Insure Crops Against The Weather

December 9, 2010 06:07 AM

 Weather insurance has evolved over the years. Jamie Wasemiller of The Gulke Group says the programs originally started in the 1980s in oil fields. Then it transitioned to short-season, high value crops, and now it is available for row crop growers.

Unlike most crop insurance programs, these contracts are paid on what happens with the weather and presumed damage from weather conditions. Actual yield or production is not factored into the final payments.
"With weather insurance, you can purchase a contract that covers a specific period that is important to you on your farm to maximize the best possible yields for your genetics. There are a lot of different periods of time that are important to a grower. It could be getting planted on time, the amount of moisture we receive during pollination, etc. You can actually protect these short windows."
If a producer elects to take this coverage and adverse weather conditions occur, the farmer is paid within 10-15 days of filing the claim. This can happen throughout the growing season.
Wasemiller is selling contract from WeatherBill. According to WeatherBill CEO Dave Friedberg, the premium is set at the beginning of the growing season. Payments go to the pay premium throughout the year, which essentially acts as the deductible. Once the premiums are covered, payments are then made to farmers. If the no payment levels, or the full level of the premium isn’t met, premiums are collected at the end of the growing season. 

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Spell Check

12/9/2010 09:22 AM

  I've heard this has been around for a long time. Why is it that we're hearing about this and weatherbill's partnership with ADM all of a sudden? Also, I've heard the prices are very expensive. i can see how this would be beneficial for a ski resort (for example) or even a pumpkin patch that solely relies on specified time periods for the bulk of their income. But as far as row crops (specifically talking about corn and beans) I don't see how it's really beneficial to pay the added costs when the windows are so large for the various crucial elements in the growing season. I mean, if you can't get the crop planted, isn't that what prevented planting coverage is for? Also, corn and beans are both fairly adaptable crops. Example, you can't get the corn planted in April for whatever reason. Crop insurance gives you until June 30 to plant corn (in Ohio). Another example: you aren't able to apply your nitrogen when you would like and the corn grows too tall to be able to knife it in the ground so you dribble it on top instead. to me, the weather insurance seems like it's trying to cover a lot of the same things that crop insurance already covers, but without any backing from the federal government.

12/9/2010 11:30 AM

  All valid points, Ohiofarmer. Thanks for reading and letting us know your thoughts. As far as I have been able to research, this is new to the row crop areas. If not, I apologize for not being on it sooner. Greg Vincent

12/11/2010 10:09 AM

  Weather insurance has only been used in row crops over the last couple of years. They focus on temperature and precipitation and should be looked at as a product to cover shortfalls in both yield and quality. There are many different critical times throughout the growing season that will help determine the conditions and yield of our crops. Weather insurance is a way to protect against as many of these critical times and you want. They are extremely customizable which will help determine the premiums. As an analyst with the Gulke Group we focus on risk management tools. Keeping that in mind here are a few things I tell our clients and others. Make sure to utilize this as a true hedge against production. Cover the bushels that crop insurance does not (especially if you trying to determine if this should become part of your yearly risk management plan). Finally, when you are determining what contract specifications you wish to purchase use a benchmark of paying no higher than a 15% premium in relation to your coverage per acre. I encourage farmers to learn more about this type of insurance. I am happy to help otherwise contact a risk management professional. There is real benefit here if utilized properly and within a structured marketing plan. Jamie Wasemiller 707-365-0601​


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