In 2012, weather insurance paid dividends to drought-stricken farmers
There is nothing Jacqueline O’Donnell would like more than to put the 2012 farming season behind her. O’Donnell farms about 3,700 acres of corn, soybeans, wheat and canola near Fairfield, Ill. The ground ranges from poor to excellent; the better ground is in the river bottom, which is considered high risk for flooding.
O’Donnell says insuring her crops can be a nightmare. That’s why she turned to weather insurance for part of her crops. "Who would have thought this would be the year we’d have a major drought, and weather insurance would save us?," she asks.
O’Donnell invested in one wheat, two bean and two corn policies with The Climate Corporation’s Total Weather Insurance (TWI) program, a full-season program that protects growers’ profits by insuring against yield shortfalls caused by bad weather. Coverage is based on field location, soil type and crop, and pays out automatically when bad weather happens.
When a policy closes, O’Donnell expects a check in the mail within a week. Because of the drought, four of her five policies paid out.
When It Counts. The hottest and driest growing season since 1936 meant 80% of The Climate Corporation’s TWI corn policies paid out.
Growers without TWI who saw reduced yields lost an opportunity to capitalize on record commodity prices, says David Friedberg, CEO of The Climate Corporation. Weather insurance secures profits above the 85% of actual production history covered by regular crop insurance, but caps out at $350 per acre.
Farmers can lock in the number of acres to be covered. Price varies as spring planting approaches, and premiums can rise if the weather turns sour.
O’Donnell used to consider weather insurance pricey. But for filling in the gaps of existing coverage, weather insurance is a godsend. "We’ve already purchased coverage on wheat acres, and will increase the number of corn and soybean acres covered in 2013," she says.
Beginning with the 2013 growing season, farmers can get field-level insights in a single view, including weather forecasts, precipitation and soil moisture. The Climate Corporation’s new service provides farmers with weather data, down to a 2.5-mile-by-2.5-mile square.