With no relief from unprecedented input prices anywhere in sight, many farmers are tightening their belts and increasing their efficiency on their farm, squeezing as much profit as they can out of the 2022 crop. What can we do with your crop insurance policy to maximize coverage and limit costs? Here are some things to consider:
- Take advantage of the crop insurance subsidy: Make sure you are putting your resources towards a plan that the government helps you pay for to get the most bang for your buck. Setting up your farms into enterprise units is a good way to increase the amount of subsidy you get and lower your premium without lowering your coverage level. Talk to your agent, as changes like this can affect how you collect insurance claims.
- Be careful when lowering your coverage and look at your break evens: If lowering your crop insurance coverage level or type will put you well below your input costs, consider what will happen in a claim year. Will you be able to cover the costs of farming out of pocket before your insurance starts paying you in claims? Do you have a lot of loans outstanding? Are you growing your operation and need to reinvest profits? Do you have another source of income to cover your living expenses or part of your farming operation?
- Use your crop insurance guarantees to make smart decisions on your farm: A good practice is to take a look at the yield history for your farms. What can you reasonably expect to produce in a “normal” growing season. You can use this information to:
- Forward contract your grain and avoid the “harvest lows” that are typical in a given marketing year
- See which farms are high producing and low producing and use that information to make decisions about fertilization, tiling, soil sampling, and crop rotation.
- Validate any rent changes that you expect for the year with landlords
- See where and when major losses have occurred in the past to help protect you against gaps in coverage and see where you should be investing in crop/market protection.
- Remember that crop insurance coverage is by crop/by county: The coverage you choose on soybeans does not have to be the same as what you choose on corn. Identifying problem areas and talking with your crop insurance agent might be an opportunity to discuss strategy and cost savings without eliminating key protections.
- Talk to your agent about the products that are the best for your operation: Farming is an individualized practice, so its important to discuss your concerns, crop rotation, added or removed acres, and general farming practices with your agent so they can help guide you into choosing the right coverage without breaking the bank.
- Avoid common crop insurance policy mistakes: Make sure you are eligible to receive the full benefit of your policy by avoiding the most common crop insurance errors that keep money out of your hands. Follow the link to learn more HERE.