Crop insurance's role in the next Farm Bill - William Cole

Market to Market | Podcast
May 23, 2023 | 33 min

Crop insurance has become a mainstay in agriculture the last couple of decades. The case for crop insurance is the producer has skin in the game. William Cole is chairman of the Crop Insurance Professionals Association and a farmer himself in addition to his agency in Batesville, Mississippi. 


Paul Yeager   Hey everybody, it's Paul Yeager This is the MToM Show podcast a production of Iowa PBS and the Market to Market TV Show. This week we are going to dive into the farm bill and specifically, crop insurance. William Cole is from Batesville, Mississippi right now he's the chair of the Crop Insurance Professionals Association, which earned him a seat at the Senate Agriculture Committee hearing a couple of weeks ago in Washington DC, specifically, about the Farm Bill, we're gonna go heavy on crop insurance and where he sees from a crop insurance perspective, also a farmer from Mississippi, what role crop insurance plays and how it can find space and couple of places to expand and really solidify in the next farm bill. That's the discussion today we're going policy hunting with William Cole. You were actually out in the field this week. What were you doing?

William Cole   Well, we were trying to get our our corn fertilized and our soybeans we are trying to get sprayed, and it won't stop writing here. So we do a few acres a day and then it rains again.

Paul Yeager   So you have corn, soybeans, what else?

William Cole   Yeah, well, that's all we have this year. We intended to put some rice but it was a little rainy early in the season. And we just couldn't get all of our ground prepared for rice by this year.

Paul Yeager   Ground prepared because of the rain or just other factors.

Speaker 2   No, no. The rain? Yes. Yeah, we we got about half the corn and we wanted planted and then no rice. And we had to switch over to soybeans because obviously a later, later plant period there. 

Paul Yeager   You're in the northern part of the state. Is that right?

William Cole   That's right. Yes. About an hour south of Memphis and the north part of the Delta.

Paul Yeager   You have been, have you been in an area where there has been rain in the last few years?

William Cole   Yes, yes. The last two or three planting seasons have been exceptionally wet. We we get fronts comes from the Gulf of Mexico that come north, and then we get all the fronts with the jet stream coming from the west. So well, I guess you can say we're blessed with plenty of moisture here.

Paul Yeager   And that's something that not even what, 100 and or maybe 200 miles to your West is not the same story.

William Cole   No, no, I have friends of mine and fellow agents from Texas. Those guys, they can't catch a break. I think they're on a multi year drought that just didn't seem to begin any relief right now.

Paul Yeager   What is your farm setup? Is it just you or do you farm with somebody?

William Cole   No, my, my son recently graduated from Mississippi State and it with an ag degree in precision ag which is which is interesting degree technology is pretty amazing. But he has recently taken over managing our farm, which is taking a lot of the pressure off of me. He can do the day to day operations, and I can stay in the office and work on more crop insurance.

Paul Yeager   Is that okay?

William Cole   He's doing a great job. Yeah. I remember that. He's great. It's funny story. I went to help him the other day and 15 minutes I was there. I broke the top of the water trailer. So I think I got fired that day.

Paul Yeager   You and I have some commonality, William that's what I always used to say I was really good at breaking stuff.

William Cole   That's supposed to be the son making mistakes instead of dad.

Paul Yeager   So now did you have family that farm that you took over from?

William Cole   No is interesting. My dad though, sold school buses. And so I didn't grow up with any farming in my family. But I love agriculture and actually thought I wanted to trade commodities back out of school and I realized real soon I didn't want to sit in front of a computer where coat and tie every day. So I got an opportunity to get in the crop insurance business, which is dealing with farmers every day. And this is my 28th year doing it. So it love agriculture, but I didn't have any background.

Paul Yeager   So you what you'd rather stare at numbers of insurance, the numbers of trend lines on corn and soybeans.

William Cole   Yeah, that's a good point. I had never thought about that.

Paul Yeager   So why crop insurance? You said working with farmers is been something I mean, I always feel that those in insurance, you kind of are cut different.

