John Phipps: Time For A New Insurance Company

01:30PM Mar 22, 2019
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I have been privileged to have been part of Farm Bureau for many years. An older farmer recruited me to serve on our county FB board for my township, which led to local offices and four rewarding years as county president. During that time, I was educated by remarkably professional staff, introduced to people who would become lifelong friends and offered opportunities that shaped my future as a farmer and even a writer.

Farm Bureau remains a singularly valuable resource for American agriculture, but internal structural idiosyncrasies which propelled its success have now begun exacting a toll on its mission and validity. 

The brilliant decision by early FB leaders to fill a need for insurance services for farmers succeeded beyond anything I think they could imagine. The impressive orgal talent and resources FB commands at every level are proof of this wise investment. This includes its membership ranks, euphemistically referred to as “farm and ranch families”. What is seldom said out loud, but not denied, is that membership is mandatory in order to buy insurance from FB-affiliated companies. 

This leads to their own peculiar institution, and its attendant illogic. Because membership is essentially a reflection of consumer insurance choice, a FB member card does not have the same legitimacy, in my opinion, as membership in the National Corn Growers Association (NCGA), for example. My intentional NCGA dues are a rough indicator of my opinion of their activities, but my FB dues may not reveal anything other than satisfaction with my insurance coverage, premiums and service. Indeed, the large majority of FB members are disinterested auto insurance buyers, suggesting to me a better acronym for the national org (AFBF) would be IAICInvoluntary Association of Insurance Customers.

The question then arises, how many members FB would have if this mandate were lifted? Certainly fewer. Worse yet, FB doesn’t know or (publicize widely) how many even USDA-definition farmers are in the membership count. This self-delusion weakens the org, I believe. Better to isolate the insurance from the org, take the money, and accept an honest farmer-member count.

This quirky membership structure would be little more than eye-rolling nonsense, but over time money has tainted purpose, and now carries it into questionable partisan waters. Because power within FB is distributed by membership, insurance sales now shape FB’s most important mission: farm policy. Let me illustrate.

This chart shows the number of voting delegates apportioned to each state, which obviously translates into legislative power within the association. Since the org’s purpose is adamantly declared as farmer oriented, it is almost laughable that no farm or farmer linkage attaches to this ranking.

For example, compare the state statistics for ag output (farm GDP) or operator numbers (PDF). (I used the NASS operator census but any other will still be widely divergent from the FB voting rankings).



AFBF voting power

Simple math reveals examples of the farcical misrepresentation of AFBF voting power.
1.    CA: 20% U.S. ag GDP, 3 votes, $8M GDP per vote, 40K operators per vote.
2.    TN: 1% U.S. ag GDP, 35 votes, $26K GDP/vote, 3K operators/vote
3.    MN: 3.5% U.S. ag GDP, 2 votes, $2.3M GDP/vote, 55K operators/vote
4.    TN, TX, NC votes > entire Midwest (ND to OH)

This ludicrous basis for decision power has been a perennial irritant among many members, but the distribution is now so lopsided as to defy reform. Two trends may exacerbate this institutional inequity. 

Farmer numbers are declining, especially above the hobby category. Meanwhile, insurance companies thrive, generating FB membership growth. In fact, FB finds itself in the curious position of having far more members than even the most generous farmer-ish headcount. What happens if even fewer states can select the leaders and policy?

With this intensification of representation disconnected from industry reality, FB positions and attitudes are increasingly dominated by successful insurance delegations. To be sure, farmers as a whole are heavily clustered on the political right, although their actual policy preferences are a mix of blatantly leftist protectionism (sugar, dairy) and subsidies (crop insurance) scattered like chocolate chips in a cookie of free-market rhetoric. This has long been the case, but the overweighting of conservative votes in the org has sped the process of FB forsaking even a fig leaf of bipartisanship. Evidenced by the last two annual meetings, AFBF is now a regularly scheduled campaign event for President Trump, complete with official regalia and choreographed ovations.

I fully support the rights of FB leadership to ally themselves with a political faction, and the insurance tether can deliver the appearance of member consent. Nonetheless, open partisanship is a risk. It’s hard to maintain the illusion of grass roots policy making when it is adopted indiscriminately from a political party. AFBF demonstrates what can happen when a membership org [or a country] is run as a business.

Loyalty to the group and leader, more so than principles, becomes the new standard of virtue. Alternate viewpoints are received with suspicion, and criticism verges on heresy. My free-trade, anti-subsidy, professional accountability, and egalitarian stands have previously been tolerated with genial indifference, but border on unpatriotic on the current FB political spectrum. However, as long as I remain a member, my premiums are counted as endorsement of the status quo.  

My departure has an upside for FB. With less dissent, the purity of “one voice” is more achievable, advancing FB unity. Policy debates could speed by. Although I treasure my memories and friendships from FB and remain grateful for all it has done for me, leaving feels less like retreat of disloyalty and more like release from dishonesty. I’ll have some plain insurance, pleasehold the politics.