Bunger addresses crop insurance challenges amid low commodity prices

MITCHELL, S.D. - Attendees at Dakotafest in Mitchell got the chance to get their crop insurance questions answered by Marcia Bunger, administrator for the USDA Risk Management Agency.

Low commodity prices and their impact on margins were the hot topic of their conversation.

"Things are really going to have to tighten up. People that are in the ag sector are going to start to look at ways to trim," Bunger said. "So, there was specific questions around the different kinds of policies and what my perspective is on what they should be purchasing, not purchasing." Today's commodity prices are going to have a direct impact on crop insurance.

"Premium is probably first, but at the same time the dollar coverage that they are going to be able to get from their coverage," Bunger said.

This is quite different from recent years.

"The last couple of years have seen high commodity prices, meaning high dollar levels of coverage, to the point that you were probably covering all of your input costs. Today, that is not so," Bunger said. "We are going to see probably lower spring prices, which means that the dollar-per-acre coverage is going to be considerably lower and you are not going to be able to cover all of your input costs." The goal of the day was not to sell or convince anyone of anything, but just to answer their questions.

"We are here to provide information, because at the end of the day, everybody's operation is very unique, so you really have to take time with your agent to discuss what is the best path forward with what you are going to be buying for risk protection," Bunger said.

Bunger also gave people a closer look at new things happening within the Risk Management Agency.

"We have really opened up a lot of opportunities to add enterprise units if you wish to purchase crop insurance that way, versus the basic unit," Bunger said. "It gives the grower the chance to cheapen up the cost of their crop insurance; he takes on more risk, but yet at the same time it might be something that is worthwhile looking at." All of these programs go toward national security, Bunger explained.

"Food is a national security issue and because RMA has such a robust risk management program, I think that really speaks to that component," she said. "It also, when you get down to the individual operation, it makes a difference of whether you are going to be farming next year or not." Bunger hopes that attendees realize that although the Risk Management Agency is small in size, they have a large footprint across rural America through ag commodities.

"$270 billion annual is what we are protecting.

That's no small number," she said. "We do that with the private sector with crop insurance agents and AIPs."