Agriculture in this state, and throughout the U.S., has been one of the bright spots that is helping the U.S. turn the economic corner. But the productivity of the American farm and the consumer benefits of the American food supply did not just happen in a vacuum. And hands down, farmers across the country will tell you that their most important risk management tool is crop insurance.
As a crop insurance agent who was on more than a few farms the day after Hurricane Katrina struck, I can tell you first- hand that crop insurance was a financial lifeline for many farmers.
Crop insurance is privately written and delivered insurance that is purchased by individual farmers and tailored specifically for the risks they face on their farms.
After Katrina, crop insurance companies dispatched crews from other parts of the U.S. to the Gulf Coast states to meet with the farmers and perform the appraisals. And, believe it or not, indemnities were paid in a matter of weeks.
For farmers, the speed with which they received their indemnities enabled them to pay off their production loans from the crop they had just lost and bounce back to plant again the following spring. Compare that to federally-administered disaster programs, such as SURE, that take as long as two years for a loss payment to finally reach a farmer.
Another reason why crop insurance is a preferred risk management tool is that the right policies are matched up with farmers based on the crops he is planting, the specific perils or risks he faces, and the level of risk he is able to shoulder alone in the form of a deductible.
As a crop insurance agent, I can attest to the fact that private sector delivery works so well because agents are incentivized to offer the very best and most comprehensive service possible to farmers because it's the right thing to do and it's the only way to distinguish yourself among other agents since USDA sets the premiums.
Service-oriented agents, good public policies, and private sector innovation have catapulted the use of crop insurance as a tool used by only about 30 percent of farmers in the early1990s to one that in 2011 insured 80 percent of eligible lands in the U.S.
In this acrimonious political environment, there are few things that Republicans and Democrats can agree on. But one thing members on both sides of the political aisle have lined up behind is crop insurance because that is what producers around the country are saying is their top priority. So, as Congress writes the 2012 farm bill, it should not only not harm crop insurance, but also continue to build on this success story so that crop insurance effectively serves every crop, every producer and every region of the country as well as it does in the corn belt. We can get there.
William Cole is a crop insurance agent from Batesville. Contact him at email@example.com.