Crop insurance not just a safety net for farmers

NEVADA, Iowa — Federal crop insurance isn’t just a safety net for farmers. It also serves as a backstop for rural communities and rural residents.

“I don’t think people put enough weight behind the importance of crop insurance and what crop insurance has meant to our farmland, our stability and not just our farmland, but really, our rural economies,” said Doug Hensley, the president of real estate services for Hertz Farm Management.

Of all the farm bill programs that impact production agriculture, Hensley said that crop insurance is the program that farmers and landowners and prospective buyers need to be watching.

“The most important thing that I think is going to come out of this farm bill, as it relates to production agriculture, is what is going to happen with crop insurance,” he said.

Federal crop insurance has been around since 1938, when Congress passed the Federal Crop Insurance Act.

In 1980, Congress revised the program to subsidize crop insurance premiums and to bring private insurance companies into the program. Today, the federal government subsidizes just over 60% of the premiums for crop insurance.

For the 2021 crop year, 444 million acres of U.S. cropland was covered by federal crop insurance. In 2021, row crops made up the majority, at 70%, of insured liability.

“Crop insurance has undergirded this safety net that has benefited local banks that are lending on operating loans. It has been a safety net that has allowed people to make payments on tractors and combines, which impacts implement dealers,” Hensley said.

He said that the impacts spread wider in rural communities.

“It’s not just the farmer it backstops. It backstops them very directly, but because they are backstopped, all the people who do business with the farmer also are backstopped,” he said.

“You can just go down the list of all the vendors and input suppliers that play into this agricultural economy across the Midwest. Crop insurance has been super, super important to creating a stable market that we have today.”