New reports indicate Congress could vote on a new Farm Bill as early as this week, ending the two-year struggle for legislation that would significantly change coverage options under the National Crop Insurance Program.
Under the proposed changes, the program will counterbalance the end of the direct payment system to farmers by offering a new, supplemental crop insurance policy that would help cover out-of-pocket losses for farmers. The new legislation would also reclassify cotton under a new crop insurance plan.
David Graves, manager for the American Association of Crop Insurers, believes the new supplemental policy will lead to greater crop insurance sales.
“The program will be of greater value to more farmers across the US, especially for specialty crops,” Graves said. “A farmer may very well end up buying more insurance.”
That promise has Doug Johnson of Fargo-based TCI Insurance looking forward to the new Farm Bill.
“I do foresee a demand for [the supplemental crop insurance policy],” Johnson said. “I think it’s certainly got a fit to close up that deductible. One of the requests from the farm groups is that they would like to be able to purchase higher levels of coverage, so this might fit that request.”
Graves did warn that the new rules could mean more work for producers in the crop insurance space, as provisions in the bill require them to administer policies—something that requires training staff to sell and service the new coverages.
However, Johnson said well-seasoned crop insurance agents know how to roll with the punches, citing a 2010 government-imposed reduction in compensation for agents.
“It’s kind of like everything—we do more with less,” he said. “When crop insurance started, we didn’t do any of the keying, whereas now we process all of it. The companies basically audit the policies versus key them, so we’re printing our own maps and our expenses go up while revenue continues to go down. You’ve got to watch both ends of it.”
To help counterbalance some of that decrease in revenue, Johnson is diversifying his practice in addition to looking forward to a vote on the changes to the crop insurance program.
“We’re a full service agency, and property/casualty has always been a revenue source, but it has increased as a percentage of our total income dollars since 2008,” he said.