William Cole   You know, it's such a niche interesting business that, you know, we we meet with farmers now and it's evolved over the years we used to when I first got into this it was pretty much look at your yields and determine what the best coverage was for the farmer. You know, now the way this Evolve is we're working with every USDA program. We're meeting with these guys. In working with all of the programs they might qualify for FSA NRCS. They go with our bankers on their crop loans and their guarantee. So I guess you'd say we're kind of a wrap around 100% Farm Advisor now not just a crop insurance agent.

Paul Yeager   When did that change? 

William Cole   You know, I would say four or five years ago, when they started, maybe the last Farm Bill, maybe back to '18, when we started having a lot more interaction with crop insurance and other FSA programs,

Paul Yeager   and I always get things are evolving, what is driving the most change in crop insurance?

William Cole   I think technology Yeah, in in we're, we're needing to, in crop insurance is unique, because it's ever developing and evolving the r&d. And then the process you might have heard of called the 508H process, there's they're continuously new improvements and new policies and cover more crops. So you can't you can't get comfortable because you better go to every every update school and every training you can get, or you'll you'll fall behind pretty quick in this business.

Paul Yeager   Okay, so you're sitting at your office chair, and I'm guessing you meet with clients that might sit right there to your left when they come in, at what point when you see an eye kind of glaze over or roll back that you have to kind of dial back and, and go again, or most of your customers, they're all in, they get every single thing you're telling them,

William Cole   you know, it runs the gamut, I'd say from the guys that really get into the weeds, and we're no every intricate part of the policy, you know, to the guys that, you know, we actually become their trusted advisor, they say, you know, what level do you think I need and which is puts a lot of burden on us to really know and, and know all the background of the guys farming operation to make sure we give the right advice. As far as levels of covers.

Paul Yeager   His crop insurance been the best thing for farming to provide as much stability and an in stable world.

William Cole   You know, right now, as I, as I said last week and a testimony I gave to the Senate, it's really the only safety net right now. They the the programs at FSA aren't keeping up with the markets, they haven't updated the prices. And so there's just no, there's no way we've dropped to those levels. As far as market prices. So crop insurance, actually, it corrects or is driven straight from the futures markets on our price guarantees and as whatever their yields are their 10 year APCH is or actual production history. So right now we're the only only safety net they have so so it's really, really important for us to get it right every year.

Paul Yeager   And you talk about stability and and safety net. And when I say it's when you it's tied to what the commodity markets doing, that's about as equitable as you can come up with, right? Otherwise, it probably feels like government has a little too much. thumb on the scale.

William Cole   Yeah, that's right. So yeah, each year, you know, we start off the year, we, they, they have a discovery period, straight from the Board of Trade. So you know, that's relevant, their yields are updated. Every year on every crop, we can even actually go down to the farm serial number, or in other parts of the country, the section is how they keep it so you can separate it out. And you can put your whole farm together based off of that current market. And in then there, there are other extra, I guess you'd say, add ons you can add to that, like extra replants for private product, hail coverage and that kind of thing. So you know, so you got your base underlying policy, then you've got a lot of options that you can add to that.

Paul Yeager   I think you told me last week when we talked on the phone that crop insurance is one of those that farmer has an investment of skin in the game type of thing. And that probably puts a lot of on the conservative side of politics and fiscal understanding of they want the private person to have investment in things and so it's not just a government can't believe I'm gonna say it I'm not gonna say handout but a government subsidy.

William Cole   Yeah, you're exactly right. Every every level of coverage has a has a has a premium support, right, if you will, so the government pays a portion of it and the producer actually pays a portion of it. So you know, when he elects up 75 or 80% coverage, you know, he's got a significant outlay in expenses into fire that coverage. So it's not, you know, for guys that don't understand a federal crop is in no means a government handout. It is a true insurance policy that that farmers by getting for you were

Paul Yeager   you alluded to it, you were in DC a couple of weeks ago testifying in front of the Senate Ag Committee, what were you trying to Well, first of all, who are you there on behalf of just you?

William Cole   The the testimony that I gave was on for hours representing the Crop Insurance Professionals Association, which is a group of private insurance agents and and A farm credits and other lenders that sell crop insurance from all over the nation. So, and I'm the I'm the chairman of that organization and was fortunate enough to that, to be asked to testify, there were two other company CEOs also given testimony. 

