Many farmers who make their living on commodity crops like corn support the federal crop insurance program. (Kathleen Masterson/Harvest Public Media)
Government subsidized crop insurance is a vital safety net – that was the central messages from farmers and crop insurance agents testifying before a U.S. Senate committee agriculture hearing Thursday.
Critics say the program is too costly, but commodity farmers want to keep the program and even add more risk protection options.
The lengthy morning hearing was full of stories like this one:
"(Last year) we went through the most devastating crop year in history," said Haskell County, Kan., Farm Bureau president Jarvis Garetson. "We had on our farm less than 5 inches rain in the last 18 months, that's by far less than what we received through the Dust Bowl in Haskell county.
"Without federal crop insurance, we would be having farm sale this spring, instead of preparing to plant the next crop.”
Many farmers testified to the importance of crop insurance in protecting their family’s way of life and for the key role it plays in securing a farm loans from banks.
Other than specialty crop growers, most want to keep crop insurance running the way it does.
Bob Carden, a crop insurance agent with Carden & Associates, Inc., in Florida said he had just two messages for the committee.
"First, do no harm to crop insurance, do not cut crop insurance, but build on it," Carden said. "And second, do not let the government take over the delivery of crop insurance, while government can take years to pay a producer on a loss, under private delivery of crop insurance, farmers get paid in matter few weeks."
Clearly, Carden has a vested interest. Currently, the government subsidizes crop insurance, paying about 60 percent of the premium. Much of that money goes to private insurance agencies in the form of premium payments and the government also subsidizes some of an agency's administrative costs.
But those critiques didn't come up on Thursday's panels. The Agriculture, Nutrition and Forestry committee, which has built various parts of previous crop insurance programs in past years, seemed more sensitive to farmers' concerns than critical.
In recent years the government has already cut $12 billion from crop insurance spending, a fact that insurance agent Steve Rutledge, chairman of Farmers Mutual Hail Insurance Co. in Iowa, pointed out.
Some growers of specialty crops like rice and peanuts said that the program needs some adjustments to work for them. They said the way the prices are set doesn't always reflect a farmer's economic reality. And some commodity crop growers associations also introduced their own plans that would slightly change the way crop insurance base prices are set.
Still, even a blueberry farmer testified that she couldn't survive without crop insurance, as it was integral to her getting loans.
Many of the panelists were from the Midwest, the plain states and the south. But not all ag industries support crop insurance.
A few weeks ago I spoke with former USDA Assistant Secretary for Economics Dan Sumner, now a professor of ag economics at University of California Davis.
"I've never seen crop insurance actually be attractive to farmers when it's not hugely subsidized," Sumner said. "So I'm hesitant to think crop insurance is a profitable, long-term strategy."
Sumner says there are a number of industry groups in California that wish the crop insurance programs would just go away for their crops. Take for example, he said, lettuce growers in Salinas valley, California's "salad bowl."
"What they don't want is massive crop insurance that encourages people to grow lettuce in regions where it's not so suitable, because if they do get crop in those places, they push prices down,” Sumner said. “They're not convinced they want their competitors to be heavily subsidized to grow the crop where it's just not suitable."
But that sentiment didn't come up in the hearings. The current crop insurance program expires in September, and until then most farm groups will continue lobbying for extension in the 2012 farm bill.