Crop Insurance Today August 2016 - 32

Continued from page 1 and agriculture. It is our job to keep up with current events and, at the same time, it is also our responsibility to be able to know what is "wheat" and what is "chaff " (I know, extremely bad metaphor, but hey that is what crop loss adjusters do, right?). In specific reference to "noise" versus "signal," we have included in this issue of TODAY® a feature article on a national survey conducted on behalf of NCIS to demonstrate the level of support for crop insurance. The results of this survey reveal that the majority of registered voters view agriculture and farmers favorably. In addition, when asked about farm policy, these same registered voters indicate that a crop insurance system based on risk management principles, such as farmers sharing in the cost of the farm safety net and shouldering a portion of crop losses through insurance deductibles, is a fundamentally sound approach to farm policy. We view these results as a "signal" despite the voice of farm policy opponents ("noise") often heard in the media. All too often, the commonsense solution to managing agricultural risks through the use of crop insurance does not get past the noise of "think tank analysts" who make a living attacking farm policy. In addition to the national survey, another "signal" is the facts on the ground that demonstrate the reach and impact of crop insurance for farmers all across the country. USDA's Risk Management Agency (RMA) Administrator, Brandon Willis, recently highlighted the data in briefings for both stakeholders and press. "Year after year for 10 years in a row we are seeing growth," Willis said."It's a tremendous success story." This is due, in no small part, because of the combined efforts of our public-private partnership to make crop insurance "work for all." RMA reports that the number of acres covered by crop insurance increased to 297 million in 2014, up from 265 million in 2009. Roughly 85 percent of planted acreage for major commodity crops, 74 percent for all fruit and nut acreage, and 36 percent of vegetable acres are insured. The number of organic acres insured has increased by 110 percent during this same time. Additionally, RMA and crop insurers helped 13,719 beginning farmers and ranchers who work more than 32 AUGUST2016 3.5 million acres start their operations and save more than $14 million through premium discounts and waived fees. These facts on the ground are not lost on agricultural leaders either as a recent oped published in the Sioux Falls, SD, Argus Leader from the vice president of the largest farm and agricultural organization can attest. American Farm Bureau's Scott VanderWal wrote that crop insurance is the cornerstone of the farm safety net and "is more critical than ever" because it "provides protection against the one thing that even the most resilient farmer cannot defeat - Mother Nature." "Old fashioned hard work, innovation, and smart farm policies like crop insurance will help ensure...a bright future for us all," he concluded. The signal is clear. There is broad and overwhelming support for a risk management-based farm safety net. A farm safety net in which farmers are able to plant the crops that suit them best and a safety net in which farmers also share the cost. Non-Judgmental Awareness Perhaps our first step into the realm of Zen Crop Insurance should be the attainment of "non-judgmental awareness." We can think of this as the ability to observe an outcome or set of circumstances and analyze the situation without hastily applying a connotation or label of good or bad to a given circumstance or outcome. In other words, we should observe first, gather all the relevant data, and then put an issue into context before jumping to a conclusion and making an erroneous decision. In crop insurance and life in general, this is not an easy task. The relatively "new wave" of behavioral economics is replete with experimental research that indicates that our decision making is myopic and inter-temporally inconsistent. Moreover, we tend to over-emphasize or attach too much credibility to extreme values and observations from small samples. (See Daniel Kahneman's Thinking, Fast and Slow). At the end of the 2016 we will have observed only two crop years under the 2014 Farm Bill. Provisions of the 2014 Bill were implemented at breakneck speed at a time when the farm economy weakened considerably- yet the 2015 crop year was quite good in the Midwest, while drought continued to plague California and excessive moisture and flooding damaged crops in the Southeastern United States. As we move into 2017 and preliminary debate begins on the next farm bill along with possible calls for crop insurance reforms, we would be well served to evaluate our current circumstance carefully and deliberatively given our limited number of data points. Awareness of the world around us will be key. Beware of the Transitions "Watch out for the transitions. They are times of great danger; when the present situation is ending and the next situation hasn't yet begun. Those gaps are the places where awareness can most easily be lost. It's like going through a doorway. If you barge through without caution, you open yourself to disruption on the other side. In fact, you invite chaos."-Vajra Regent Osal Tendzin (Zen Golf by Joseph Parent) As we are all aware, there will be a national election this year in the United States. Every four years our citizens have the privilege, opportunity, and responsibility to cast their vote for the highest office in the land. Regardless of the political outcome, there will be a new Administration and new faces within that Administration who will propose changes in farm policy in some fashion or another. These changes might be "minor tweaks" or wholesale reforms to the structure of current policy. "It will be what it will be." That said, we will have to apply our "Zen" going forward. We will have to be able to separate the "signal" from the "noise." We will have to tune our awareness to the actual needs and effective demands of our customers, that is, the farmers and ranchers of our country who work daily in order to ensure that there is an adequate, safe, and abundant food supply available to us both domestically as well as across our borders. We will also have to be open to change. The farm bill and farm safety net policy now serve multiple constituencies. Moreover, a much brighter spotlight now shines on crop insurance. Our fiduciary responsibility to both private-sector shareholders and taxpayers should always be foremost in our awareness. At the same time, we must ensure that the milestones that have been achieved in the farm safety net are not lost. Both crop insurance and farm policy have

Table of Contents for the Digital Edition of Crop Insurance Today August 2016

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Crop Insurance Today August 2016 - 1
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