5 Crop Insurance Myths to Ignore

Over the past several years, the Federal crop insurance program has become the nation’s primary farm safety net. Even with this growth, some farmers still lack adequate crop insurance or don’t have any at all. These five misconceptions could be to blame.

Myth: Crop insurance is too expensive.

Fact: The government provides a premium discount to encourage farmers / ranchers to utilize crop insurance as a risk management tool. Fact is, if a natural disaster would occur and you did not have your planned revenue it may be more expensive not to purchase crop insurance for this type of exposure.

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.

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 2019, more than 370 million acres 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.