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Insuring your crops

Keister stresses the importance of crop insurance program

March 12, 2017
Chuck Hunt - Register Editor ( , Faribault County Register

Crop insurance for farmers has changed quite a bit over the years and it is continuing to change with each season.

What Travis Keister, president of Minn-Iowa Insurance Company based in Blue Earth, hopes is that this important program does not go away.

That almost happened in October of 2015, when a federal budget reconciliation bill for crop insurance was killed.

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"That meant for four or five days farmers were unable to buy crop insurance and it was unclear if they would be able to again," Keister says. "But a surge of phone calls to congressmen caused a reversal in the decision, and saved crop insurance."

And that is important, he adds. Not just because his company only sells federal crop insurance and nothing else, but a loss of crop insurance could have a devastating impact on agriculture, its very future, and the price of groceries.

"Without the federal backing of crop insurance premiums, many average farmers could not afford it," Keister says. "It is supply chain economics. If only the big, giant food corporations control the product from the ground to the table, prices are going to increase dramatically."

The federal crop insurance program has a long history, Keister says. It started in the "Dirty Thirties" the 1930s.

"It was completely government run for many years," Keister says. "Every county had a federal crop insurance agent. Here in Faribault County, my dad (John Keister) was that agent."

Less than 20 percent of farmers had crop insurance in those years. Then, in 1980, the government changed the way the crop insurance program was run.

"The Congress passed a bill that had the government crop insurance program combine with a private delivery system, with private insurance companies like ours," Keister says. "So agents delivered the product, with the Risk Management Agency, inside the USDA, providing the coverage."

Almost immediately after that combination of a public and private crop insurance program, the number of farmers participating in the program started to increase.

"Today, in the upper Midwest, participation in the federal crop insurance program is up to about 99 percent," Keister says.

Now, since the 1990s, there is not just crop insurance but a new revenue insurance policy. Basically, this is a revenue versus yield policy, he explains.

"This helps farmers because with a revenue policy, ag lenders can focus on loans on a cash-flow basis, versus an asset-based collateral lending basis," Keister explains. "With the revenue policy there is a baseline, or a floor, for revenue which is different for each individual farmer. It is called an actual production history, or APH."

This new type of policy came about because of the disasterous loans and interest rates for farmers in the 1980s. When falling land values hit along with high interest rates, many farmers were unable to pay off loans or secure new loans.

The problem now, according to Keister, is that farmers have had some very good crops for the past 13 or 15 years.

"Now that they have had some prosperous years, some people are uncomfortable with any kind of government programs for an industry that appears to do well," he explains. "They have put ag under a microscope and don't realize that America needs to support agriculture. But some are questioning that, and the last two Farm Bills have had massive cuts to agriculture that will be harmful to the industry."

And, Keister adds, harmful to probably everyone in places like Faribault County, that rely heavily on agriculture as an industry, employer, property tax payer and much more.

There are also two political groups which have action plans that would be harmful to agriculture, Keister says.

"On the left is the Environmental Working Group (EWG), which believes all farming has a bad environmental impact," he says. "On the right is the Heritage Foundation which believes (the federal) government should not be involved in anything other than defense and national security, and wants to do away programs like the Farm Bill, and just rely on the free market system."

Keister adds that an awful lot has already been cut out of government farm programs and that "ag has already given its pound of flesh plus to help lower the budget."

"Less than 1 percent of the federal budget covers all of the USDA programs," Keister says. "And less than half of that is the federal crop insurance program. A very small amount."

Keister knows what he is talking about. For the past three years he has served on the board of directors of the Crop Insurance Professionals Association (CIPA), and for the last five years has served on the CIPA legislative committee.

He has been to Washington, DC several times to testify and lobby for agriculture, farmers and the need for crop insurance.

In fact, he heads back to Washington, DC on May 15 for another round of explaining the agriculture story.

Keister also knows his stuff because he has been working in the industry for the past 14 years, ever since he moved back to Blue Earth to work with his father in the company. Travis Keister is now the president of Minn-Iowa Insurance, while John Keister is the CEO.

John Keister started Minn-Iowa Insurance in 1976, so the company cerebrated its 40th anniversary just last year, in 2016.

"When the company started we basically covered just Faribault County," Travis Keister explains. "In the last 14 years we have seen a lot of growth."

That is almost an understatement, as Minn-Iowa now has two other offices, in Wells and Jackson, as well as five agents in a wide area.

They now serve farmers in the bottom half of Minnesota, the northern tiers of Iowa, a little bit in both eastern South Dakota and western Wisconsin. And, with cooperation with another agency, serve the central section of Iowa as well.

"We are busy the whole year with this program," Keister says. "Especially busy right now, as farmers have until March 15 to sign up for crop insurance, and can't sign up even one day after that."

He does have some advice he wants to give to all farmers.

"They need to get involved in what is going on in politics when it comes to the Farm Bill and agriculture," Keister says. "We need to stay in contact with our senators and congressmen and continue to tell them the ag story."

Then, he adds, there is a good chance things will stay healthy around here, in Faribault County, economically.



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