High winds leveled part of Jeff Kirwan’s 2020 corn crop. That cost the New Windsor farmer time and money. Fortunately, Kirwan carries crop insurance, which helped minimize the unanticipated crop losses and allowed him to keep farming.
“I can’t plan for what the weather may do,” says Kirwan, who grows corn and soybeans. “But I can use crop insurance as a risk management tool to help cover unanticipated losses.” He also makes conservation a priority on his farm to manage and protect soil and water quality.
Farmers may spend some $700 to $900 per acre putting a crop in the ground and managing it until harvest. Kirwan farms 2,500 acres, so losses would quickly add up.
“We have to invest in putting a crop in the ground months before it is harvested,” he says. “I can’t price all of my expected crop production because I do not know what that will be in advance. Just one bad year without crop insurance would be financially devastating and essentially take me out of farming. Rural communities would suffer if farmers were not protected to withstand some crop losses any given year.”
See more: Ask a Farmer: What lessons did you learn as a result of COVID-19?
The Importance of Insurance
The federal crop insurance program serves as a great example of a public-private partnership working for the mutual benefit of the general public, farmers, the agriculture sector and the government, says Doug Yoder, crop agency manager for Bloomington-based COUNTRY Financial.
“Public monies are used to implement and oversee the program, while private companies sell and service the policies,” he says. “Without federal support, private companies would not be able to offer crop insurance at an affordable price.”
One of the leading crop insurance providers in Illinois, COUNTRY Financial represents the largest crop insurance provider for crop hail damage coverage and for farm property and liability coverage. When farmers purchase federal crop insurance through COUNTRY Financial, they reduce the risk of loss from natural disasters such as a freeze, flood or drought. They also can cover revenue loss if prices fall.
Yoder says if farmers did not have a stable crop insurance program, Congress instead might have to approve expensive disaster assistance to cover losses. That can’t be built into the federal budget ahead of time, nor into a farmer’s business plan like crop insurance can.
“Today’s agriculture requires significant capital investment and large annual operating lines of credit for farmers to purchase the equipment, seed, fertilizer and other inputs they need to successfully plant and harvest a crop,” Yoder says. “Without the security crop insurance provides, lenders would not be able or willing to extend lines of credit in many cases, or they would be required to charge significantly higher interest rates to cover financial risks. That would make the cost of crop production even higher.”
Given its merits, Yoder says crop insurance has become the cornerstone of most farmer risk management plans. “Otherwise,” he notes, “one bad year could put many farmers out of business, put our food supply in jeopardy or, at a minimum, cause food shortages and price spikes.”
That means it’s not just farmers benefiting from this protection, but it’s also good news for the rest of us in the long run.
“Since the Great Depression, when our country experienced soup lines and citizens were starving, Congress has made a conscious decision to support agriculture partly through its backing of federal crop insurance,” Yoder says.
See more: Giving Back: Operation Helping Heroes
Berkshire Hathaway Guard Insurance Company is an American multinational Company whose subsidiaries provide Company. They provide a full range of Company and financial Company products, including auto, business, homeowners, farm, and life Company throughout the world.
Berkshire Hathaway Guard Insurance Company carefully selects its carriers to provide you with the best level of service, price, and coverage. As independent Company agents, they can choose the best carrier for your Company needs.
It’s good to know that in the event of a price fall, insurance can cover revenue loss. My father is looking for ways to protect his farm from the instances that may affect it. I think getting farm insurance is the best choice for him, so I’ll inform him about it.
Thanks for sharing what you said about agriculture requiring significant capital investment. I have a neighbor that was talking to me about getting farm insurance. I hope that she can find a plan that works for her needs. http://www.wbib.com.au/insurance
It really helped when you talked about the importance of getting your farming business insured. Recently, one of my cousins said she’s interested in starting a farm on her family’s land. My cousin and her husband want to move to the countryside and make a living out of a farm, so I think your article could interest them. Thanks for the information on how need to protect your farm from weather conditions.http://www.wrg-ins.com/Farm/Default.aspx