As with any business, agricultural producers face risks of all kinds. However, the two most important risks facing farmers are yield and price. Fortunately, producers can buy insurance that reduces their exposure to low yields or low prices. Unavoidable risks protected by crop insurance include:
* Excess Moisture
Since the 1930s, crop insurance has been available to agricultural producers in the United States. However, it was in the 1990s that the United States government promoted crop insurance by offering new products and more insurance premium subsidies.
The Risk Management Agency (RMA), is part of the United States Department of Agriculture is the governing authority for the crop insurance program and is in charge of the Federal Crop Insurance Corporation (FCIC). Private insurance companies contract with RMA to service crop insurance sold through independent insurance agencies. As with other disaster insurance programs, such as the National Flood Insurance Program, the private sector sells crop insurance, as the private sector is more efficient and rapidly adjudicates claims.
Crop insurance is unique in that companies selling Federal Crop insurance have a mandate to sell to any farmer, even those who are at high risk, at the same premium set in advance by the Federal government. Even farmers in high-risk drought areas such as California get policies without special underwriting standards or higher premium rates.
Without crop insurance, agricultural producers would have difficulty in achieving financial stability, a more difficult time in getting and repaying loans. Crop insurance allows agricultural producers to help forward marketing.
Essential facts about United States Crop Insurance
* Farmers share in the cost of the program
* Agricultural producers are personally responsible for managing risk
* Under the program, the producer gets tailored risk management solutions
* Quick indemnity pay outs
* The crop insurance program is dynamic; it can quickly adjust and self-correct
* Payments to producers never exceed actual insured losses
* Insurance is allowable collateral for loans
* Growers have no payment limits that cut protection from losses
* Insured growers have the benefit of private sector efficiency
* The program has the flexibility to meet World Trade Organization support limits
The United States crop insurance program provides so much more than just protection from risk. It plays a vital role in keeping the agriculture industry functioning.
Contact our office to make sure you are completely covered.
Content provided by Transformer Marketing.
Sources: http://www2.ca.uky.edu/cmspubsclass/files/cgwalters/Understanding%20Crop%20Insurance.pdf, http://www2.ca.uky.edu/cmspubsclass/files/cgwalters/Understanding%20Crop%20Insurance.pdf, http://www.cropinsuranceinamerica.org/just-the-facts/is-crop-insurance-like-other-forms-of-insurance/, https://www.cropinsurers.com/images/pdf/focus-on-congress/Importance_of_Crop_Insurance_in_the_US.pdf