VALLEY CITY, N.D. (AP) — Farmers battered by up to five years of disease-ravaged grain yields have a message for top agriculture officials in Washington: farmers need better crop insurance.
“It’s really apparent we have a lot of work to do,” said Ken Ackerman, who heads the U.S. Agriculture Department’s Rick Management Agency.
Ackerman drew 400 farmers and insurance agents to the Valley City Eagles club Friday. Earlier in the day, more than 200 people attended a similar meeting in Crookston, Minn.
“The level of coverage we’re offering, because of the fact of an erosion of yields over the years, is not doing the job,” Ackerman said.
Besides the erosion of yields for insurance formulas, farmers complained that land under water is not adequately covered for “prevented planting” terms. Others complained they have to use low county yield averages in formulas for new land they acquire. Still others complained crop insurance coverage doesn’t cover quality discounts they’re getting at the grain elevator.
One farmer testified he had a $50,000 loss but got only about $800.
“We need policies that cover cost-of-production,” said Gary Ihry, an insurance agent from Hope. “A lot of guys, it costs $160 an acre to raise wheat, and we’re insuring them for $105 or $110 an acre.”
Said Ackerman, “We in Washington can give you 1,000 excuses on why we can’t do things — regulatory, process, budget — all these reasons are true. But we have to go back and figure out what to do.
“This system works very well if you have a normal distribution of losses, one bad year in every three or five. But when you’ve had a situation like you’ve had in North Dakota with four or five bad years in the last seven, it erodes the basic level of coverage,” Ackerman said.
The tricky part is raising protected yields without making the insurance too expensive, he said.
“We’re going to run the numbers on a couple of options,” Ackerman said.
One would be a tradeoff between unit coverage and higher yield. In other cases, farmers may be willing to pay more to get the coverage they need.
“The message I heard the loudest today is farmers want access to the coverage, if we could do it in a way that the cost is reasonable,” he said.
Rep. Earl Pomeroy, D-N.D., said a bill he’s introduced would take out low yields during years in which the secretary of agriculture has declared a disaster.
“The way the program works now is analogous to a car insurance policy — one or two fender benders and you find yourself paying a higher premium,” Pomeroy said. “In this case, one or two years of bad yield and you can no longer buy the coverage levels you need to adequately protect your risk.
“Clearly, the program has to hang with the farmer during a several-year loss cycle. It certainly was with them through several years of no losses, as it collected the premium,” Pomeroy said.