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A little-known debate is going on in Washington, D.C., regarding crop insurance.
Farmers across Iowa rely on their crop insurance policies to weather unexpected storms. Without such coverage, many of them would be hard pressed to secure the loans needed run their operations. Unfortunately, crop insurance is facing $7 billion in cuts that would take money and jobs directly out of thousands of Iowa communities; that could undermine insurance delivery to the men and women who grow America’s food, fiber, and fuel; and that in Washington would deal a blow to the agricultural budget as we head into the 2012 farm bill. These cuts would hit Iowans hard.
A number of crop insurance companies are located in our state, employing thousands of Iowans.
Moreover, there are thousands of independent agents competing to provide a quality service to farmers. And, these insurers and agents sold $9.2 billion worth of liability protection last year, providing a meaningful safety net to our farmers should the floods have continued.
Perhaps this is why, in a recent letter to USDA Secretary Tom Vilsack, all five of Iowa’s House members criticized the proposal, estimating it could cut potential underwriting gains by near 30 percent and would hurt growers in the state more than in other areas.
“We know you, as our former governor (Vilsack), understand the gravity of the situation to Iowa,” the members wrote.
“Crop insurance is a key safety net that underpins agriculture, one of Iowa’s primary drivers of economic growth and opportunity.”
The good news is the Iowa lawmakers aren’t alone. The American Farm Bureau Federation and associations representing the corn, soybean, wheat, and dairy industries sent a similar letter to Vilsack to stop the attack.
The push for massive cuts is coming from the USDA alone through a rewriting the Standard Reinsurance Agreement (SRA), the contract between the government and the country’s crop insurance companies.
For perspective, these proposed cuts are three times larger than ones Congress overwhelmingly defeated when crop insurance came under attack in the 2008 farm bill.
What’s so surprising about the USDA proposal?
Earlier this decade, government officials were begging crop insurers to expand their offerings and pleading with growers to increase coverage levels to mitigate risk. That way, the government could use the private sector to leverage a relatively small investment (roughly $6.4 billion in 2009), for a tremendous amount of reliable coverage for farmers ($80 billion total in 2009).
Crop insurance companies, their agents, and growers answered the call. This is why total liability insured by crop insurance has grown from $13 billion in 1990, to $31 billion in 1999, to $80 billion in 2009.
But, now the USDA is signaling a major retreat in the effort to improve access to quality coverage for all U.S. producers.
In times of economic uncertainty, it would seem incredibly unwise to go forward with this plan that would deal a significant blow to communities throughout the heartland.
The USDA should reinstate the current SRA and let Congress deal with the issue in the next farm bill. If they don’t, Iowans will feel the brunt of this attack on a public/private partnership that has actually worked.
Norm Nielsen is a principal with Associated Insurance Counselors Inc. in Preston, Iowa. He is a member of the Crop Insurance Professionals Association.
A little-known debate is going on in Washington, D.C., regarding crop insurance.
Farmers across Iowa rely on their crop insurance policies to weather unexpected storms. Without such coverage, many of them would be hard pressed to secure the loans needed run their operations. Unfortunately, crop insurance is facing $7 billion in cuts that would take money and jobs directly out of thousands of Iowa communities; that could undermine insurance delivery to the men and women who grow America’s food, fiber, and fuel; and that in Washington would deal a blow to the agricultural budget as we head into the 2012 farm bill. These cuts would hit Iowans hard.
A number of crop insurance companies are located in our state, employing thousands of Iowans.
Moreover, there are thousands of independent agents competing to provide a quality service to farmers. And, these insurers and agents sold $9.2 billion worth of liability protection last year, providing a meaningful safety net to our farmers should the floods have continued.
Perhaps this is why, in a recent letter to USDA Secretary Tom Vilsack, all five of Iowa’s House members criticized the proposal, estimating it could cut potential underwriting gains by near 30 percent and would hurt growers in the state more than in other areas.
“We know you, as our former governor (Vilsack), understand the gravity of the situation to Iowa,” the members wrote.
“Crop insurance is a key safety net that underpins agriculture, one of Iowa’s primary drivers of economic growth and opportunity.”
The good news is the Iowa lawmakers aren’t alone. The American Farm Bureau Federation and associations representing the corn, soybean, wheat, and dairy industries sent a similar letter to Vilsack to stop the attack.
The push for massive cuts is coming from the USDA alone through a rewriting the Standard Reinsurance Agreement (SRA), the contract between the government and the country’s crop insurance companies.
For perspective, these proposed cuts are three times larger than ones Congress overwhelmingly defeated when crop insurance came under attack in the 2008 farm bill.
What’s so surprising about the USDA proposal?
Earlier this decade, government officials were begging crop insurers to expand their offerings and pleading with growers to increase coverage levels to mitigate risk. That way, the government could use the private sector to leverage a relatively small investment (roughly $6.4 billion in 2009), for a tremendous amount of reliable coverage for farmers ($80 billion total in 2009).
Crop insurance companies, their agents, and growers answered the call. This is why total liability insured by crop insurance has grown from $13 billion in 1990, to $31 billion in 1999, to $80 billion in 2009.
But, now the USDA is signaling a major retreat in the effort to improve access to quality coverage for all U.S. producers.
In times of economic uncertainty, it would seem incredibly unwise to go forward with this plan that would deal a significant blow to communities throughout the heartland.
The USDA should reinstate the current SRA and let Congress deal with the issue in the next farm bill. If they don’t, Iowans will feel the brunt of this attack on a public/private partnership that has actually worked.
Norm Nielsen is a principal with Associated Insurance Counselors Inc. in Preston, Iowa. He is a member of the Crop Insurance Professionals Association.