Paul Yeager   So you're there on behalf of crop insurance in that group? What were you trying to you get to do an opening statement, what were you trying to nail there in your opening statement,

William Cole   you know, really wanted to express how important as that crop insurance is not just to our farmers, but to our whole rural communities. And the number one overlying thing is just to protect it, you know, don't let let any, any any cuts or any, or any changes to the program that might undermine How great is working so far. And then the next thing is, you know, there, we always want to evolve and change and, and provide better coverage to more producers throughout the nation. So we had some ideas there have to to have it, strengthen the program, and maybe get away from some of these ad hoc disasters that they're they've been paying out every year.

Paul Yeager   But how do we get away from paying out those,

William Cole   you know, there's several ideas that are getting some traction, that thing or the viability or is getting explored, some of some of those would be interesting, the premium support right at some of the higher levels. So if you look at the premium support, right, when you get to the over 75%, the premium sport actually is lowered. So it's inverse, the lower levels get the higher subsidy, your premium rate. So we're, we're really looking at increasing that premium sport at the higher levels, which would incentivize covering more of your own farm risk. And obviously, you've got to pay premium, as we discussed. So if a guy had an 85% versus a 65%, the it would be less likely that you would need ad hoc.

Paul Yeager   So that's really when only ad hoc spin kicking in is when somebody is below that 75%.

William Cole   Well, in areas where in that's not necessarily the case, but we're hoping that if a guy had higher level of coverage, there would be less need for it.

Paul Yeager   Okay, I get you. But I think I joked with you about we've had these, we didn't even know what they were called these Deray chose those types of disasters happen. Your How does crop insurance fit into that discussion? to step in when the government maybe doesn't need to step in? Yeah,

William Cole   you know that the duration has really got complicated, because if you remember, there were there were a lot of grains that were already in the grain been in harvested, and then the storms hit those green bands. So it really got complicated. It wasn't simply you had a crop in the field. And in you asked it to flood and that was a very easy one to adjust. So the situation you guys had is was a little different. But it seems like you had another one recently. So it seems like they're more common. 

Paul Yeager   Three. we've had three of them. William three, there you go. That's ridiculous. I've never heard of this thing. And here I've had three in the last three years.

William Cole   You know, one example I could give you in a traditional type disaster is in 2012. If you remember, you guys had one of the worst droughts in history up there. The Midwest, the rates are a little lower. There was a very good example, if you go across the United States or the Corn Belt, they traditionally have 80 or 85%. They're in only the worst droughts the most money ever paid out or federal crop insurance. If you remember, right, there was no disaster program from that year. So that tells you when in a year like that, when you have high levels of coverage, it really does. It really does facilitate those farmers getting paid timely within that year where they had the disaster. And if there is a disaster needed. Normally you don't get it for a year and a half or two later, which is you know, it helps but it sure would be better if you got it actually in the year that where you had the problem.

Paul Yeager   Yeah, farmers are used to being able to delay some of their their checks, but man when you delay it 18 months, that gets to be an issue, I would imagine. Yeah. Is what you're

William Cole   writing, you know, the bikers. It's hard to tell them Well, I got I got a disaster coming just

Paul Yeager   holds coming. It's coming, getting some slack, doesn't play well. Okay. Those that at least watch this program. They understand. You know, we show a lot of Senate hearings, house hearings, things like that. There is a there's a couple of things from where you sit that we don't see at home. You see lots of senators come go in our house has the same issue. I know you get asked some of the same questions as the morning or as the session goes on. What were the questions that you received?

William Cole   The first question is, you know from where I'm located, we don't have a lot of specialty crops in the Delta of Mississippi. is traditional row crops here? So the first question that I got was for Senator Stabenow from Michigan and specialty crops are really important to her and there's the whole farm coverage is really important to her and so the first question she she came up out of the gate asking about that so I had to I had to be ready to answer that question it because whole farm really works for those specialty crop guys so had to learn a little more about whole farm and those guys have a problem with whole farm there are actually liability limits on that policy. So you know in say corn you could have a 20,000 acre farmer that you know in we cover him let me Does It Really Matter What how much is liability is but with specialty crops, he's take a large vineyard or a big you know, really diversified specialty crop producer in California or Oregon or Washington, there might be my can only cover a certain amount of coverage. So there's a big need to to raise the limit or either take the limit off of that whole farm coverage where those guys can get adequate coverage. 111 analogy I heard is you need those bigger real good producers in the program because that lowers the premium for everybody on the writing someone gave the analogy is the equivalent to taking a healthy young person out of a health insurance pool. You know, if you're only insured and the older guys are the ones that the smaller bad bad health guys and then you know everybody's premium is gonna be really high. Right?

