Volatility of farming, weather and simple risk have more turning to crop insurance

Volatility of farming, weather and simple risk have more turning to crop insurance

CHAMPAIGN — Most likely, there will be an increase in the number of acres covered by crop insurance in 2013 after last year's drought emphasized the importance of having such policies.

Doug Yoder with the Illinois Farm Bureau said 80 percent of the planted acres of corn in Illinois and 79 percent of the acres of planted beans were covered by crop insurance last year.

It's not a program free to farmers. In 2011 and '12, Illinois farmers spent $743 million on crop insurance, according to Yoder. More than 10 million acres were insured last year, and 12.8 million acres were planted, according to the National Agricultural Statistical Service. Revenue protection policies were the most widely used insurance coverage with 63 percent of the planted acres in 2012 covered by revenue protection and more than 40 percent of those acres having a coverage level of 80 percent or higher, according to data from the U.S. Department of Agriculture.

The overall percentage of crops that are insured has been consistent the last few years, Yoder said, but he anticipates an uptick this year because of last year's drought and other factors.

The volatility in farming right now is unprecedented, he said, in light of concerns about more drought conditions, the uncertainty in the markets and the risk involved in just planting a crop.

He said the cost to plant 1 acre of corn is, on average, $500, not including land costs, and that's a record high. And last year's drought drove home the fact that there really is no other safety net out there for farmers other than crop insurance, he said.

But a portion of the crops that have gone uninsured in the past are high-risk acres, land in a flood plain, for example, and rates to insure those crops would be three to four times regular rates. Farmers literally can't afford the insurance.

In the past, farmers have not been able to separately insure high-risk and non-high-risk farm ground, but one of the changes for this year will allow that and likely lead to more of the high-risk acres that have not been insured in the past being covered this year.

But this year, farmers can separate their insurance coverage for high-risk ground and non-high-risk ground thanks to the so-called "high-risk alternative coverage endorsement."

"It's one of the best new additions we have ever seen," Yoder said.

He said there are high-risk acres in central Illinois, but of the 20 percent of crops not insured last year in the state, most were high-risk acres in southern Illinois where the more rolling topography results in more high-risk acres.

Yoder said this new feature will also be important, because with improvements in the technology used to analyze acres and determine what's low-risk and high-risk, more acres will be classified as high-risk.

Yoder said last year created a great opportunity for farmers to evaluate how their policies worked. If they did, then maybe just tweaking a few things is needed. But if not, they need to analyze what's out there and what fits for them.

He recommends UI's farmdocdaily.illinois.edu, which has a crop insurance tool that can be accessed for free. But more importantly, he recommends getting with a good agent and spending some time with them discussing the options.

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