Last year, the federal crop insurance program offered more than 118,000 coverage options for 543 different crops — almost doubling the number of options available in 2009, according to the USDA’s Risk Management Agency.

Despite the growth of options, some farmers still lack adequate crop insurance or have none at all. These five misconceptions could be to blame:

Myth: Crop insurance is too expensive.

Fact: Coverage costs make up just 2 to 7 percent of farm liabilities, and government subsidies — which can be as high as 100 percent — further offset the cost of premiums.

Beginning farmers and ranchers can access special programs, through the USDA’s RMA, that include a 10 percent premium subsidy and a waiver of administrative fees. In 2015, the program helped 13,719 new farmers save more than $14 million.

Myth: There is too much paperwork.

Fact: You fill out applications for farm loans, file taxes and respond to the Census of Agriculture because each one is important to the success of the farm. Crop insurance is no different — and purchasing coverage requires minimal paperwork. Completed application, planted acreage records and a production report are all you need to secure coverage.

Myth: Crop insurance discourages farmers from reducing risk through other means.

Fact: Farmers can and should use a multitude of tools to manage risk. But crop insurance — unlike crop rotation, cover crops and market hedging — is a risk management tool that farmers can take to the bank. The payout from crop insurance can help keep the farm afloat after losses. Crop insurance can be especially important when prices are low; the federal policies can make farmers more attractive to lenders, providing access to credit at lower interest rates at a time when farmers need it most.

Myth: Crop insurance won’t cover me.

Fact: Crop insurance is not limited to big corn or wheat growers in the Midwest. Coverage is available in all 50 states for more than 543 different crops, and farms do not need to have a minimum number of acres in production to qualify for the federal program. In 2015, more than 297 million acres of farmland were protected through crop insurance coverage, including those yielding fruit, vegetables and other specialty crops.

Myth: Disaster assistance is better than crop insurance.

Fact: Crop insurance provides a guaranteed amount of coverage and allows farmers to cover different commodities and different kinds of losses. In comparison, the amount of disaster assistance is unknown (a package could be limited to specific geographic areas, crops or losses, leaving farmers who fall outside of these parameters uncovered). After a claim, farmers can expect to receive a crop insurance payment within 30 days for most plans of coverage; disaster assistance can take years to collect.

 

Misconceptions about crop insurance can hurt the farm. Before deciding it’s not the right product for your operation, talk to your Farm Bureau agent to learn more about the coverage available and how it can protect the farm.