A five-year farm bill boasting an expanded crop insurance program is on its way to the White House this week after the Senate voted last night to pass the $1-trillion legislation. Producers will be able to start selling the new policies after President Obama signs the bill into law Friday.
“This is not your father’s farm bill,” said Sen. Debbie Stabenow, who helped negotiate cooperation on the bill between the House and Senate as chairwoman of the Senate Agriculture Committee. “It’s a new direction for American agriculture policy.”
The expanded program features an additional $7bn in crop insurance over the next decade, along with new subsidies for rice and peanut growers that kick in when prices drop. Agribusiness clients will also be able to purchase heightened levels of coverage, including a new supplemental policy designed to cover out-of-pocket losses for farms.
The new offerings will likely lead to more sales, said David Graves, manager for the American Association of Crop Insurers.
“The program will be of greater value to more farmers across the US, especially for specialty crops,” Graves told Insurance Business. “A farmer may very well end up buying more insurance.”
Doug Johnson, a producer for TCI Insurance in Fargo, agrees and is celebrating the passage as a good thing for his business.
“I do foresee a demand for [the supplemental crop insurance policy],” Johnson said. “One of the requests from the farm groups I work with is that they would like to be able to purchase higher levels of coverage, so this might fit that request.”
Producers will also be responsible for administering the new policies, which may mean additional staff training to sell and service the coverages. Johnson is prepared for this new purview, however, and even welcomes it.
“I think it’s a good idea. It will eliminate duplication—we’re already administering crop insurance,” he said. “
Farmers will have to report the same acres, and it will be much more efficient to run it through the current delivery system.”
Graves cautioned that compensation for the extra administrative duties is “not always automatic,” but did say commission from sales of the supplementary coverage option “will bring new revenue to the table to help defray costs.”