Paul Yeager   Okay, I asked I think I spoke to the other day when I asked you specifically because I was going off of that question from Stabenow , asking you about specialty crops to find specialty crops because that has changed.

William Cole   Yeah. So especially crops in there is actually a list of specialty crops. It is not it it takes your your blueberries, citrus, grapes, all of the all of those peaches all that goes into the specialty crop. If this and I can I can get a list for you but it is a it is largely a split. One one I had a small the top I can give you a real quick list the top specialty crops would be apples, blueberries, almonds or Almonds as some of the West Coast guys like grapes, you know citrus fruit, those like the matte vast majority of our of our specialty crops,

Paul Yeager   basically, it's fruits and vegetables versus the other crops.

William Cole   That's That's exactly right. Yeah.

Paul Yeager   So in the old days, 20 years ago, you thought specialty crops was cotton, sorghum rice, that's not the case anymore. Why what when did that change? Do you know?

William Cole   In I can't name the specific time when that that change. But as far as crop insurance, the there's a delineation there. In, in how those are categorized, and I can't remember when exactly that was that was changed those. My understanding

Paul Yeager   it was maybe for Farm Bills ago. So it's it and that's every five years. So we'll say we'll just go 20 years and we'll just smile and nod and move on. Thank William, that. I'm sorry. So if Senator Stabenow, Michigan, blueberries, fruits, there's a lot of stuff up there. They have a lot of trees, different diversity. So I get what what why she's asking on that behalf. What were some of the other questions that you had that day?

William Cole   So some of the issues that were were tying in it wasn't directly to me, it was to the panel that and I can't remember exactly the ones that I that I answered, but some really important issues are, you know, the, as you well, no, climate smart practices are a big, big buzz and agriculture now. And in we from crop insurance perspective, we think there's a danger in, in in making it mandatory or tying premium support to, to climate smart. You know, I think anything that's incentive based, is a really good idea. You know, and as I would probably say that our farmers might be the best stewards of the Earth, they're out there. So I think given those guys, the tools, a really good crop insurance program, and then maybe some incentive based programs are a good way to attack these issues as far as climate smart. One other issue is, is having pay limits put on crop insurance, similar deal to what we talked about, especially crops. If you put a pay limit on on crop insurance, it would undermine the program and a lot of your bigger producers will get out and would you would have a adverse effect on how it was operated. So we need to be cautious about anything putting a limit on our payments there.

Paul Yeager   So is that oh For that, when you say payment limit is that the over 75% part that you were talking about, or I might be using it there

William Cole   So in some of the some of the other FSA programs, if you will know, there are like a 250 payment limit for different disasters, you know, or however many individuals make up your farm and entity, each one have a payment limit. So, you know, we don't ever want to have that in crop insurance. So, so that's where, you know, because the guy's paying for his coverage, you know, if he should he should not have a limit on how much how many acres that that he farms or that he ensures.

Paul Yeager   I see. I see. Okay, so there's questions that come from the senators in the room. And then there's the real questions that come from staff, you get to have discussions with staff, what's been some of the follow up is as the Senate tries to craft their version of the Farm Bill,

