Crop insurance or crap insurance

Farm Management

Tools

Crop insurance or crap insurance

Mar 15, 2016 | 18:22 1 Our family has farmed for essentially 40 years and never been in crop insurance.

After the past couple years and putting down the groceries unlike ever before, we are now considering it. The investment is just too much to run naked.

Is it a real insurance product or just a tax on all the good farmers that end up supporting all the other guys out there farming the system? Reply With Quote
Mar 15, 2016 | 20:15 2 IMO, it would be hard to "farm the system". If you build good yields, you get up to 80% coverage. Reply With Quote
Mar 15, 2016 | 20:17 3 And for the record, I do not think there are very many "bad" farmers out there. I have gotten too wet to seed coverage a few times. Has nothing to do with being a bad farmer. Reply With Quote
Klause's Avatar Mar 15, 2016 | 20:44 4 with CAP you get up to 90% coverage.... Reply With Quote
Mar 15, 2016 | 21:34 5 Worst part for u is that u will have to go with your area average. Takes years to build up your own average yields to give u better coverage. Reply With Quote
farmaholic's Avatar Mar 15, 2016 | 22:02 6 I thought you could build your individual averages if you could provide the info from good verifiable sources. Ag-Stab and seeded acre
records. Anyone ever do it?

I think big claims free experience discounts keep people in it.

Long time insurers must have to use area averages when they grow a crop they've never grown before.

I thought Production Insurance or Ag Stab was needed for cash advances.
Lenders likely require it for big borrowers. Input Capital(canola streamers) likely require it. What about FCC's input credit.

We managed to survive without it. We never thought the "guarantees" were good enough at entry level. Our history shows claiming would have been tough and barely in claim positions at times.

"It isn't meant to fully dress you...just cover your ass". LOL

We're not in it so I guess we are kinda running naked.
Last edited by farmaholic; Mar 15, 2016 at 22:06.
Reply With Quote
Mar 15, 2016 | 22:51 7 Yeah, if you are just going to jump into it, it is tougher. They use "area average" yields. In plain english, they use some kind of yields from 1930's Kazakhstan. If you have been in it, and you grow a new crop, I believe they compare your other crop yields, vs. a benchmark for your area, and adjust yields accordingly.

I never thot about the fact that jumping in, you would have high premiums, ( no experience discount) plus you would have to build a yield history on your own.

I would call my local office for better details, and how it may work in your case. Reply With Quote
Mar 15, 2016 | 23:07 8 If your worried about the risk of the groceries your buying. Crap insurance is just that. CRAP.. There are better coverage programs out there that protect your investment in inputs plus a set guaranteed revenue above those inputs that you choose. If you haven't ever been in CRAP insurance like others said pretty much bugger for coverage and the experience discount is a bloody joke. Reply With Quote
Mar 16, 2016 | 00:35 9 I've never carried crop insurance either, I have a baler and cows that I consider to be my insurance. My reason being is that the average yeilds for my area are so pitifully low that in my worst disaster( and I've had plenty) I couldn't get below their yeild, let alone 80% or less. And I don't like the idea of paying into it for 5 years just to get an average. Might as well invest that money in improving the land so I don't have disasters. But my bank keeps insisting. And I keep ignoring them until oops its too late, maybe next year. Last year I finally humoured them and took out Hail insurance with the Lack of moisture option on a few acres. And after a record dry winter, spring and most of the summer, they found that we had above average moisture, so no payout. And to add insult to injury, I had a few acres (less than a percent) of canola that I was never able to combine last fall. Moose and deer completely destroyed it, I called to make a claim, big surprise, no wildlife insurance on crops left out this winter.

For perspective, in 2014 with no insurance after 90 to 100% hail(nieghbors in all directions adjusted to this) in mid July on all acres, then killing frost and snow on the regrowth in early September. The yields I still ended up with were above the 80% trigger. But may have been a claim for quality. But was worth more in a bale than in a bin. I can't figure out who is growing crops around here with those types of average yeilds and remaining in business?

That said, I also put minimum insurance on automobiles, and none on equipment, homes and buildings etc. My logic is that if a disaster won't break me, then I'm better off investing in the farm, than in insurance. Reply With Quote
Mar 16, 2016 | 01:29 10 Are you able to go online and check coverage based on average yield in the RM?

