Planting season will be here soon. Is your crop insurance up-to-date?

February 12, 2019
hands holding plants

Farmers have always lived at the mercy of nature's whims. But starting in 1938, we began seeing the first trappings of a very important safety net: federally subsidized crop insurance. If a drought, early frost or excessive rain destroy the plants, or if there’s a steep decline in market prices, that coverage is there to keep you afloat.

Without crop insurance, it would be much tougher to return to the plow the following spring.

How crop insurance works

Our crop insurance system is like a three-legged stool between government, private insurers and farmers.

Rates are set by the federal Risk Management Agency, which also determines coverage depending on region.

Private insurance companies write and re-insure policies, and they process claims.

The federal government subsidizes the premiums, and reimburses the private companies to cover their costs for managing and selling these policies.

And even though much is said about the fact that the insurance policies are subsidized, farmers pay into them, too. Minnesota farmers alone paid $245.6 million out of their own pockets, according to the most recent statistics from National Crop Insurance Services. In Minnesota, federally backed crop insurance protects 17.6 million acres of Minnesota farmland with some $8.2 billion in coverage. Policies have paid out $141.3 million for the losses.

Core benefits of crop insurance

Considering Minnesota's crops contribute $18.5 billion to the state’s economy, that’s an excellent return on taxpayer investment. While this coverage does protect livelihoods, it also protects our ability to maintain a reliable food supply.

But having the right policy can make all the difference between making ends meet and coming up short when the weather or market wreaks havoc on crops and profits. For many lenders, crop insurance is a condition for farmers taking out operational loans to purchase inputs.

Crop insurance can also, in some cases, be a tool for forward contracting, allowing farmers to guarantee a crop price and close a sale before the seed is in the ground.

Do you have the right coverage?

All too often, farmers may take a get-it-and-forget-it approach to their insurance needs. But there are several options to consider, and the policy you choose will depend on the level of risk you’re willing to take, and how your operation is set up.

There’s a lot of technical information about different policies, and how they vary by crop and even by county. There are policies for single commodities and umbrella options if you grow multiple crops. Other considerations include last year's yields, and the location of your fields. For example, some policies are better suited for producers who own land that spans different counties.

Now that the 2018 Farm Bill is settled and signed, there are new options you’ll want to consider.

That’s why an annual review of your policy is always a sound business decision. Protect your crops and your farm, and schedule a one-on-one consultation with a Minnwest Trusted Choice Independent Insurance Agent. We can help you assess your current coverage for your crops, land, buildings and machinery so you can enter the 2019 planting season knowing you’re getting the most from your coverage options.

Minnwest Insurance Agency, Inc is an affiliate of Minnwest Bank. Products offered through Minnwest Insurance Agency, Inc are: Not a deposit | Not FDIC insured | Not insured by any federal government agency | Not guaranteed by the bank or an affiliate of the bank | May go down in value (if applicable)