Over the years, crop insurance has evolved from being just a Catastrophic Coverage policy into a myriad of different products, which, when trying to figure out what each one covers, costs, pays off and best suits your farming operation, can only be described by many producers as difficult as herding cats.
Although crop insurance is federally subsidized, it is sold by private crop insurance agents who can help you sort out the details.
According to the USDA Risk Management Agency (RMA), “Buying a crop insurance policy is one risk management option. Producers should always carefully consider how a policy will work in conjunction with their other risk management strategies to insure the best possible outcome each crop year.
“Crop insurance agents and other agribusiness specialists are available to assist farmers in developing a good management plan,” RMA adds.
Catastrophic Coverage, typically called CAT, is the minimum level of crop insurance, that, obviously, results in a minimum payoff should an insurance claim be made. However, producers do have the option to purchase buy-up insurance policies that cost more and cover more, and the payoff is higher than that of CAT.
Since many of the cotton-growing areas were subject to adverse weather conditions in 2009, we polled our readers in April to see if these experiences influenced their crop insurance buying decisions for 2010. Did they stick with CAT or opt for a buy-up product?
After all of the votes were tallied, 66 percent of the respondents say they jumped on the buy-up bandwagon, while 34 percent stuck with CAT coverage for the 2010 season. Following is a sampling of some of the comments we received on this topic:
• “If it had not been for crop insurance for the past three years, I would not be farming today. My replant in 2009 paid my premiums, and I still made an excellent crop, so I came out better than expected. The new Farm Bill is going to meddle in crop insurance and subsidies, so you may want to pay attention. Some help is better than none at all!”
• “I already had ‘buy-up’ coverage. If you have to borrow money to farm, most banks don’t require it, but strongly encourage it. 2009 will not make me change my insurance coverage, but these people in Washington who think farmers are getting rich living on crop insurance revenue should see my bottom line. It doesn’t even pay my bills when I do have a claim!”
• “I have carried 70 percent CRC on my corn and cotton for many years.”
• “Thank goodness for crop insurance. Yes, it could get better in a lot of ways. We need to be calling our congressman because a new FARM BILL is getting ready to be rewritten. Washington is coming after us because we are a small group in today’s world.”
• “Looked at buy-up, but the most coverage I could buy did not cover my out-of-pocket costs, and the premiums were my expected profit. It costs too much to do business today. Crop prices are not keeping up with our costs.”
In the June Web Poll, we move back into the crop production arena and ask our readers the following question: Are you realizing a healthier bottom line today by using variable rate applications of fertilizer, plant growth regulators, defoliants, water, etc. (any or all of these inputs) than you did in the past when you may have tried using variable rate technology?
To cast your vote and share your comments, please go to the Web Poll section that is housed on www.cottonfarming.com. Also feel free to identify the cotton-growing area in which you farm. The results of the June poll will be reported in the Cotton Farming August issue.
Web Poll Results
In April, we asked: Given the adverse weather conditions that many areas experienced last year, did you opt for buy-up crop
insurance for 2010 or stay with the required CAT?
• Opted for buy-up — 66 %
• Stayed with required CAT — 34 %
June Web Poll Question
Are you realizing a healthier bottom line today by using variable rate application of fertilizer, plant growth regulators, defoliants, water, etc. (any or all of these inputs) than you did in the past when you may have tried using variable rate technology?
(3) It depends.
Register your vote