Crop insurance No. 1 priority in new farm bill
• Farmers in the Southeast echo the sentiment that crop insurance is critical in the new farm bill, many noting that high prices have brought with them highest in history input costs, and risk associated with planting such a capital-intensive crop demands some sort of safety net.
April 6, 2012
U.S. Secretary of Agriculture Tom Vilsack, leaders of the U.S. Agriculture Crop Insurers Association and the directors of all U.S. grain associations agree that the single most critical part of the upcoming farm bill has to be crop insurance.
Farmers in the Southeast echo that sentiment, many noting that high prices have brought with them highest in history input costs, and risk associated with planting such a capital-intensive crop demands some sort of safety net.
And four major farm groups recently joined the chorus backing crop insurance as a must in any new legislation. To read that story, click here.
Major spring-planted crops in the Southeast will almost certainly be in the ground before any action is taken on the upcoming farm bill.
However, there is particular concern among wheat growers that some type of crop insurance be given at least tentative agreement in Congress prior to planting later this summer and fall.
Smaller acreage, less diversified growers, especially those new to full-time farming are particularly vulnerable to weather related disasters. Without crop insurance, some simply couldn’t ride out the economic storm, lacking the on-farm equity to leverage a new year of bank financing.
Speaking at a recent meeting of nearly 5,000 farmers attending the Commodity Classic, Vilsack said, “The first thing a new farm bill must include is a safety net for farmers. U.S. farmers, mostly in the Southwest, lost 55 million acres of farm production to weather related disasters last year.
“Without an insurance program to get them from one crop to the next, some of these growers would be out of business,” Vilsack adds,
“In our quest to provide food for future generations, in an ever increasingly over-populated world, we simply can’t afford to lose farmers to weather problems.
“Over the past three years the federal government guaranteed payment of over $30 billion in crop insurance claims.
Providers made money
Still, the insurance operations that made those payments made money, and even provided about a 10 percent positive return on tax dollars — that makes a strong case for a viable crop insurance program,” Vilsack says.
Crop insurance companies wrote more than $11.9 billion in federal multiple peril crop insurance premiums last year, covering nearly 265 million acres of farmland, protecting more than 80 percent of eligible crops, with total potential liability exceeding $113
billion.
On March 15, speaking to the U.S. Senate Committee on Agriculture, Nutrition and Forestry, Steve Rutledge said, “How crop insurance emerges from the 2012 farm bill process will hold major ramifications for this risk management program and for America’s
farmers and ranchers who have come to rely on it.”
Rutledge, who spoke on behalf of crop insurance companies, underscored the public/private partnership that is unique to crop insurance and how that relationship lowers risk for taxpayers.
Both Secretary Vilsack and Rutledge, who is chairman of Farmers Mutual Hail Insurance Company of Iowa, have urged both houses of Congress to avoid further budget cuts to the crop insurance program.
Since 2008, crop insurance programs in the U.S. have absorbed about $12 million in budget cuts. “This reduction is astounding when one considers that crop insurance represented only 8 percent of the farm bill spending and a meager one-tenth of one percent of overall government outlays,” Rutledge said.