Why farmers can’t miss the upcoming crop insurance deadline
Without a doubt, crop insurance is the most important risk management tool for SC farmers. After two disastrous years combined with low commodity prices, it is imperative farmers have coverage, understand their policy and know what questions to ask when meeting with their agent.
Crop insurance is good risk-management, just as one would protect any asset. But for a farmer, it’s more than protecting just one asset such as your car or your home—it’s insuring (potentially) your entire income for a growing season. If a weather event or other peril comes in and destroys a crop, it cannot be rapidly replaced like a car or a home. It takes an entire year to “get it back.” Crop insurance ensures that a farmer can start over again, put crops back in the ground and grow another year to help feed and clothe the world.
If you’re a farmer, you should know that the deadline to sign up for 2017 coverage is February 28th Below are some key questions to think about when considering your coverage needs for 2017:
Q. In the face of disaster, how big of an impact do you think Crop Insurance has?
A. Crop insurance helps farmers reduce their financial risk and protect their investments. It has become an essential business tool in farming. Working in an industry where one catastrophic year could wipe out years of profit, farmers cannot operate without some financial security that they can stay in business and go on to plant the next season. Crop insurance provides farmers the necessary collateral to borrow money from lenders and gives lenders the confidence that farmers can repay their loans. Farmers use crop insurance as a security when they forward market their crops to take advantage of market opportunities.
Q. When discussing coverage options with your agent, what are important questions to ask?
A. As a policyholder holder you should discuss the amount of coverage needed to cover input costs. You should also discuss and ask questions about different Crop Insurance plans and structure. For example, would your operation benefit more from Yield or Revenue protection? Would it be more advantageous to have basic, optional, or enterprise units? Another big factor affecting your Crop Insurance policy is the subsidy-coverage mix. Which coverage levels are most subsidized?
Q. What information should you provide to your agent?
A. Providing accurate yield history is imperative to receiving the indemnity amounts your operation earned. Your ten year history directly affects your guarantee. You should always provide the correct amount of acres you intend to plant so you can select the unit structure that is most fitting for your operation. When reporting planted acreage, be specific about the physical location of the land and whether or not you planted that tract in previous years. When discussing coverage options, you should identify any counties in which you might possibly plant and any and all crops you are considering.
Q. Are there any new products that may be useful to Farmers?
A. A few new products that can be included as options on your policy are STAX, Trend Adjustment, Yield Exclusion and Whole Farm. Whole-Farm Revenue Protection (WFRP) provides a risk management safety net for all commodities on the farm under one insurance policy. This insurance plan is tailored for any farm with up to $8.5 million in insured revenue, including farms with specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets. One of the newest products offered by ArmTech is Production Cost Insurance. Production Cost Insurance (PCI) is a revenue-based private product designed to help guarantee producers’ profitability by covering both input costs and a portion of historic revenues. When adversity is met at any phase of the crop season, PCI provides the confidence for producers to make optimal farming decisions. New products hit the market all the time, so be sure to keep checking with your agent!
Q. What can you do to supplement your crop insurance?
A. First and foremost, keep accurate records! In addition to the options discussed in the previous question, you can check out the many private products offered by your insurance company or ask your agent about them. If there is a disaster declared in your area, always check with your local Farm Service Agency office to see if federal help is available.
At ArborOne Farm Credit, we offer a full suite of crop insurance plans in addition to our financing, offering one-stop shopping for farmers. Many on our team are farmers themselves and can directly relate to farmers’ needs. Our team comes right out to the farm, so farmers don’t have to take time out from their busy operations. And, Farm Credit has been serving rural America for over 100 years—so we know Ag! We are your experts in lending and in crop insurance, so give us a call today.
If you would like to discuss any of these questions more in-depth, contact Andrea Turner, crop insurance agent serving Darlington County at (843) 601-2533.