risk management

Farming is a risky business. Natural disasters and extreme weather can have immediate and devastating effects on farms, crops and livestock. That’s why it’s critical for producers to better understand those risks and how to properly plan for them.

We take our responsibility to America’s farmers and ranchers very seriously at the Risk Management Agency (RMA), and we value our time spent with them and other stakeholders getting feedback on our programs and policies that are so vital to America’s food supply.

I welcome these face-to-face opportunities, and last week was fortunate to spend a few days in Washington state that culminated in a public forum to discuss the enhancements we’ve been making to the Federal crop insurance system.

Shawna Kalama is a proud member of the Confederated Tribes of Warm Springs and the Confederated Tribes and Bands of the Yakama Nation. She’s also a beginning rancher, pursuing her dream the past few years near the Cascade Mountains on the Yakama Indian Reservation in Washington State. Kalama has successfully leveraged several USDA programs to simultaneously support both her entrepreneurial education goals and her growing livestock operation.

She began earning her business degree at Heritage University, and recently participated in a risk management education program, sponsored by the USDA’s Risk Management Agency (RMA). This week, the agency announced that $8.7 million in cooperative agreement funding is available for the risk management education program for fiscal year 2016. The program introduces the agency’s risk management tools, crop and livestock insurance programs and educational partnerships to new and beginning, and traditionally underserved farmers and ranchers. The curriculum includes an overview of RMA’s Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis tool, which identifies potential problems, and finds solutions and resources to help beginning farmers and ranchers manage risks. Nearly 90,000 producers participated in risk management education events in 2015.

Farming is in my blood, and I’m proud of that. I grew up on my family’s sheep ranch in northern Utah and managed our raspberry farm before coming to USDA. For the past three years, as Administrator for the Department’s Risk Management Agency (RMA), I’ve sat across the table and listened to producers who, like myself back in Utah, couldn’t find an insurance product for their operation.

Natural disasters and unexpected events make agriculture a risky business, so having a strong safety net is essential for today’s farmers and ranchers. Nobody knows that better than RMA.

Agriculture is an inherently risky business. Some risks are everyday business risks; some risks are brought on by natural disasters. Producers need to regularly manage for financial, marketing, production, human resource and legal risks.

Helping farmers and ranchers overcome such unexpected events, not only benefits individual producers, but also rural communities that depend on agriculture. Over time, resilient rural producers help form robust rural economies, which build a strong economic foundation and provide improved access to credit for the next generation of beginning farmers and ranchers.

Crop insurance has long been an important part of the farm safety net, providing a reliable and cost-effective risk management tool that ensures farmers can continue to farm even after tough years. Just as important is the planning and good stewardship of the land that farmers perform to ensure a sustainable food supply.

USDA has a long standing mission of helping people help the land. USDA provides assistance to producers with farm-level natural resource assessments and conservation planning as well as financial and technical assistance through a variety of voluntary conservation programs. USDA also provides the technical services necessary to implement conservation compliance provisions.

Last week, USDA marked the six-month anniversary of the signing of the 2014 Farm Bill. I am proud to say that we’ve made important progress on every title of the Farm Bill, including issuing disaster assistance payments, updating risk management tools, modifying farm loan programs, announcing new support for agricultural research, establishing new conservation programs, and much more.

My team and I at USDA have gathered together some top statistics that show how the Farm Bill is at work in your state—and the record results we’ve achieved this time around. For example:

As consumer demand for fresh fruit and vegetables increases, so do the production risks for the nation’s farmers as they grow these crops.  To meet this challenge, the Risk Management Agency (RMA) pays close attention to the changing agriculture sector to ensure that crop insurance is made available where feasible.

A tremendous amount of work goes into offering a new insurance product, making sure that the product provides the coverage needed by growers at a reasonable premium without distorting the market or affecting a grower’s management decisions for the crop. New insurance products must have written policy, underwriting and loss procedures, as well as an actuarially-sound premium rate. The ability to innovate with new and expanded insurance offerings to reflect modern and changing farming practices is central to how the Federal Crop Insurance Program works.

For over a century and a half, USDA has worked alongside farmers, businesses, and community leaders to ensure USDA programs put forward the most innovative thinking to meet the changing needs of a modern agricultural landscape. Mission areas across USDA, from agricultural research to forest management to nutrition programs and more, also look forward to create a stronger rural America, better prepared to meet 21st century challenges.

Federal crop insurance provides the risk management tools necessary for American farmers to stay in business after a difficult crop year. They can be the difference between a farmer going under because of a lean year or having a safety net that allows them to keep farming and rebuild.  These tools help farmers who rely on good farming practices for smart land use and preserve economic stability for generations.  And the Risk Management Agency (RMA) has worked hard to extend risk management tools for organic producers.

Organic producers were first able to obtain crop insurance under the Agricultural Risk Protection Act of 2000. However, due to the lack of data, organic farmers were initially charged an additional 5 percent surcharge and were only able to insure the “conventional price” for their crop - not the organic price.  Many organic producers felt the surcharge was not justified and that crop insurance prices needed to better reflect what they received in the marketplace.