Zacharias is deeply rooted in the agricultural sector. In the USA, he frequently acts as a spokesperson for the industry and has authored numerous scientific publications. Before joining NCIS, he was an Associate Professor of Economics at Iowa State University and an Assistant Professor of Agricultural Economics at Louisiana State University.
Farm Bill
He began his introduction with an overview of the Crop Insurance Act in the USA. Throughout his career, Zacharias has been part of several USDA workgroups and task forces in the crop insurance sector. He was closely involved in the implementation of the Farm Bill 2014 and 2018.
In short, the 2014 Farm Bill accelerated the shift from traditional price and income support programs toward risk management, making crop insurance the most important tool for farmers to deal with production and price risks. The Agricultural Improvement Act of 2018, better known as the 2018 Farm Bill, further strengthened crop insurance by adding new products and focusing research on developing coverage for additional crops. “Crop insurance became even more important as a safety net for agriculture.”
Public-Private Cost Sharing
Zacharias emphasized that crop insurance in the United States is based on a unique partnership between government and the private sector. “Our system is characterized by legislation, policies, and contracts. The government and insurers have a contractual relationship, built on a rules-based system.”
In practice, the government supports farmers through premium support, while the actual delivery is largely handled by private insurers and agents. According to Zacharias, the model is often cited as an example of how a market-driven system can function effectively thanks to strong regulation and government support. “Premiums in the USA amount to tens of billions of dollars annually. That makes our program one of the largest and most comprehensive insurance systems in the world.”
Federal and State Regulation
The program distinguishes between federal and state regulation. Zacharias explained that the national Federal Crop Insurance Program is federally regulated. “This means that our federal government—specifically the USDA and its Risk Management Agency—sets the rules and rates for basic crop insurance products, while private insurers and their agents are allowed to sell and administer the policies. These so-called Approved Insurance Providers (AIPs) are state-based Property & Casualty companies that share in a cooperative agreement with the federal government. In addition, AIPs may also offer private, specialized crop insurance products that are not subsidized.”
Happy farmers
Zacharias’s message was clear: crop insurance - and especially the federal premium support provided in the U.S. - play a crucial role in the stability of the agricultural sector. He referred to Federal Crop Insurance as “the cornerstone of the USA Farm Policy Safety Net.”
“In about 400 interviews with farmers, the response was almost always the same: they are very satisfied with the crop insurance program and understand better than anyone that the public-private partnership requires both financial and political commitment from the private sector and the government.”
Podcast: Keep America Growing
In the latest episode of Keep America Growing, the monthly podcast from NCIS, President Thomas Zacharias speaks with Pascal Forrer (AIAG) about the rapid worldwide growth of crop insurance. From China to Brazil and across Europe, more and more countries are looking to the USA-model as an example. The conversation also highlights innovations such as parametric insurance and the use of satellites and AI.