May 9, 2013
Farmers Purchase Crop Insurance While Hoping for the Best

Although it is early in the year, farmers are already purchasing their crop insurance policies. As of May 6, 2013 more than 240,000 policies have been purchased, protecting nearly 88 million acres representing nearly $20 billion in liabilities, accounting for $800 million in farmer paid premium.  These numbers will continue to grow as we move further into spring.
  • In 2012, farmers invested more than $4.1 billion to purchase more than 1.2 million crop insurance policies, protecting 128 different crops.
  • Crop insurance policies protect more than 281 million acres, with insured acreage now equal to 86 percent of planted cropland in 2012.
  • $30 billion: Farmers have spent more than $30 billion out of their own pockets to purchase crop insurance since 2000.
  • To date, Kansas, Texas, California, Oklahoma, Nebraska and Florida lead the way in the number of crop insurance policies purchased.
Drought Update
 
The 2012 drought – the worst this country has seen in decades – is now becoming the 2013 drought.  In fact, 47 percent of the continental U.S. – including a good portion of the nation’s breadbasket – remains in some stage of drought, compared to roughly 37 percent a year ago, according to the April 30, 2013 U.S. Drought Monitor. In other words, many farmers are starting off 2013 in worse shape than they were at the start of 2012.

Seventy-seven percent of the state of Nebraska is experiencing “extreme” drought or worse. Additionally, nearly every county in the states of Arizona, California, Colorado, Kansas, Nevada, New Mexico, South Dakota, Texas, Utah and Wyoming are either abnormally dry or in some level of drought. 




CROP INSURANCE IN ACTION: Bill Bridgeforth, Tanner, Alabama

“In a typical year, with five different crops in the ground, it seems like we farm all the time,” said Bill Bridgeforth, a fourth generation farmer from Tanner, Alabama, in the state’s northeast corner.   Bridgeforth farms 10,000 acres of cotton, corn, soybeans and canola with his brother Gregory and their sons. 
 
Bridgeport explained that being a farmer in the Deep South could be a mixed blessing. On the positive side is the region’s extended growing period, which allows double cropping. 
 
But the negative side of the extended growing season is the extreme weather swings, like powerful thunderstorms, tornadoes and hurricanes that can also plague the region. “There’s just so much variability in the weather here in the south,” he said. 
 
That’s why Bridgeforth buys crop insurance every year.  
 
Read Bill Bridgeforth’s story here.



CROP INSURANCE IN THE NEWS

Jeff Spellman, a farmer from Woodward, Iowa, told the editors at the Des Moines Register that their recent editorial portrayed crop insurance as a free government benefit bestowed unto farmers. “Nothing could be further from the truth,” he said.
 
Spellman explained that in order to enjoy the protection of crop insurance, farmers must first purchase it, with their own money.   “And farmers have been willing to do so, spending more than $30 billion out of their own pockets to purchase the protection of crop insurance since 2000,” he said.
 
He also pointed out that most farmers who purchase crop insurance, even during a historic drought like last year’s, do not file a loss claim. “In fact, Iowa farmers purchased more than 107,000 policies last year, costing them about $400 million, yet less than 48,000 of those policies were indemnified.”
 
To view the letter to the editor in its entirety, click here.



SPOTLIGHT ON CROP INSURANCE: Just the Facts

CROP INSURANCE: Just the Facts is a new web-based question and answer series that provides easy to access answers to some of the most commonly asked questions about farmers’ favorite risk management tool.   One of those questions and answers will be highlighted in each new edition of the Bi-Weekly Crop Insurance Update and Drought Report. 
 
How does crop insurance benefit the public?
 
It is in the public interest to have a secure food supply and financially stable agriculture.  There is a public benefit to a stable and secure rural economy and food production sector. That requires the presence of some form of publicly-funded safety net for farmers, who increasingly face variable weather patterns that challenge the food production system. The need for a sound crop insurance program is most easily demonstrated by the three-year drought, which began in 2011 and is extending into 2013.
 
Crop insurance is the primary risk management tool farmers use to financially recover from natural disasters and volatile market fluctuations; pay their banks, fertilizer suppliers, equipment providers and landlords; and purchase their production inputs for the next season. Without an effective and affordable crop insurance program, catastrophic production losses would sap the rural economy by setting in motion a series of harmful events: farm failures and consolidation, job losses, farm-related small business failures and financial stress on rural banks. A financially healthy rural economy requires a financially healthy farm production sector. 
 
By 2050, the UN projects a 34 percent increase in global population and a 70 percent increase in demand for food (see this.
 
As the number of consumers expands globally and the climate continues to exhibit more intense weather events there will be increasing pressure on the global food production system. In the US, the ability for farmers to purchase crop insurance is actually this nation's "insurance policy" against disruption and instability in the food production sector. Crop insurance will also be critical to helping young people obtain credit, enter farming and become the next generation of producers that meet the growing global food and energy needs.
 


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