Mike Clemens remembers the state of crop insurance when it started back in 1975: It was cheap, not very comprehensive, and many farmers didn’t bother to buy it.
First established in the 1930s, crop insurance has evolved greatly in the decades since then, with federal programs covering more than 100 commodities, from alfalfa to winter wheat, apples to oranges, and covering both meat and potatoes.
“I call it a private-public partnership where you have producers who have paid insurance premiums through insurance companies. Insurance companies work with their underwriters and then the federal government will get involved to make sure the coverage is there,” Clemens said.
Clemens, who farms in Wimbledon, North Dakota, has a hand in the program, serving a four-year term on the Board of Directors of the Federal Crop Insurance Corporation. He was appointed by President Donald Trump’s Agriculture Secretary Sonny Perdue in 2018 and his term ends in May 2022.
Coverage is subsidized by the federal government. The Congressional Budget Office projects net spending for crop insurance to be about $40 billion for fiscal years 2021-2025 and more than $80 billion for 2021-2030, according to a report by the Congressional Research Service. to offset the administrative and operational costs of private insurance providers and to reinsure losses from policies sold.
“I don’t think the general public and a lot of congressmen realize how well this program really works,” Clemens said, adding that he sees it changing decision-making for farmers and their bankers.
Clemens’ resume for the board included time on the public policy committee with the National Corn Growers Association after working on statewide crop insurance issues in North Dakota, where he said crop insurance is vital.
“Enrollment is so high in North Dakota because, guess what, it’s either too hot or too cold, it’s not raining, it’s been raining a lot. It froze last night, it was the time of harvest and it froze again in the fall,” Clemens said. “There are so many threats that seem to be getting to North Dakota, so crop insurance is a very important tool for producers in our state.”
In 2021, 23 different crops covering almost 22 million acres were insured in North Dakota, representing 93% of total acres.
The role of the Federal Crop Insurance Corporation board is to review proposals and develop policies regarding new insurance products or changes to existing products. One of the crops added during his time was hemp, as it returned to favor.
And there were products for goods that did not fit the traditional definition of the product – meat and milk.
“Farm Bureau came to us with the concept of having a dairy revenue policy. It was something that was going to be unique,” said Clemens. These types of new products need to be looked at from both the manufacturer’s perspective and the insurance agent’s and underwriter’s perspective.
“So you had to put it all together to get an actual policy,” Clemens said. “I would say it was a very successful product online.”
There has been a shift away from insurance based on income or production history.
“A lot of the products that are being offered there have wanted to move into yield policy,” Clemens said, which may reflect changes in the market and factor in pricing and production history.
The scope has also changed to grouping together different goods.
“It’s revenue at the end of the day,” Clemens said. “So a very important part of that was making sure the revenue was paid, not just a crop loss on a particular crop or vegetable or apple issue or peach or orange issue. Making sure manufacturers get the right coverage and hopefully at an affordable price for them.
Serving on the board meant regular trips to Washington for three-day meetings to review various proposals.
“When you figure out your trip, you’re gone a week at a time,” Clemens said, plus homework before meetings. But the COVID-19 pandemic has stopped these in-person meetings.
Being on the board helped him gain a national perspective and hear from other board members with experience in fields like orchards and cotton.
He recalls one time the board was invited to lunch with Perdue and had a chance to talk about things other than insurance.
“It was fun to put on my producer hat,” Clemens said.
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