In fact, farmers say crop insurance is their most important risk management tool.If you’re like most farmers, you insured your crops under the federal crop insurance program authorized by the U.S. Department of Agriculture’s Federal Crop Insurance Corporation.
Revenue Protection policies comprise more than 75 percent of the federal crop insurance policies sold. These policies are designed to protect against loss of revenue caused by low prices, low yields or a combination of both.
“Federal crop insurance can cover 75 to 85 percent of projected revenue, depending on the level of coverage the individual selects,” says Rod Nelson, RCIS field service manager.
However, relying solely on federal crop insurance leaves anywhere from 15 to 25 percent of a farmer’s operation at risk. That’s when some farmers turn to private coverage products to protect more of their bottom line.
Brothers Brian and Jeff Borgmeier are fifth-generation farmers who grow corn and soybeans near Kasota, Minn. As RCIS clients, the brothers insure 85 percent of projected revenue through federal crop insurance.
“Revenue protection is the federal crop insurance product that we use,” says Jeff. “We also have a replant policy or rider on top of the federal crop insurance. Then we have an additional hail coverage product with a wind endorsement.”
The Borgmeiers see quite a bit of hail in their area, so the hail protection product is important for their operation.
Jeff says, “If you’ve lived through a hail storm a week before soybean harvest, that’s a scary thing—to get that close and then in a few seconds lose the whole crop. That is a big reason why we like to have hail insurance on soybeans.”
Private products allow customization
Nelson explains that producers use private insurance products to meet the needs of their specific operations.
For some farmers, private coverage products are used to help cover the deductible of the federal crop insurance.
“For example, if you had a 200-bushel corn crop and it was at $4 a bushel, you get $800 of value,” Nelson says. “Your federal crop insurance is going to be maybe 80 percent of that, or $640, so you’re looking to cover that $160 an acre.”
Other growers depend on private coverage products to support an operating loan. “I think it’s important for lenders to know that the grain is insured,” says Brian Borgmeier. “They feel a little more comfortable making a loan knowing that there’s insurance…