For farmers and ranchers, crop insurance is often considered an essential business tool. In 2016, more than 290 million acres were protected under the policies, protecting losses on crops and livestock and providing peace of mind in a risky industry.
Although crop insurance has been around a long time — private insurance companies introduced the policies in 1880 to protect farmers against hailstorm damage — here are seven things you might not know about the almost $10 billion industry.
1.Timing is everything
There are multiple important deadlines for purchasing crop insurance and completing farm duties to guarantee insurance coverage. Ask your Farm Bureau agent about sales closing dates for filing applications; you’ll also need to follow the acreage reporting date, earliest planting date and final planting date to ensure your crops are covered. It’s essential to have crop insurance in place before you suffer a loss.
2. A range of crops are covered
What does crop insurance cover? In the past, not much. Crop insurance was only offered on a handful of crops. However, current policies are available on more than 130 commodities, ranging from field crops, like corn and cotton, to pasture, range, forage and livestock products. The Federal Crop Insurance Program also protects against natural disasters and the loss of revenue due to declining prices.
3. Cost calculators are available
How much does it cost to insure a crop? The truth is that it varies. The Risk Management Agency offers a cost estimator tool to help you approximate the crop insurance premium based on information about your insurance plan, county/state, commodity, acreage and other data.
4. Can I afford crop insurance?
The Federal government subsidizes the farmer-paid premiums to reduce the cost to farmers. Subsidies can range anywhere from 38 to 80 percent depending on the product, level of coverage and unit option chosen. Through this Federal support, crop insurance remains affordable to a majority of America's farmers and ranchers.
5. The 2014 Farm Bill expanded coverage
To enhance the farm safety net, the Farm Bill added new products and expanded coverage. One of the new products, Whole-Farm Revenue Protection, is of particular note for farmers who grow organic and specialty crops; it covers all farm revenue in a single policy, making it easier for diversified farms to cover their crops.
6. New farmers have special privileges
The USDA Risk Management Agency, the organization that manages the Federal Crop Insurance Corporation, gives those who qualify for the beginning farmer and rancher designation an extra 10 percent premium subsidy. The program also waives the administrative fees, allows new farmers to use the production history of the previous grower on the same piece of land and offers higher substitute yield adjustments.
7. Combination coverage has advantages
Based on your crops, acreage and location, a combination of crop insurance products might be better than a single policy. Your Farm Bureau agent can help you consider your financial needs and risk and offer suggestions for products that will provide the right amount of protection.
If you’re unsure about the best crop insurance options for your farm or ranch, talk to your Farm Bureau agent about your options.