FarmHer, Inc. by Marji Guyler-Alaniz | Crop Insurance and the FarmHer

Crop Insurance and the FarmHer

By Marji Guyler-Alaniz, FarmHer

Prior to founding FarmHer, I spent eleven years working at a career in crop insurance. Even though I was finished with that career and ready to move on to the next phase of my life, risk management is still near and dear to my heart.  I almost always ask FarmHers or RanchHers about their risk management on their farm, mostly just out of personal interest.  Many times on the larger and more conventional crop farms (soybeans, corn, wheat, etc.) they have crop insurance and seem comfortable with their coverage.  On the less conventional and smaller crop farms (think vegetables, fruits and diversified livestock or poultry) many times I hear “crop insurance won’t work for me.”  One particular story sticks with me. 

While visiting a third generation family-owned orchard in Nebraska, I quickly noticed that they were selling the majority of their apples as seconds so I raised the question of why to the FarmHer.  She said there had been an early season hailstorm that hit their orchard hard, causing just enough damage to the recently emerged fruit that it was blemished and, though it tasted good, was only good enough looking to sell as a second.  She went on to tell me that this was the third year out of the last ten years that hail had hit their family operation causing significant losses.  Each storm over those past ten years had been tough on the family; they put everything they have into the yearly apple crop.  That crop is their livelihood.  They work hard all season towards the culmination of about a month of on-farm sales of their apples to local customers. 

As we talked about the difficult situation they are in and the fact that with such culminating losses, the FarmHer wasn’t even sure about the ongoing future for their third generation farm.  After she mentioned that, I brought up crop insurance. Her answer was simple; there is no crop insurance available for us.  That answer did not sit well with me.  With the government crop insurance program being a multi-billion dollar annual program and the availability of a multitude of private products such as crop hail coverage I just couldn’t settle on the fact that there was no insurance available to this farm; that there is nothing to help them protect their livelihood. 

I started digging, first looking up programs and availability of the government crop insurance availability at www.rma.usda.gov.  I had no doubt that through the more established and conventional programs such as yield or revenue based coverage, there likely was no coverage available for apples in Nebraska.  Sure, there is plenty of coverage for wheat, corn, soybeans, sunflowers, sorghum, cotton and such but not for less conventional crops grown in less conventional areas such as apples in Nebraska. 

For these less conventional situations there are programs called AGR (Adjusted Gross Revenue) and AGR-Lite that have been available in limited capacity over the last decade.  Even more promising for those of you growing apples, pumpkins, other squash and hedge apples on a family orchard in Nebraska or anywhere else for that matter;  is a brand new product called Whole Farm Revenue, available for the 2015 growing year.  These programs are a newer concept in the Federal Crop Insurance program. They are considered pilot programs but are continually being expanded and the Whole Farm Revenue Program is available in the majority of US states for this growing season.  These programs don’t restrict coverage to certain types of crops, but rather provide coverage for the revenue of the entire farm and all products sold.  So, for a single farm this type of insurance product could cover sales of eggs at a farm stand, produce grown in a hoop house and sold at farmers markets, and fruit grown in an orchard and sold commercially.  The gross revenues of the entire farm are totaled and if they don’t meet the previously set guarantee, an insurance payment will be due to the farm.  In my research for this particular farm, the AGR and AGR-Lite programs were not available but the new Whole Farm Revenue program is!  More information about this program is available through the USDA here.

In addition to the Federally subsidized programs above, Private Crop-Hail insurance is most an option to farms such as the orchard in Nebraska.  Private Crop-Hail coverage is a product that is not subsidized by the Federal government, but rather, sold as mostly an add-on product through the companies that sell and service the Federal Crop Insurance program.  Crop-Hail coverage is just as it sounds, providing coverage for more limited losses such as hail or other weather related perils.  A product like this comes with a very real cost, but it could mean the difference between continuing the family farm or closing the doors. 

So, why did this particular FarmHer think there were no insurance options available to their farm?  Maybe there wasn’t at the time she and her family researched the options.  Maybe a family member in a prior generation had decided that the coverage was not affordable and therefore, “unavailable” and that story had been handed down through the generations.  Maybe their particular crop insurance agent didn’t sell the crop hail option or wasn’t even aware of the options available.  Maybe the insurance agent just wasn’t interested in selling the private crop hail coverage due.  Maybe that particular agent represented an insurance company that did not have a private product available in that area.

No matter what the reason, the lesson is simple.  Don’t take no for an answer.  Don’t rely on what you have heard from prior generations or from one source.  Reconsider your options every year.  If the future of your farm is at risk, start digging and find out more information.  Talk to another insurance agent (if there is one) in town and see what they have to say about your operation’s risk management.  Get on Google and see what you can find.   Talk to your friends and neighbors and see what they do.  You might find out that there are more options out there than you think…or maybe there is not.  Either way, having all of the facts available is key to making an informed decision about the risk management of your operation and your future livelihood.