William Cole   you are right now we're dealing with an issue of this specific to our crop insurance. It will be I don't know if we have enough time today to explain how our Commission's calculated it is a very complicated formula, that that is a band is a factor of the administrative and operating expense that the federal government pays the pays the companies. So to summarize that, back in 2010, when the new center reinsurance agreement was negotiated, there was a factor applied to that. So depending on how much they you know, calculated, then crop insurance commissions were a factor of that, or or percentage of that. So what drives crop insurance, as you know, are the premium, excuse me are the prices of the commodities. So as you will know, corn, soybeans, wheat, make up a large percentage of that premium or ease of that guarantee that liability that's covered in the nation. The downside of that, especially to crop guys, they don't have publicly traded crops. So when our row crop guys, prices are going up, our premiums going up. So this factor hits us pretty hard. But those specialty crop guys aren't getting the benefit of the of their premium going up due to prices. And they're, they're getting a double hit on this. I mean, some of these guys are, I don't know how they're keeping the doors open their their condition is so low, well, specialty crops. And then at the same time, we're really driving hard to increase coverage in cover more crops. And most of that is in the specialty crop business. So we're putting more work on those specialty crop agents, and then cutting their commission they're earning. And it's almost impossible to sustain what they're doing, you know, hiring really skilled labor to go out and, and service these policies. So we're really working really hard to try to get an inflation factor that was in there for five years. For some reason, it was not it was taken away in 2015. And we, and we think that there should just all we need to do is implement the inflation factor. If they could do that, those guys will get a bump in, in what the how the calculation is done. And it would relieve a lot of stress on those guys. And back in the omnibus bill. Right. At the end of the year. There was bipartisan support that said the administration the RMA could implement this inflation factor. Well, for some reason, we assumed that loggers or whatever it at RMA and USDA, don't think that that don't agree. So for some reason, we're in an impasse, we can't figure out why they can't implement the inflation factor right now. So that's one of the biggest things we've been talking to staff about lately.

Paul Yeager   Do you have confidence that that might return the inflation factor?

William Cole   I mean, very, very, especially in this day and age, very few issues that you get both sides of the aisle in both houses are in lockstep with our our opinion. And so I feel like we're on good footing if all these guys are agree and ladies are agreeing on this.

Paul Yeager   I agree. I don't I don't see how you you can't find common ground on something like that. But it is always curious why something gets removed. And you have to find that veteran staffer to answer that question. Oh, well, we had to run that out. Because and that's what happens in those offices. Yeah,

William Cole   you're right. So anyway, I hope we can have the resolution there. And then we're really working hard to where we don't have to do this in the future. We'd love to have a permanent solution, a permanent fix to this and this next farm bill. So and we're working on with with the House and the Senate on resolution for that, like we can get it in this next farm bill.

Paul Yeager   You're talking about the inflation thing that you must correct, yeah. Okay. All right. Every five years when this comes around, and did you know when you took the chairmanship of this that you'd be as involved in these negotiations as As, as you are.

William Cole   No, I didn't. It, it seems to. I think I've been getting more and more. But you know, it's it's an honor to be asked to do this. And I'm proud, proud to represent our agents that I, one of these days, I'm going to figure out how many millions of acres that we actually are insure and represent that that would be, that'd be good to know, I'd been it put a little more pressure on me be a little more timid. I didn't know how many farm families I'm representing there?

Paul Yeager   Well, and it is, and if that's what truly has come out as years have gone on, is that is a good way to stabilize things for the producer, I think your role is valuable. And that's why you do get to have a seat at the table.

William Cole   You're right, in any in on that same on the witnesses there on that that Senate hearing. You know, half of the panel were were ag bankers, and I don't know, if you picked up on that, how reliant those ag bankers are on our crop insurance. So, you know, they really hit home where half the panel where lenders and half the panel were crop insurance representative. So you can tell it adds another another level of importance to making sure that we protect crop insurance.

Paul Yeager   This was not your first time testifying in front of the Senate. What was your other time

William Cole   Prior to the 18 Farm Bill. And, you know, it's, uh, we'll tell you, like I said, it's an honor, but it's also a very intimidating experience. You know, you, you think you're prepared, but you also, you have in the back of your mind that you're going to get a question that just that really, you're not prepared for. And in the first time, there wasn't a dairy policy in Barry's got a really good DRP policy now. And at that time, there wasn't one there were a lot of talks about dairy and, and actually, Senator Stabenow, hit me with a question on dairy, you know, you know, you go out through the Delta, Mississippi, and you can't find a single dairy. So I think I answered the question pretty good. But then I got to think and if you ask a follow up, I was probably a really bad trouble there. Well, let's,

Paul Yeager   let's be honest, there's enough of those where they have a piece of paper that gets handed to him to ask, they don't know the follow up to ask either and you'd probably you could put the here's, here's what you do, William, next time, I want you to turn around and say, Well, do you have a follow up? But could you ask that a different way for me and see how see how they do? Yes. They have so many hearings? I'm not trying to to gang up on a politician, but they have so many different hearings, that they're a part of that. That's, that's where good staff work comes into play?

