Choosing an agricultural business is risky but a real compensating job especially for people who love to do the farmwork. They are in the field cultivating the land to plant crops and supply adequate food on every family’s table. However, we never had any idea that in their desire to grow their crops, they undergo certain types of problems that may or may not cause their finances to a halt.
They deal with a lot of challenges that no other businesses get to experience. Their ups and downs include bankruptcy due to some factors that affect their crops such as extreme weather conditions and disasters. The need to deal with the damages requires urgency to save some of what is left or to finally give up and find other ways to recover.
Have you experienced the same worst scenarios on your land? What are the countermeasures that you’ve done to avoid the total loss or to control further damages on your farm? Have you considered purchasing crop insurance as a tool to relieve your worries with the coming disasters that will fall? Here’s an introduction to crop insurance that would help you understand why you need it in your farming business.
What is Crop Insurance?
Crop Insurance is a type of insurance created to cover economic damages to the farmers. It assists in planning to stabilize crop production and lowers the negative effects it might cause to their lives. It is a necessity that every farmer must acquire to stay secured from the extreme impact of uncontrolled events that might occur against field businesses. This type of insurance is tailored for every farmer’s operational needs and delivers assistance 30 days after a claim was filed.
Types of Crop Insurance
There are two common types of crop insurance: multiple peril insurance, and crop-hail insurance. You can also avail of crop revenue insurance in an event of low yield.
- Multiple peril crop insurancepertains to program insurance where the government and insurance companies work together to protect the farmers from loss due to tremendous disasters such as hail, flood, drought, disease, freeze, and loss of profit due to declines from the market. It must be purchased before the crop is planted.
United States Department of Agriculture authorized private insurance companies to handle the policies of the farmer with tasks such as processing claims, training, keeping records, and marketing. This is under the Federal Crop Insurance Program, a program designed to help the farmers that has a unique public-private partnership with private insurers.
RMA or Risk Management Agency oversees the program and the one who is responsible for setting the rates which determine the crops that can be insured in all over the country. Eligible farmers who request to purchase crop insurance are assisted by private insurance companies. The government issues subsidy to the farmers to lessen the cost of their premiums. They also help insurers get reimbursements by offsetting administrative and operating costs from the premiums.
The affordability of crop insurance throughout America made it possible for farmers to have one. Not all crops are covered with this type of crop insurance. Some of the frequently insured crops that are included in this program are corn, cotton, soybeans, and wheat while not commonly insured are dry peas, pumpkins, blueberries, citrus, and walnuts.
- Crop-hail insurance is a type of crop insurance that farmers avail knowing that their country is a hail-prone location. It is sold by private insurance companies and is not part of the government program. It covers other perils like fire, wind, vandalism, lightning, and replanting costs aside from hail. It has often low or no deductible needed and can be purchased anytime even amidst the growing season.
- Crop revenue insurance refers to a type of insurance farmers can purchase which can help them when crops experience a low yield or the crop price is too low. Insurance companies pay and help them to avoid loss of earnings due to varying prices every season that affect the profitability of the business.
Why do you need Crop Insurance?
Facing damages and loss of your hard work would put you to endless planning of recovery which Crop Insurance can resolve for you. If you have invested anew, the risk is high so you need the assurance that if everything didn’t work out you won’t be in a total loss. Here are some of the advantages of why you need to acquire agricultural insurance for your safety.
- It helps the farmers to deal and rebound with extreme weather and pays them during heavy loss.
- It helps in avoiding money loss and bankruptcy.
- It helps them to borrow and repay the capital or money to grow and improve the business.
- It helps to set stable cash flow and continuous business that increases the trust of possible investors.
- It helps the farmers to market their crops.
- It secures them to stay in the business and continue planting for the next season.
- It helps to introduce the use of new technology to improve crop production.
- It provides awareness by having campaigns that discuss the effects of natural disasters and what needs to be done after.
The need to ensure your investment in the agricultural business is on the safety net grows each time you experience difficulty recovering from financial loss. Seeing the land and the crops totally devastated after a destructive disaster is a wake-up call to finally secure what you have worked for. Choosing to purchase agricultural insurance will give you peace of mind and assurance of a good harvest and profit.
Farming has never been easy but with the help of Crop Insurance, the fear of losing capitals and revenues is decreased. The alarming impact of these unfortunate events brought about by climate challenges is resolved by means of technology advances, financial services, and a federal program coming from both sectors. The combining efforts of the federal government and the private insurance companies have pushed the program in full effect.
Using the authority to support the farmers financially and the efficient work of the private companies, the goals that are set to improve crop production and profits have succeeded. Working in the field with the aim to produce crops and grow your business would be smart and satisfying if you will entrust your farm to the systematic ways of crop insurance.
Give us a call and we’ll try our best to accommodate you with more information and help needed for you to learn more about Crop Insurance.
Previous article: What Is EPLI And Does My Business Need It?