LIBERTYVILLE, Ill. – A recent Farm Foundation Forum webinar examined what’s next for federal crop insurance. “Risk and Resilience: The Next Chapter for Crop Insurance” was moderated by Dr. Keith H. Cobel, a Farm Foundation Fellow and vice president of agriculture, forestry and veterinary medicine at Mississippi State University. Cobel has published over 95 scientific articles on farm economic management and served as the chief economist for the U.S. Senate Agriculture Committee from 2013 to 2014.

The webinar was paneled by Rick Clark, a regenerative organic farmer and owner of Farm Green LLC; Tara Smith, executive vice president of the Torrey Advisory Group; and John Coleman, managing director for origination and agriculture for Munich Re of North America. Once identities and credentials had been established, Smith spoke to the surge in the amount of crop insurance policy premiums issued by the USDA over the past decade.

“Crop insurance covers more acres and more types of crops in all 50 states than any other USDA program,” said Smith, an insurance expert who grew up on an Illinois row crop farm but has spent the last 28 years working in Washington, D.C., including with the Senate Ag Committee for Pat Roberts. “It is the broadest program used by the most farmers that we have. In terms of numbers: $159 billion in liabilities are covered right now across 562 million acres of farmland, pasture and range land in the United States. Add on top of that then another $40 billion in livestock liability policies, and compare that to what we’ve seen since just a decade ago.”

Back in 2015, USDA was covering just $102 billion in crop liability on 295 million acres, while livestock policies accounted for just $20 million in liability due to a cap that was in place until 2018, according to Smith. “We’ve seen a program that is not only instrumental and fundamental and woven into the daily life of most farmers, but we’ve seen this program really grow over the years. We cover over 125 crops now with individual policies, and we have a whole farm policy for those commodities who do not have individual policies. And we’ve seen that specialty crop business that is so important grow,” she said, with liability limits extended by USDA from $17 million a few years ago to $25 million today for specialty producers.

Part of the reason for the recent growth, Smith saod, is due to the foresight of Congress in enhancing the flexibility of crop insurance through the past couple of farm bills. Tweaks and changes can now be made to federal crop insurance without having to rewrite the entire crop insurance title of a farm bill.

“It’s been built into the program in a way that we don’t really see with any other sort of risk management tool provided by the government,” Smith explained. “It means that we can change a lot within the crop insurance program from year to year, whether it be the development of new policies through 508h (private sector-developed insurance), or just tweaking policies from season to season. We can do all that administratively without a farm bill, which, when you think about where we are right now, without a farm bill, could be a really good thing.”

Parametric risk transfer in the ag system will never fit in a one-size-fits-all crop insurance program because of its vast diversity, Coleman said. Munich Re is a re-insurance company that insures the federal crop insurance program and also offers private crop insurance products to those in the ag value chain. Munich Re examines gaps and exclusions in the federal crop insurance programs to offer additional, non-governmental specialty policies to farmers.

“We are actually able to leverage what are vast universes of weather and climatic data, crop yield and crop production data to actually deliver these products, such as our Rainfall Index and HIP (Hurricane Insurance Protection) Wind Endorsement. Those types of programs are leveraging data to actually solely and independently determine the payout; that is what we are doing as an industry. This helps protect the full range of the ag value chain, especially the cooperatives, who are exposed to the same risks as farmers but are ineligible for the government scheme,” Coleman said.

“It’s super-interesting to be able to see all these (insurance) opportunities across the ag value chain to be met not by government schemes, or for those groups who are simply ineligible,” he added.

Lending another perspective to the conversation, Clark said that because of the nature of his operation he has been able to do away with crop insurance, though he understands that this approach does not fit with most conventional farming practices.

“We have worked very hard to be conservation-minded, good stewards of the land, and we care very deeply about human health and soil health,” said Clark, a fifth-generation farmer from west central Indiana who has been embracing regenerative agriculture for the past 16 or 17 years. “What started this journey was an erosion event. The erosion event gave us an opportunity to look at other ways to farm.”

As a result of changing his operation to embrace organics and conservation practices such as cover crops and reduced tillage, Clark said he has not needed to carry multi-hazard crop insurance since 2019. “There’s no need to have it,” he said. “When you become diverse you can begin to strip away things that don’t seem to matter much anymore. We are saving a little over $2 million per year in input costs and I’ve taken away the crop insurance. I feel so confident in my system that I don’t feel the need for multi-peril crop insurance anymore.”

The webinar, which aired on Oct. 28, is archived for free viewing at https://www.youtube.com/watch?v=7dTaSr7kE3A.