By Judith Ruiz-Branch
For farmers who grow anything but soybeans and corn in Illinois, buying crop insurance is nearly impossible. Even an insurance agent couldn’t figure out how to safeguard his vegetable and poultry farm against unpredictable weather and plain old bad luck.
Ed Dubrick, a first-generation farmer, worked at a local crop insurance agency for two years as he was starting up his small operation. He wanted the same federally subsidized safety net for his grapes, raspberries, asparagus, and tomatoes that he was easily selling to row crop farmers. But the bureaucracy was insurmountable.
“After probably two dozen phone calls and at least 100 hours put into trying to figure out what I needed to do, I decided crop insurance was too complicated for my diversified farm. It really felt like an instance of the blind leading the blind,” said Dubrick, a veteran who runs DuChick Ranch on 7 acres in Cissna Park, a small village 100 miles south of Chicago.
Crop insurance is intended to support “food security for American consumers and economic stability for rural America,” according to the U.S. Department of Agriculture. But it doesn’t cover all crops equally. It’s primarily used by farmers growing the nation’s four major commodities: corn, soybeans, wheat, and cotton. And Illinois is the nation’s No. 1 producer of soybeans and No. 2 producer of corn.
Only 10 insurance policies were sold to specialty crop farmers last year in Illinois, according to a federal agriculture department census. Meanwhile, nearly 147,000 policies were sold to corn and soybean farmers.
“Does this mean that only 10 farmers in Illinois would benefit from (specialty crop insurance). Absolutely not,” Dubrick said.
The federally subsidized program is administered by 12 approved insurance conglomerates that profit more from selling single-crop policies to large operations than multicrop policies to small fruit and vegetable farms. Half of the insurers are subsidiaries of foreign-held multinational corporations based in Japan, Switzerland, Canada, and Australia.
The Tribune is launching a series of special reports analyzing the hurdles many farmers face in trying to be good stewards of the land as climate change intensifies. Crop insurance is one of these barriers.
As currently structured, it helps big farms stay big and keeps fledgling farms small and vulnerable. It’s an invisible hand nudging Illinois farmers to cultivate land dominated by neat rows of corn and soybeans.
But aggressive farming of only two crops has gradually eroded and depleted nutrients from the Midwest’s rich soil. To compensate, grain and bean growers have become increasingly dependent on fertilizers and drainage systems that contaminate water supplies and reduce soil fertility, said Illinois State Climatologist Trent Ford.
“The corn and soybean yields are going up but the question is, how many more inputs are we having to put into the system in order to do that? ” he said. “Everybody sprays with fungicides now at least twice a year no matter how wet we’ve been because they just know that’s what you do.”
Climate change is a wild card that threatens to bring severe drought one year and heavy downpours the next. Farms that only grow one or two crops also have less flexibility to adapt.
Diversifying harvest is a natural form of insurance, said Anne Schechinger, Midwest director of the Environmental Working Group, a nonprofit organization at the intersection of human health and the environment. But, instead of working with nature, she said the federal government throws tens of billions of dollars at antiquated crop insurance policies that benefit large farms and insurance conglomerates.
“(Crop insurance) is really keeping farmers on this treadmill of growing the same crops each year, knowing that in 10 to 20 years, it’s very likely not going to be sustainable given intensifying climate change,” Schechinger said.
Profits and power
Corn and soybean farmers work with a local agent to secure an insurance policy with one of 12 federally approved insurance providers. The policies protect up to 85% of the farmers’ historic revenue or yield for a single crop against unforeseeable perils such as natural disasters and market crashes.
The USDA’s Risk Management Agency subsidizes roughly 60% of a farmer’s premium. Farmers are responsible for paying the rest, regardless of whether they own or rent their land. And they never profit from insurance; they just recoup a percentage of their losses.
In 2022, the government paid approved insurance providers $12 billion to subsidize premiums and another nearly $4 billion annually to administer the program, according to the U.S. Government Accountability Office. In turn, these insurance providers pay local agents a commission to write policies for farmers.
“In so far as who’s benefiting most from this system, without question, it’s these private insurance companies,” said Billy Hackett, a policy specialist with the National Sustainable Agriculture Coalition, an alliance of grassroots organizations advocating for federal reforms that support small to midsize family farms and rural communities.
The profits have progressively been consolidated in the hands of a few. Over the last decade, 17 federally approved providers have dwindled to a dozen, following a series of buyouts by the publicly traded providers.
Ten of the 12 insurers did not respond to requests for comment for this story.
Ryan Jones, director of marketing for South Dakota-based Precision Risk Management, said the privately owned provider “would not be the best fit” to comment on subsidies or the barriers small specialty crop farmers face to receiving insurance.
Country Financial, the parent company of Country Mutual, which is based in Illinois, said in a statement from spokesman David Beigie that it supports crop insurance reforms benefiting farmers, companies and agents and “strongly opposes” cuts to the federal programming.
“In the face of severe weather in Illinois and in other parts of the country, we work with farm clients to help mitigate risk and ensure they have the proper insurance protections for their farming operations,” the statement said.
Country Financial and another Illinois-based insurer, American Farm Bureau Insurance Services, have ties to nonprofit groups made up of farmers and non-farmers that lobby for biofuel production, free trade and agricultural subsidies, including crop insurance subsidies.
Several people on the leadership team of Country Financial have previously worked at or have joint positions at the Illinois Farm Bureau, which spent $120,000 lobbying on Capitol Hill last year.
American Farm Bureau Insurance Services, also based in Illinois, is partially owned by the American Farm Bureau Federation, a national lobbying group that calls itself “the unified national voice of agriculture” and sowed doubt that climate change was real until a few years ago. It spent more than $7 million lobbying in Washington in the two years before the passage of the last farm bill in September 2018. Last year, as talks were underway about the next farm bill, the federation spent over $1.3 million lobbying.
The Crop Insurance and Reinsurance Bureau, an advocacy group that includes eight of the 12 approved providers in its membership, has consistently spent $320,000 to $400,000 annually on lobbying since 2014.
“I 100% have a concern about it,” said U.S. Rep. Jonathan Jackson, a Democrat from Chicago who sits on the House Agriculture Committee. He’d like to see more woman- and minority-owned insurance firms on the list of federally approved providers. “It is a public-private partnership where the government is covering 60% of the premiums. That, to me, is a strong call to make the case for diversity, equity and inclusion.”
Congress is negotiating a new farm bill this year, but previous legislation prohibits the federal government from making any changes to crop insurance that would lower the subsidies providers receive.
“It’s not dissimilar from how the federal government hasn’t been allowed to negotiate for lower drug prices through Medicare. A similar dynamic exists here in crop insurance, and that was a very intentional provision that was added in the 2014 farm bill,” Hackett said.
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