What is in this article?:
- Crop insurance and the next farm bill
- Workloads, banking, awareness
- With crop insurance destined to be a key component of the next farm bill, what are insurance agents keeping a close eye on as the legislation takes shape?
- Insurance agency president discusses industry concerns/kudos with new farm bill.
Workloads, banking, awareness
I was struck by the photograph included in your testimony showing the amount of paperwork required to sign someone up for crop insurance compared to the past. To deal with that paperwork, how much time do you spend with a client now compared to a decade ago?
“Now, I spend four or five times what I used to.
“Part of that is good because the policies have improved. I helped push the revenue policy through back in the 1990s. The ARPA bill helped improve (the industry) as well.
“But we’re still asking the farmers to pay an awful lot of money for crop insurance. So, much of the time I spend with them is evaluating (individual situations) – what if I do this? What if I do that?
“And how does that marry up to any farm program out there? With the last farm programs, we spent hours and hours on education regarding ACRE and how that interacted with crop insurance.
“I think time will (increase) as we go into the next farm bill. You’re talking about STAX, SCO (Supplemental Coverage Option) and ARC. And I think those are all good options.
“I’m a particular fan of (Texas Rep. Randy) Neugebauer’s SCO combined with the traditional crop insurance. I think that’ll give the farmer the most bang for his buck. But I think it’ll also give the taxpayer the most bang for the buck.
“Farmers must pay in order to participate in these plans. So, when they’re spending their own dollar, it isn’t about going to the highest level to get the most ‘free’ money possible. It’s about getting the coverage that’s the most optimum for their farm.
“So, we do spend an awful lot of time with farmers. And that’s what I love to do so I’m not unhappy with that.
“I am unhappy with the enormous amount of regulation. (For example) if you transpose a number, you can’t correct it after the fact. … That’s crazy.”
On trend adjusted yields…
“These are fabulous, extremely helpful. You can hang your hat on the science behind them. It makes sense – for the farmer and the taxpayer.
“The more records you have in a farmer’s database, the more accurate you’ll be actuarially. That means you’ll spend taxpayer money well.
“One of the frustrating things on our own farm is that, due to conservation, we maintain a fairly strict rotation. That means it takes us 20 years to get a 10-year database.
“With the trend adjusted yields, you’re being rewarded for doing conservation correctly.
“We’re just in a corn/soybean rotation on our farm. Some farms have four and five crops that they rotate. Trend adjusted yields would be very appropriate for them.”
On personal transitional yields…
“I’m a huge fan of this because it incentivizes farmer to keep accurate records. If someone is trying to bring fraud into the system by skipping around with different crops in different counties to pick up insurance money, going to personal T yields will stop it cold.
“As long as I’ve been in the business, I have great APHs (Actual Production History) but I’ve also had years that would have been devastating. Think about the 2011 floods – (many producers) have hard hits in their database. Well, if they’ve kept good records, their personal T yields will still be significantly higher than the county average.
“It cuts both ways: You incentivize farmers to do the right thing and stop the potential for abuse on county averages.”
On agriculture bankers and crop insurance being a main focus of the next farm bill…
“I think they’ll be thrilled. I spend a significant part of winters working with bankers, making sure they know what to do, what to watch out for, any potential traps in rule changes.
“When a rewrite goes on, I get called many, many times to provide information on clients. It’s a team effort between the farmer, myself and the banker. We can say ‘if they price is this at harvest and the yield is this, what will that mean to the bottom line?’
“One thing all the bankers I work with tell me is ‘if we lose the subsidy to crop insurance it will crash the U.S. ag economy.’ And it will crash the U.S. ag economy, without a doubt.”
“Farmers need to be tuned in to the potential run on the subsidy. That’s the first thing to be aware of.
“Second, they should be aware that (crop insurance) agents won’t change the way we do business. We’ll still provide the same service. But over time if this cap on agents persists, it will hurt the farmers more than anyone else.
“Already a lot of agencies are selling out to others, to banks. The cap has made it too prohibitive. So, farmers (could lose) the one-on-one resource they enjoy if the cap stays.”