22.5 billion) and wheat ($10.5 billion) accounting for most of that amount.
Corn, soybeans and wheat are the three major crops in the Upper Midwest.
Gibson says he remembers when many farmers thought the program would never succeed.
Federal crop insurance, created in 1938, has seen many changes through the years. It was even discontinued temporarily in the 1940s.
In 1980, federal crop insurance was reformed into a public/private partnership.
In 2000, the federal Agricultural Risk Protection Act was passed, giving more ag producers access to risk management tools.
Federal crop insurance has played an increasingly important role since 2000, and people involved in production ag need to remember what things were like before then, Gibson says.
Funding for 2012 crop
The RMA and its partners in the private sector have adequate funding for 2012 losses and enough adjusters to complete claims, according to Robert Ibarra, the Washington, D.C.-based director of RMA’s risk management services division.
The federal crop insurance program has a number of new features this year, Ibarra says.
•The use of trend adjusted yield, or an upward adjustment that allows producers to insure more bushels per acre based on better crop varieties and improved farming practices.
Corn, soybeans, wheat, canola, grain sorghum, cotton and rice are covered by the trend adjusted yield in 2013, with other crops added later, according to Ibarra.
•A pulse crop revenue program is being added in 2013 for producers in many, though not all, counties in North Dakota and Minnesota.
&bulll;The final dates for which canola can be planted in North Dakota and northern Montana, and still be eligible for coverage under federal crop insurance, has been extended.
The extension reflects studies that show canola can be safely planted later than previously thought.
The RMA continues to study and develop new products, Ibarra says.
One of the changes being planned is recognizing and utilizing data compiled with the use of precision agriculture.
Prevented planting update
The RMA continues to fine-tune its prevented planted insurance policy, which provides coverage when extreme weather conditions prevent planting
For instance, eligible land “must be physically available for planting at the beginning of the insurance.” But land isn’t available for planting simply because a producer could till the land the previous year, the RMA says.
Until 2012, many of the questions about prevented planting on the Northern Plains involved excess moisture. But now, much of the attention has shifted to prevented planting as a result of drought.
To qualify for prevented planting as a result of drought, a producer must provide “verifiable documentation,” says Doug Hagel, the Billings, Mont.-based director for the RMA regional office that serves Montana, North Dakota, South Dakota and Wyoming.
“It has to be very good documentation,” Hagel adds.
Such documentation must come from sources “whose business is to record and study the weather,” according to the RMA.
Local weather reporting stations of the National Weather Service are one such source. Farm records, newspaper reports and written opinions from extension service personnel do not qualify as sources, the RMA says.
Producers also need published material or written opinions from ag experts showing that the insured crop couldn’t be planted because of inadequate moisture. The written opinion must be based on the crop, area in which the crop is grown, the soil type in which the crop is grown and other relevant factors, the RMA says.
“It has to be very good documentation,” Hagel says.