How can farmers use crop insurance to protect their investments from losses due to natural disasters or market fluctuations?

Inclement weather can destroy crops, prevent farmers from planting, or prohibit them from harvesting. Major events, such as floods and hurricanes, can cause many agricultural operations to fail if they don't have a safety net. For producers who take out federal agricultural insurance, the effects of bad weather can be mitigated and they can trust that their business will be able to continue operating. Have you recently suffered loss or damage due to a natural disaster? Learn about USDA disaster assistance programs that might be right for you by following five simple steps.

The amount of coverage, which is purchased per acre, is limited to the expected value of the crop, including anticipated profits. Find financial help for losses of livestock, honey bees, and farm-raised fish due to disasters and qualifying natural events. If natural disasters affect agricultural operations, the USDA offers a number of programs to help producers recover losses and rebuild. The provisions for each crop specify whether impeded sowing is available, unless otherwise stated in the Special Provisions.

The USDA offers programs that provide coverage to producers to help them manage risk and protect their operations from the impact of natural disasters, and offer price support in the event of price or income falls. However, the payment of the claim or the cash value cannot exceed the original subscription limit or the policyholder's financial interest in the harvest. The safety net provided by federal farm insurance and other USDA programs helps keep agricultural producers in business. The Disaster Reclamation Program applies specifically to producers who already have direct loans with the USDA Agricultural Services Agency and need to “temporarily reserve scheduled payments due to certain natural disasters.” This difference is more evident when a loss occurs, since in the multi-risk program, the amount of the loss (the reduced return) is calculated on average over all the fields in the unit and not on the affected acre or acres insured.

The coverage takes effect once the crop is planted, but the crop must be planted before the last planting date set by the government by crop and by county. In 1938, Congress also passed the Federal Crop Insurance Act, thus creating the first federal crop insurance program. Most insurers offer policies for major cereal and hay crops, but the availability of coverage for specialty crops and vegetables is more limited. The Agricultural Services Agency, the Natural Resources Conservation Service, and the USDA Risk Management Agency offer several options.

Visit the Risk Management Agency website to find a regional or compliance office or to find an insurance agent near you. However, the attempt failed because they did not have enough data to set adequate rates to cover the type of generalized catastrophic losses caused by prolonged periods of drought, for example.

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