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BRANDON WILLIS administrator USDA Risk Management Agency addresses the Plains Cotton Growers annual meeting in Lubbock
<p>BRANDON WILLIS, administrator, USDA Risk Management Agency, addresses the Plains Cotton Growers annual meeting in Lubbock</p>

Crop insurance has stood test of time

Almost 296 million acres of U.S farmland were covered by crop insurance last year and because of that protection a lot of farms and jobs were saved.

Almost 296 million acres of U.S farmland were covered by crop insurance last year and because of that protection a lot of farms and jobs were saved.

“We believe a lot of people are farming this year who wouldn’t be without crop insurance,” says Brandon Willis, administrator, USDA Risk Management Agency.

Willis spoke of the growth of crop insurance as a means of protecting farm and ranch assets over the years and of the increasingly important role insurance will play in farm risk management under the recently enacted Agriculture Act of 2014 during the recent Plains Cotton Growers annual meeting in Lubbock.

“We have seen significant growth since 1999,” he said. About 19 percent of that growth has come from increased acreage enrollment and about 15 percent has come from higher levels of coverage.

Willis said the new farm law gives farmers the ability to “take control of risks. We have not had ad hoc disaster payments in more than seven years. Crop insurance has proven it can be the safety net.”

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He encouraged farmers to learn as much as possible about new programs before sign-up begins later this year. “Farm program implementation needs to be made in a timely manner, but it is easy to underestimate the number of decisions to determine how it is implemented. If it is not implemented in a timely but thoughtful way, we could see problems.”

Making crop insurance the keystone of the farm program comes after years of growth, especially in the past few years. Willis said 283 million acres were insured in 2012. That number increased to 295.8 million last year. Total premiums increased from $11.1 billion in 2012 to $11.7 billion in 2013. He emphasized that the program assures that farmers have skin in the game and pay significant amounts out of their own pockets—$20 billion over the last four years for premiums. “Cost is directly related to risk,” he said.

Farmers have some important deadlines coming up this year, he said. Livestock producers could begin signing up for disaster assistance on April 15.  He said web-based training and education tools will be available this summer on the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) options.

In the fall producers should begin updating production history with anticipated publication of farm program details. By late fall, producers will begin to elect either PLC or ARC coverage.

STAX info available this summer

He said the STAX program for cotton will not be available until the 2015 crop year but that RMA anticipated the program would be in effect and started preparing for it last year. “We will have information on STAX counties by the end of the summer,” he said. “We anticipate we will have STAX available in the vast number of cotton counties.”

A supplemental coverage option (SCO) also will be available in 2015.

“Program details and eligible counties will be available this summer.”

Beginning farmers, with less than five years in farming, also get some benefits from the new program with yield adjustments and a 10 percent reduction in insurance premium. That program begins in 2015.

Willis said a farmer’s ability to separate coverage by production practices offers another advantage. Irrigated and dryland agriculture will be considered differently for insurance coverage.

Despite crop insurance’s history of benefits to U.S. agriculture, critics remain. “We see a lot of attention on crop insurance and some see it in a negative light. Farmers are frustrated with the lack of understanding of the program.” Willis reiterated that a lot of farmers who survived the long-term droughts of the past few years may not have done so without crop insurance.

“Crop insurance has stood the test of time. It was authorized in 1938 and has changed over the years. It was improved in the 1980s.

“We have also seen a lot of farm policy changes, many designed to address a certain issue. All were good for the time. But none have had the impact of crop insurance.”

And criticism of the program is misplaced, he said. “Farmers must follow good farming practices (to be insured). They can’t receive more than 85 percent of what they would have made without a disaster. They never do better with crop insurance than if they had made the crop.”

He said crop insurance has been around for 75 years because “it makes sense. It’s a safety net for farmers and makes them more efficient.”

USDA says disaster sign-up starts April 15

He said it’s also good for consumers because it saves money. It allows farmers to invest in technology that makes them more efficient and productive. It’s good for Congress because it saves taxpayer money.

“These are good reasons why crop insurance has grown over the years.”


Also of interest:

Drought conditions improve but some areas worsening

Farmers turn to crop insurance for risk management

USDA says disaster sign-up starts April 15

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