Does Agriculture Insurance Cover My Loss if Crop Prices Collapse?
Farmers are known for being extremely hard workers. They also face unique challenges and risks. Agriculture insurance can protect farms, livestock, and equipment from loss and damage. And yes: agriculture insurance can protect against losses due to price fluctuations.
Read on to discover how agriculture insurance works and how it can protect your farm.
What Is Agriculture Insurance?
Agriculture insurance is designed to cover the needs of farms, ranches, wineries, and nurseries. It also serves other commercial enterprises that focus on raising livestock or producing crops.
The exact coverage varies depending on your insurance policy. Commonly, agriculture insurance will cover the buildings, animals, or equipment that constitute your farm or ranch.
Types of Agriculture Insurance
Farm and ranch insurance can be further divided based on the assets covered. For instance, common forms of agriculture insurance include the following:
Farm owner insurance (protects the physical property)
Farm livestock insurance (protects animals)
Equine insurance (covers the needs of horses)
Farm equipment insurance (protects machinery and tools)
Farm dwelling and structures (protects homes, silos, barns, etc.)
Farm liability insurance (covers you in the event of an accident)
Crop insurance (covers crops)
These policies are designed to adapt to the needs of ranch owners, growers, and livestock-dependent farmers.
What Does Agriculture Insurance Cover?
Depending on the policy, you can use agriculture insurance to cover such events as:
Damage to your home, barn, or other exterior structures
Damage or theft to equipment
Medical care of livestock
Accidents that occur on your property
Certain types of equipment coverage can also provide financing for rental vehicles should a major piece of equipment be damaged or stolen.
Can Agriculture Insurance Cover Crops?
The Federal Crop Insurance Program (FCIP) has been in place since the 1930s. Today, it’s administered by the USDA, Risk Management Agency (RMA). This program offers farmers coverage if their crops are damaged or destroyed due to events and disasters such as:
Excess moisture
Damaging cold
Hail
High winds
Disease
Crop insurance can also protect farmers against price fluctuation that would impact a farmer’s ability to profit from the year’s crop. The FCIP is not, though, the only type of crop insurance commercially available. Many other agriculture insurance providers offer revenue protection coverage that protects against major shifts in price.
How Revenue Protection Insurance Works
Most commonly, crop insurance offers revenue protection based on historic yields, sometimes called the Actual Production History (APH). This is simply the historic (mean) average of your crop yields.
The crop insurance provider will use the APH as well as futures market prices to determine the revenue coverage guarantee. As a result, farmers can remain confident that even if prices should plummet, their income is secure through an agriculture insurance policy.
The Protection You Need
Farmers play an essential role in the food supply chain in the United States. For that reason alone, they deserve all the protection they can get. And with the right agricultural insurance product, growers can find protection even if crop prices collapse.