William Cole   Yeah, in that particular Senate hearing. Chairman Roberts, and in Senator Chuck Grassley, were on that committee that time and so I take with those guys that been around a whole lot longer than me and that I always can remember that remembering those guys asked him questions. That's that was a memorable experience.

Paul Yeager   Well, Senator Grassley, Senator Roberts well, and really, Senator Stabenow, they've all done a couple of farm bills. And yeah, you don't want to get into a debate with them if you're not prepared, for sure. But you can do what a lot of witnesses have done. I've seen it in hearings you'd like I'm gonna have to get back to you. I'll get back to your staff on that, you know, just answer it that way. And move on. That's what Yeah.

William Cole   I had that one filed away.

Paul Yeager   So the experience, you said that first time was a little eye opening? Second time, did you feel more a little more comfortable and felt like you could handle any of those follow ups that came your way?

William Cole   Yeah, I did it. You know, I wouldn't want to do it again next week, that's for sure. But I felt a lot more prepared. This time I was prepared. I don't know if you've ever noticed there's a little box in front of you. And it has a green, yellow, red as you're doing your opening testimony. So you know, us guys from Mississippi, don't talk real fast. You know, when that yellow light came on, I kind of kicked it in overdraw. Make sure I'll finish within the five minute timeframe.

Paul Yeager   You went from 10 words a minute to 20. You really? I'm picking on you, William, where do you see what's the best case scenario that comes out of these discussions for producers across the country when it comes to crop insurance? What's your number one and number two priority expansions if you get a perfect build on from where you sit? You know,

William Cole   right now, that just as I mentioned, there's bipartisan support in both houses for crop insurance, and we feel really good. And you know, like I mentioned, the first thing is just protect what we have, you know, watch these last minute amendments that always seem to get thrown there that just you know, that want to just cut the legs out from under the program. We gotta guard against that. But, you know, feel really good about getting that airs, that excuse me, that ain't no fix that I mentioned. I feel good. There's a lot of talks about that changing that subsidy around, if not, with the underlying policy, maybe the ECO, SEO, best or county level based over the top coverage, you know, there. So we knew I feel real good I, you know, it seems to be more taught, improving the program, then then then doing any damage to it. So, and every officer we've talked to is really open to any suggestion that we might have. So, as you well know, you know, our suggestions all have to be scored in, you know, and you got to kind of figure out, what's the CBO score it so there's always you can have the best idea in the world, but you got to pay for it somehow.

Paul Yeager   Is Washington broken? You know, you hear all these things? And the two times do you think it's fixed enough and working enough that you're gonna be able to get some type of good piece of legislation?

William Cole   You know. So this, this is the best I take away from talking with some high ranking members, is they have to get this debt ceiling situation resolved. And then I think then I think if that happens, then I think the Farm Bill, the farm bill goes through relatively smoothly but because Senator Stabenow now is really pushing in she and she's working really well with Senator Bozeman from Arkansas, the ranking member there. And Senator Thompson is working the House side as you will know, you know, that they're asking for a lot of money to be added to snap in that is tied with our crop insurance and Title One program so and so you got to be able to I think, I think we have some real leadership on both sides that that can that can negotiate a compromise to where I think we can get a farm bill done I feel I feel pretty good about it. But like I said, I'm more concerned right now with with figuring out this Debt Debt Limit deal.

Paul Yeager   Aren't we all? Try to figure it out. William Cole, I appreciate your time. Thank you so very much for it. And I'll keep an eye out for you next time. I see you there in the Senate. Oh, thank

William Cole   Thank you, I enjoyed it. appreciate you asking me to join today.

Paul Yeager   My thanks to William Cole. New episodes of The MToM show podcasts come out each and every Tuesday. We appreciate you taking time to watch listen or read. We'll see you next time.