Jason Merriman is worried about the rising price of pesticides. "Every year, we are updated [about] which chemicals we can use and what we can't," the Washington State farmer told reporters who turned out for a recent sit-down chat between agricultural producers and Rep. Dan Newhouse (R-WA). The cost and type of legal pesticides is one of several spending issues addressed by federal regulators. The government's primary instrument for managing agriculture and supporting farmers such as Merriman — the United States Farm Bill — is up for renewal at the end of 2023. So this farmer is eager to talk with lawmakers about the financial pressures on his business, which produces apples, cherries and wine grapes. "If we have extra chemicals from the year before, it's sure nice, economically, to be able to reuse these things," Merriman continued in an interview with the CBS affiliate KEPR. "When we see we can't use them, and aren't given any sort of reason, now all of a sudden I'm out of money, and I may or may not be able to fight the disease or pest with the given chemical. The replacements don't necessarily work. Sometimes they do, but I would like that choice." Pesticides were but one of the issues agricultural leaders raised with Rep. Newhouse during an event earlier this year. Farmers also shared thoughts regarding water and crop security and the cost of insurance, which are issues addressed by the Farm Bill. "It's a really important piece of legislation," Newhouse told reporters. He planned to collect comments to take back to Washington, D.C. to help formulate the 2023 Farm Bill. There are few places where politics, science, consumerism, history and finance intersect with the same urgency as the U.S. crop insurance market. Insurance for agricultural businesses is unique in the property & casualty sector because it is subsidized by the federal government and because payout triggers — namely farmer financial loss due to unfavorable crop prices, poor harvests or natural disasters — are often more widespread than with other insurance products. "Crop insurance is always at the mercy of federal product and farm program changes," Rich Morrison, QBE's vice president of Farm Services, NAU Country, said recently via email. He added that insurance professionals who specialize in crop insurance make it a priority to stay on top of political changes and "advocate for the livelihood of the American farmer." In 2022, the federal crop insurance program, which is administered by the U.S. Department of Agriculture (USDA), supported about 1.2 million policies and covered 493 million acres. The cost of the program from 2011 through 2021 was $90 billion, according to the U.S. Government Accountability Office. That agency's recent analysis of the issues facing Farm Bill reauthorization includes a question over the amount of insurance subsidies the government will agree to back. "Congress should consider reducing premium subsides for the highest income participants," the GAO has reported. "Payments to farmers and compensation to insurance companies can vary significantly from year to year. In some years, such as 2016, when insurance losses were low, USDA's compensation to insurance companies greatly exceeded payments to farmers. However, in other years, such as 2012, which saw historic droughts, payments to farmers far exceeded compensation to insurance companies." Another notable risk is the constantly fluctuating price of commodities, which directly impacts potential farm profits. Crop insurance also helps protect farmers from losses due to insect infestation, plant diseases and natural disasters. "It's been a really crazy couple of years, both with crop prices and input prices going up, so there's certainly a lot of risk on the table," Kevin McNew, chief economist for the Farmers Business Network, said during a recent webinar. Some of the key market forces McNew outlined in his presentation include "widespread and systematic global production shortfalls" over the last couple of years along with the impact of inflation on agribusinesses and the demand for renewable energy. Commodity prices also are influenced by what's happening with global food production, McNew added. To that end, some of the trends impacting farmer profits this year include: |

• A record-high soybean crop in Brazil;
• Drought conditions and crop loss elsewhere in South America; and
• Pressure on global corn prices.

"You're always looking at the weather, and you're looking at the markets," says Joe Kirksey, regional director of Crop Insurance for the Food and Agriculture Practice at Gallagher. "Commodity prices have really increased. Because of that, insurance has also increased." It's hard to understate the impact of the climate on farmers and crop insurance. Weather extremes put severe pressure on this industry, says Peter Johnson, executive vice president and managing director of Alliant Insurance Services. "We've got drier summers. We've got wetter winters. We have cold snaps that are unexpected. These are all crop exposures," Johnson says. Crop insurance claims are based on yield. To that end, many policyholders "do get payouts because their yield is lower than expected or some kind of loss event has impacted them," he explains. In the U.S., the government sets annual crop insurance prices. So there is zero variation in the rates of federally-subsidized crop policies. But agencies and brokerages that serve agribusinesses can differentiate themselves by maintaining a deep well of knowledge about client farms and crops. "It really boils down to service and relationships," Kirksey says.

Look for this feature in the April/May issue of NU Property & Casualty magazine.

Crop insurance brokers can best support policyholder relationships by providing thorough direction on supplemental coverages, and increasingly providing relevant data to help farmers make smart insurance selections. Farmers have so many details to manage including soil conditions, fertilizer needs and regulations, water supply, crop-monitoring technologies and more, that they lean on insurance pros to navigate coverage needs. "Competitive advantage comes down to service as well as other private insurance products," says Rich Morrison with QBE. "We're focused on providing exceptional customer service and innovative agent tools to help make quoting, processing and documentation simple." Johnson adds that crop insurance specialization tends to be "very local." "It's a coffee shop sale," he says. "It's about sitting down, having a cup of coffee and talking about the exposures and what's going on to make sure everybody's in agreement." Increasingly, risk management technology enables crop insurance brokers to take a more competitive stance. Today's most competitive crop insurance operations enable farmers to make data-driven decisions. They also automate forms and reporting, and they offer simple online tools for policyholders. These tools can help illuminate for farmers the differences between federally-subsidized coverages that protect their products, revenue and infrastructure, and supplemental private coverages that protect against wind, hail, drought, frost, fires, earthquakes and more. "Implementation of technologies can help insurers to collect premiums, pay out claims and register information and location of farmers," MarketWatch reports. "These factors are expected to provide lucrative opportunities for crop insurance providers." Advanced technologies such as satellites, drones, mobile applications and web-based platforms all help to further the crop insurance market, according to Next Move Strategy Consulting. The firm recently reported in its annual crop insurance market update that this sector generated $36.6 billion in 2021 and is projected to garner $59.89 billion by 2030. It will be the technologies mentioned above along with the intricacies of understanding agribusinesses and the demand for hyper-local insurance services that propel crop insurance pros forward. "It's a fascinating and incredible field" within the insurance world, Peter Johnson says. "One day you could be facing a problem at a manufacturing facility. The next day you could be talking to somebody about how their dairy cows are wandering the fields... I find the job very interesting, every day." See also: |

• USDA announces double crop insurance expansion
• Washed-out Florida farms show limits of crop insurance reach
• Wine country 'in shock' as fires ravage iconic California region