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Taking Control of the Uncontrollable with Crop Insurance
Taking Control of the Uncontrollable with Crop Insurance
By Brynna Sentel
It’s no secret that farmers take a risk every year. Uncontrollable factors including weather patterns, natural disasters, and crop diseases threaten their operation every year. That is why crop insurance is vital to the continuation of Illinois farms, especially in years like these where there are major droughts.
As of February 2023, over 90 percent of Illinois soybean acres were enrolled in some form of crop insurance program, and in 2022 over 19 million acres of farmland in Illinois were insured according to the United States Department of Agriculture.
“Crop insurance is a lifeline for farmers that allows them to insure their crops against unavoidable perils beyond their control,” says Collin Cisco, Public Policy Manager for the Illinois Soybean
Association (ISA). “So that could be things like a drought, which we are currently in, torrential rains that kill crops, or storms like the recent derecho with 90 mph winds that moved through central Illinois; these are not that uncommon of occurrences that can destroy cropland.”
Having crop insurance manages risk and protects against yield loss or price declines. Many banks require proof of crop insurance to qualify for loans. Natural causes, such as drought, excessive moisture, hail, wind, frost, insects, and disease are usually covered as well as changes in price according to the Center for Rural Affairs.
Premium rates and terms are set by the Federal Crop Insurance Corporation (FCIC). Farmers decide to what level they want to insure their crops and, depending on their plan, and what crop has been lost, they will receive a certain percentage back in indemnities for their loss of yield.
“There are Emergency Relief Programs that kick in, in the case of extreme natural disasters resulting in losses that are outside the scope of existing policies and coverage levels," says Cisco. “Crop insurance is one of many disaster relief programs a producer can choose to enroll in, but other programs are created periodically to account for the gaps that crop insurance does not cover.”
Crop insurance is the most effective safety net for farmers in Illinois. Illinois growers are fortunate to have some of the best soil in the world, so their yields are, for the most part, very productive. Especially compared to yields across the country, Illinois soybean farmers historically have a very healthy yield year over year.
“When a natural disaster does hit and it affects farmers' crops, it is vital for growers to have access to crop insurance to protect their livelihoods,” says Cisco. “When it comes to other programs like Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) for example, Illinois soybean producers don’t receive payments as regularly because of how productive and profitable Illinois soybeans are.”
Illinois' unusually dry climate conditions this summer may affect yields in certain regions across the state. This is an instance where crop insurance will be incredibly effective for those farmers who might need it.
Traditionally, Illinois soybean farmers use crop insurance truly as a risk management tool, it is not something they are consistently using every year. In other parts of the country, producers might rely on crop insurance more frequently.
“The good news is most legislators in Washington D.C. who are working on the Farm Bill see the importance of crop insurance within the farm safety net,” says Cisco. “In every agriculture round table we have been a part of, we have heard producers, commodity groups, legislative staff, and legislators express their support for crop insurance and how there should be little, if any, changes to it during the 2023 Farm Bill.”
If there are any substantial changes to crop insurance in this Farm Bill, there could be an update to reference prices for soybeans, which is an initiative that the American Soybean Association (ASA) is working on.
Although the 2023 Farm Bill may not produce any major changes for crop insurance, the 2028 Farm Bill has the potential to be revolutionary.
“The 2028 Farm Bill leads to the opportunity for changes in the farm safety net, including crop insurance,” says Cisco. “This is why the Government Relations team at ISA has already begun laying the groundwork to discuss issues with our legislators in D.C. so when the time comes, we have done a lot of the hard work, five years out.”
Advocating for crop insurance is the best way to keep your farm protected. Do so by sharing your story of how crop insurance and other farm programs have been beneficial to your operation and how changes to these programs can adversely affect your business and/or operation.
Farmers can stay up-to-date on what’s going on with crop insurance and other farm policies by becoming a member of the Illinois Soybean Growers (ISG) who are regularly informed on the happenings in Washington D.C.
