Crop insurance has evolved with changing needs

"The Crop Insurance Reform Act of 1994 came on the heals of the extreme flooding and excess moisture conditions of 1993," said Tom Zacharias, National Crop Insurance Services president.

"Since 1994, crop insurance has continued to expand and adapt to the risk management needs of U.S. agriculture. Given this 30-year anniversary, it might be useful to take this opportunity to reflect on the program's many accomplishments."

Crop insurance critics have at times called for the need to "reform the crop insurance program."

"Oddly enough, if these same critics were paying attention to the 'facts on the ground,' they would know that the modern day crop insurance program is in continuous reform in order to respond to the changing environment of U.S. agriculture," Zacharias said.

He took a walk down memory lane to review key pieces of crop insurance legislation that have since become law over the last three decades.

Revenue products were introduced in the Agricultural Risk Protection Act of 2000.

"Introduced in the late 1990s, revenue products expanded the role of crop insurance to help protect farmers in the event of revenue loss. This vital component of the program is used by the majority of farmers today," Zacharias said.

"In 2000, the Agricultural Risk Protection Act increased premium discounts to farmers, encouraging greater participation, and included provisions to fight fraud, waste and abuse and improve program integrity."

The 2014 and 2018 farm bills included crop insurance provisions, as well.

"The 2014 farm bill is another piece of legislation that followed a catastrophic weather event — the 2012 Midwest drought," Zacharias said.

"Provisions of the 2014 bill solidified crop insurance's role as the cornerstone of the farm safety net, introducing the supplemental coverage option and the Stacked Income Protection Plan for cotton," he said. "The 2014 farm bill also linked crop insurance eligibility to conservation compliance."

"Enhancements in the 2018 farm bill included cover crops as a good farming practice. Specialty crop coverage was improved, and research efforts for products such as the Hurricane Insurance Protection — Wind Index Endorsement were underway, along with modifications to whole farm revenue protection," Zacharias said.

"Benefits were also expanded in the 2018 farm bill for beginning farmers and veteran farmers and ranchers."

Top Tool

Farmers continue to deal with extreme weather-related challenges that crop insurance addresses.

In 2011, farmers in parts of the Midwest experienced severe flooding, while farmers in the southern Plains suffered through severe drought. That was followed by the Midwest drought of 2012.

Fast-forward to 2019 when farmers were again dealing with catastrophic excess moisture conditions and prevented planting losses.

The Iowa derecho in 2020 caused devastating damage to both property and crops, and hurricanes hammered the southeastern U.S.

"In 2021, drought continued to plague farmers across the northern Plains and most of the west, while the third most active hurricane season on record flooded farmland from Louisiana up to the eastern seaboard," Zacharias said.

"All this is to say that crop insurance is the farmer's No. 1 tool to deal with climate and weather uncertainty."

Conservation

Critics of crop insurance have asserted that the crop insurance program does not encourage or require farmers to adapt to climate change or adopt conservation practices.

"However, in a study published in 2020 in the Journal of Environmental Management, the authors report that crop insurance and conservation practices serve unique roles when used simultaneously," Zacharias said.

"The authors further state that crop insurance is not a barrier to the adoption of conservation practices such as cover crops and conservation tillage.

"To state that the modern crop insurance program does not support farmers' efforts to adapt to climate change or adopt conservation practices is simply not true."

Outreach

Beyond the crop insurance policies, programs have also been developed for the underserved communities.

Since 2007, through the support of the Risk Management Agency and the National Institute of Food and Agriculture grants and the support of its members, National Crop Insurance Services had provided risk-management education to underserved communities, primarily in the southeastern U.S.

"Starting in 2010, the NCIS membership has provided scholarships to students at the 1890 land-grant institutions, and in 2023 this scholarship program was expanded to include all the 1890 schools," Zacharias said.

"NCIS recently entered into a memorandum of understanding with the Intertribal Agriculture Council for the training of agents and adjusters in underserved regions through USDA's Building Resiliency project.

"The approved insurance providers through NCIS have partnered and continue to partner with USDA and the Risk Management Agency in the diversity, equity and inclusion space."

Reform Mode

With 30 years out from the Crop Insurance Reform Act, Zacharias said the industry has been in reform mode ever since.

"Nothing in what I have said here would suggest that crop insurance is standing still," he said. "The federal crop insurance program and its private sector partners have demonstrated the flexibility to accommodate change.

"These changes have been and will continue to be science-based, data-driven and provide incentives for voluntary participation by farmers."