Make Disasters Less Disastrous
Without crop insurance, last year’s drought would have put some farmers out of business. That’s for sure. What’s less certain is the impact proposed changes will have on the program.
By Des Keller | Photos By Des Keller
We are bumping along in a pickup truck through a Missouri farm field, skirting the edge of 30 acres’ worth of what would normally be harvest-ready corn. Luke Saunders, a claims adjustor for Great American Insurance, holds his GPS out the window—closer to the stalks—to measure the exact size of the plot.
Behind the wheel of the pickup is Richard “Dale” Cragen, who farms about 400 acres and runs a trucking business near Frankfort, in the northeast part of the state. “I’ve carried crop insurance for 25 years,” says Cragen, 66. “Suffering one of these years without it would make it tough to recoup the money you lose.”
Thanks to widespread drought, last year was not kind to thousands of U.S. producers. Crop insurers will likely make the largest damage payments in the program’s recent history—as much as $11 billion, which is actually smaller than early estimates for the year. Missouri was one of the hardest hit states, and Cragen’s 30 acres is a case in point. Once he’s determined the exact size of the field, Saunders conducts an on-the-ground inspection of the corn itself—or at least what passes for it in this field.
Even when Saunders finds a plant with ears, they are stunted and kernels can be few and far between, like an undersized piano with two-thirds of its keys missing. And the kernels that do exist are often sporting signs of the gray-to-green Aspergillus ear rot mold. So what is the final verdict on this field?
“We could see the yield was so low it was not worth combining,” says Cragen. After measuring the field and making a systematic determination of the amount of actual corn there, Saunders agrees. For the record, the yield for Cragen’s entire 120 acres was a measly 9 bushels per acre. Cragen will receive an insurance payment on the field based on a percentage of his average yield times a fall market price for corn.
In all, Saunders, 29, processed the claims of more than 200 farms last fall and winter. While the crop losses were large, few if any of his customers will face the loss of their business, owing to the fact that insurance at least covered all their expenses—if not a portion of their revenue—and allowed them to plant again this spring.
“People are very happy to see us,” says Saunders, whose schedule from September into January had him on the road for 12 hours a day, with more paperwork awaiting him after dinner. Saunders understands the need to process claims as quickly as possible. He farms with his father, Phillip, and younger brother Chris near Shelbina, Mo. (See “History Means a Lot”) “Adjustors are the main point of contact for the insurance company,” he says. “We see the fields. We see the crops. I’m one of the main reasons someone gets their check to cover losses.”
The crop insurance program is sponsored and largely underwritten by USDA’s Risk Management Agency (www.rma.usda.gov), although it is sold and administered by more than a dozen private insurance companies such as Great American. Nearly 85% of eligible farmland—about 281 million acres—was covered by $116 billion worth of crop insurance in 2012.