USApple
Why Should I Buy Crop Insurance?
It’s still the number one question farmers ask me. And I know what they’re really asking is, does crop insurance actually pay? Is it worth it?
In the end, that’s up to you to decide, but it’s important to understand the role crop insurance plays in the long-term success of your business. Crop insurance is a risk management tool that provides a safety net for you and your family. If you end up having a low production year or unmarketable apples due to certain types of loss, crop insurance will help you make good on your financial obligations. This may include payroll, operating costs, equipment loans and lines of credit. Crop insurance does not offer a profit, but it may allow you to keep farming.
Most people buy homeowners insurance and vehicle insurance. Although the cost for these insurance products is substantial, you would still prefer to never have to use it. These products are purchased as a safety net. The same could be said for apple growers insuring their pack houses, farm equipment or storage buildings. You are better in the long run never having to collect an insurance claim, but you’ll sleep better knowing that your crop insurance policy will cover you in most cases.
A 100-acre apple orchard can produce revenue of more than $1,000,000. Would an orchard like that be able to afford a year or two without that revenue?
What Types of Insurance are Available?
The most widely used policy is Multiple Peril Crop Insurance (MPCI). MPCI is subsidized by the federal government. The apple policies offered are subsidized at 55 to 67 percent. That makes it very affordable whether or not you have to use it. MPCI provides protection due to weather, wildlife damage, fire, disease and other catastrophes. However, it is only available in 33 states in certain counties.
The supplemental coverage option (SCO) has become more popular in the past few years because it can cover up to 86 percent. Sales closing on MPCI is November 20 in all states for the following crop year, except for California, which is January 31.
Apple tree coverage is a new pilot program that is also subsidized. It is available in Idaho, Michigan, New York, Oregon, Pennsylvania and Washington. The deadline to sign up is April 15.
Another subsidized product is Whole Farm Revenue Protection. And it’s available in all counties in all states. This policy covers all commodities on the farm from a loss in revenue. The deadline for Whole Farm is also April 15.
For counties where MPCI is not available, you can get a subsidized product through the Non Insured Crop Assistance Program (NAP) through your local FSA office.
Private, unsubsidized products are available throughout all 50 states. The most common private product is hail insurance. Despite its name, hail insurance covers more than just hail damage. It also covers damage from fire and lightning, transit to your first place of storage, fire department service charges and vandalism. Rates and deadlines for hail insurance vary by company.
Another private program available is weather insurance. Weather insurance is sometimes purchased to insure against frost damage during crucial times of the growing process. But it can also cover loss or damage due to drought, excess moisture, excess heat and other weather-related events. The weather insurance pays based on weather conditions in your area, not necessarily by what happens on your particular orchard.
There are other private products available, but hail and weather are the most common.
Storytime with Scott
Over the past five years, we have witnessed more frost events later in the spring than ever before. These events have caused substantial losses in many parts of the country. We’ve worked with farmers who had 100 percent losses on their U.S. Extra Fancy crops and had to sell them for cider. Without crop insurance they might have lost their farms. In addition to that, weather forecasters are also saying the frequency and intensity of hailstorms has been increasing.
Contact a trusted crop insurance agent to determine what crop insurance products will work best for you and your farm. You can then sleep better at night knowing that your livelihood is safe!
