The complexity of a farmer's crop insurance decision is second only to that of income tax forms. In fact, the vast majority say they rely on their agent to advise them which product and coverage level is best.
Talk to those agents, however, and they are not totally comfortable carrying the weight of that decision. In fact, they unanimously say they wish more farmers would make the effort to better understand the products in order to make a more informed purchase.
Your financial livelihood may be on the line, and every situation is different. Geography and its weather play a major role, of course: The risks are different in Colorado than they are in Georgia. How many acres you farm in a county and how far-flung your fields are also helps determine whether county-based products might work for you.
How many separate farms and landlords you have; how many crops you raise; how much risk you can take all make your decision uniquely yours. Even your choice of hybrids might affect your level of risk—and your premium.
"Crop insurance is recognized as the linchpin in the ag safety net,” says Don Preusser, president of John Deere Risk Protection (JDRP). "It is also one of the most important factors in determining a crop will be grown year after year.”
Variety of Products. That's one reason USDA offers a growing variety of products, says Bob Parkerson of National Crop Insurance Services. "At any one time, there may be as many as 25 pilot programs running, and the 2008 farm bill made it easier to propose new products.”
In 2010, for example, the biotech endorsement, which provides lower crop insurance premiums for certain genetic traits, is being expanded to Colorado, Kansas, Michigan, Missouri, and Ohio. Seed from two additional companies now qualifies.
However, due to changes in the number of operations and acres, some counties no longer will have group products available for corn, soybeans, grain sorghum, cotton and peanuts this year, reports Shirley Pugh of USDA's Risk Management Agency. This includes all counties in 28 states and some counties in Illinois, Indiana, Mich-igan, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin.
In addition, individual companies may offer private-label products. "We encourage customers to add hail coverage,” says Dave Kahle of JDRP, which also offers a Crop Delivery Contract. That agreement covers any gap between the standard crop insurance coverage and the value of contracts on which you have to deliver in case of crop production shortfalls.
The basics for coverage still apply, crop insurance industry consultants say: Grow multiple crops, in various locations, on different types of soil, as often as possible.
Certainly, no one would criticize a producer for deciding to plant the highest-yielding variety for his farm, notes Bill Niebur, vice president for crop genetics research and development for DuPont.
"However, due to how rapidly planting takes place today, a farmer may have an entire farm flowering in a seven- to 10-day window, concentrating production risk,” Niebur says. Planting more than one variety with different maturities may reduce that risk—as well as diminish crunch time and labor needs at harvest.
- JANUARY 2010