Public-Private Partnerships are Key
September 22, 2022
We often talk about Federal crop insurance being a public-private partnership. That relationship is key to the program’s continued success. We usually think of Approved Insurance Providers , or AIPs, when speaking of the private partners, but there are other kinds of private partners that help in different ways.
Every quarter, the Federal Crop Insurance Corporation (FCIC) Board of Directors meets and reviews new proposals for policies. Many private groups submit these proposals for new products through what is known as the 508(h) process.
One of those private entities is Watts & Associates (W&A), a small specialized agricultural economics firm based in Billings, Montana. W&A is not a producer group, an agency, an AIP, or a reinsurance company but they work with all these types of organizations to study issues and develop programs to address challenges.
The W&A team has historically been very active in the 508(h) space, working with producer groups and AIPs to develop products that account for about 75% of the total premium written to 508(h) developments in the last ten years. These projects have varied in scope from very large (Enhanced Coverage Option and Margin Protection), to novel (Cottonseed, revenue protection for pulse crops) to specialized (developments for popcorn, canola, and specialty types).
W&A continues to contract with RMA for research and development projects, working closely with agency staff to develop priority projects including the new Nursery Value Select and Controlled Environment programs currently in development.
I recently spoke with Alex Offerdahl, Crop Insurance Division Head at W&A, about the work that organizations like theirs do behind the scenes to expand what Federal crop insurance offers producers.
Marcia: Thank you for taking a moment to talk with me about W&A and the important work your team does. How did W&A come to work with RMA and the Federal Crop Insurance Corporation?
Alex: In 2000, Congress enacted legislation allowing entities such as W&A to participate in conducting research and development of new insurance products and features. W&A began as one of the first RMA contractors that same year.
In the early years W&A focused on developing premium rates for new programs. Changes in 508h section of subsequent Farm Bills, resulted in many requests to assist producers and grower groups in developing products unique to their industries and the risks they face. These products go through an initial concept approval phase, followed by development, and FCIC review, before becoming crop insurance policies.
Watts & Associates Policy Team in Washington D.C. attending a House Agricultural Committee Hearing, 2022
Marcia: How has the public/private relationship advanced crop insurance for producers?
Alex: The public/private partnership is at the core of what has made crop insurance the most successful component of the U.S. Farm safety net. This partnership has both fostered innovation and provides outstanding service to producers by allowing government and private industry to focus on what they do best.
The USDA RMA staff are some of the most talented and skilled individuals anywhere in public service. They provide a level playing field for all producers and assure that taxpayer interests are protected. Insurance providers compete to provide better tools and services to attract more policies, and everyone benefits from this healthy competition. Crop Insurance agents live in local farming communities and take care of their farmer clients like the neighbors they really are.
Marcia: I agree! Ultimately, we are all supporting a successful program together.
Alex: Yes. Crop insurance is a vital part of keeping producers of all types and sizes on their farms and continuing to produce by helping them manage risks that would be difficult or impossible to manage for otherwise. This in turn keeps the economic engine of rural America humming. Additionally, unlike many of the ad hoc programs of the past, crop insurance can be tailored to meet the specific risks faced by the wide variety of producers of different crop types in different regions.
Many of the policies available to producers today are tailored to meet the specific needs of various types of producers. W&A has devoted significant effort over the past 20 years to working with RMA to develop and review these kinds of policies for producers.
The high participation rates in crop insurance, a program for which a grower must pay a significant premium, are a testament to the importance and value growers place on this program.
Marcia: Well, we look forward to working with organizations like yours for the foreseeable future
Alex: The staff at RMA, and particularly in the Regional Offices are outstanding. These staff are deeply plugged in with local producer needs, risks, and challenges, and provide excellent insight into the most important issues in crop insurance. When we are contacted with a new producer group request, the RO that handles the crop and region is our first follow up call. In our area of the country, the Billings RO in particular is a great resource, combining “on the ground” experience with crops in their region with technical crop insurance knowledge.
I want to thank Alex and his team at W&A for talking to me about the work they do. W&A has developed and currently maintains the Pulse Crop Revenue, Margin Protection, Enhanced Coverage Option (ECO), Popcorn Revenue, ARPI Popcorn, Malt Barley, and the Cottonseed Endorsement among others.
Marcia Bunger is the Administrator of USDA’s Risk Management Agency (RMA). Prior to her appointment, she served as a County Executive Director for USDA’s Farm Service Agency. A native South Dakotan, Bunger is also the owner and operator of a 2000-acre farm, a cum laude graduate of Augustana College, and the first member of the Asian American and Pacific Islander community and first woman to serve as RMA Administrator.