Crop insurance has become the top choice for farmers and ranchers in mitigating risks to shield them from decreases in crop produce and revenue. Federal crop insurance has become a pillar of U.S. farm policy in recent years and as it stands, farmers collectively spend $3.5 to $4 billion from their own pockets to purchase insurance protection a year. It’s an imperative part of the agricultural industry, but can sometimes be complicated to put into practice, especially with false narratives being distributed. So, let’s expose the myths about crop insurance to give you a better understanding as to why it’s so important to have it.
Myth # 1: It’s Expensive
One of the myths that are commonly told about crop insurance is that it’s pricey. In fact, the coverage costs only make up seven percent of farm liabilities. Also, the government subsidizes anywhere from 55 to 100 percent of the liability, which further offsets the cost of premiums. In regard to first-time farmers, it’s a myth that crop insurance can be challenging for those starting their business but in actuality, crop insurance is even better for green farmers. There are specialty programs catered to them that include a 10 percent premium subsidy and a waiver of administrative fees. According to the USDA Risk Management Agency (RMA), the program helped 13,719 new farmers save more than $14 million in 2015.
Myth # 2: It’s Not Needed
Another common myth about crop insurance is that you may not need it because having disaster assistance is a better option. Though disaster assistance is a great addition, crop insurance provides a guaranteed amount of coverage and allows farmers to cover various commodities and several kinds of losses. Disaster assistance coverage is unknown and can vary based on limitations to specific geographic areas, crops, or losses resulting in non-coverage for farmers who fall outside of these boundaries. Also, the payouts with crop insurance are much faster, most times within 30 days, whereas it can take years to collect on disaster assistance claims.
Myth #3: It’s Only for Soybean, Wheat and Cotton Farmers
Despite the myth that crop insurance is only for farmers who grow corn, soybean, wheat, and cotton, it’s actually available for more than 100 crops and farmers of all sizes in all 50 states. In 2015, the number of acres of fruit, vegetables, and other specialty crops covered by crop insurance increased to 8.3 million acres.
Myth #4: It Requires a Total Loss to Qualify for Coverage
You don’t have to have a total loss to qualify for coverage. Qualified losses range from 35 to 50 percent and are based on your elected level of coverage. You may even be able to break your farm into separate insurable units. Talk to your agent about crop provisions for requirements and eligibility.
So, as you can see, crop insurance isn’t just a one size, fits all plan for farmers, but it is available and beneficial to every farmer, everywhere. All you need to get started is your production record and planted acreage report, and we can help you meet the reporting requirements with the MyAgData app. Download it today on the App Store, Google Play, or the Windows Store.