Doesn't sounds great so far, for someone just getting in for first time Reply With Quote
Mar 16, 2016 | 05:13 11 So not being political but I waited until others posted and it is CRAP insurance as I have stated on here over and over. Doesn't matter which government but there is an election and why aren't we or the so called farm groups which all have become political pocket puppets saying anything? Some of the stuff that goes on there is so bananas. Reply With Quote
Mar 16, 2016 | 07:00 12 Farm has been in it since it became available.
Something like taking care of your land, better to treat it with respect and work with it rather than abuse the system.
Would not count on present level of government subsidy lasting too far into future but own thought is to take advantage of it while it is there.
Just good business. Reply With Quote
SASKFARMER3's Avatar Mar 16, 2016 | 07:12 13 Insurance is insurance its insurance.
You don't take out home insurance to hope your home burns down. The company is betting you will have that home and pay insurance for 50 years. But some one in your area will loose a home in those 50 years.
Farming if you go out and take insurance to fail you will eventually fail.
Now yes new farmers are penalized with area coverage or they have to take their fathers coverage. But funny if fathers coverage is high they have to take area coverage.
Its a premium you pay to sleep a little easier at night.
Crap insurance isn't a basket like GARS. Its a basket per crop. So if you get hailed out on 5 and have 60 bpa on 5 you probably will get nothing. But you have hail coverage for hail damage and its not a basket.
So again if you have savings or two years of grain stored in bins on the farm don't take it. If you have debt or just a little scared take and pay the premium its a tax deduction. Reply With Quote
farmaholic's Avatar Mar 16, 2016 | 07:23 14 I had a relative who had the nerve to complain about Crop Insurance when they got a little rough with him, while everyone else in the area was getting base hits or home runs and he continued to strike out at bat. Hmmm? SCIC isn't stupid(supposedly debatable?). If your farming for crop insurance benefits quit while you're ahead. It's not supposed to be profitable.
Last edited by farmaholic; Mar 16, 2016 at 07:37.
Reply With Quote
Mar 16, 2016 | 07:31 15 If you join up with someone who has yielda and built-up discounts you take on his crop insurance status? Reply With Quote
Mar 16, 2016 | 07:38 16 The problem with starting in SCIC is you will have no experience discount and will pay full cost to begin with. (This is what happens in Sask)

After a decade or so you will likely get a 50% discount if you have good success and minimal claims.....ask them for details. Reply With Quote
Mar 16, 2016 | 07:48 17 Wall fixed the too wet acres which is now a waste of time money grab, but you have to pay for it built in.

Alberta seeds a month ahead and can decide what they want a month later.
Free ride Wally working for Saskatchewan farmers. lol hahahahha Reply With Quote
Mar 16, 2016 | 08:12 18 Was at a retail grower meeting yesterday and a presenter from pincher creek said guys are seeding there. Reply With Quote
Mar 16, 2016 | 08:24 19 Canola is $11.22/bu.guys.
I have insured only canola ever. And it's been 4 times in the last 16 years. This year will be one. To get your own yields calculated you just have to insure something that you don't grow. Just to allow program participation without a premium. However, like mentioned this will not help your premium discount. Reply With Quote
blackpowder's Avatar Mar 16, 2016 | 09:32 20 Agree, the answer is area specific. Perhaps even producer specific. Id say if your over 60 forget it.
In my career (30ish years) my total $ in vs paid out are almost a wash. If you cant afford the loss you have to. Reply With Quote
Mar 16, 2016 | 10:55 21 Aida, Cais and AgriStability were good programs when Liberals were in power. A lot of beginning farmers had their margins created and were protected from sudden shocks. The programs got fryed by the Harperites and the provinces wrestled them away only to take away most legitimate expenses and reduce margins by screwing with the formulas, including the Olympic Average. For instance I saw farmers who did really well with chickpeas or organic hits, only to get those years thrown out of the margin. This actually punished farmers for hunting for niches. I hope the Liberals will repair the damage. The feds need to take it back. Just my opinion and I know some of you will disagree with a true support program but why shouldn't farmers get some of the stress relieved. After all, we've been great sports going along with the cheap food policy. Reply With Quote
iceman's Avatar Mar 16, 2016 | 12:21 22
Quote Originally Posted by SASKFARMER3 View Post
Insurance is insurance its insurance.
You don't take out home insurance to hope your home burns down. The company is betting you will have that home and pay insurance for 50 years. But some one in your area will loose a home in those 50 years.
Farming if you go out and take insurance to fail you will eventually fail.
Now yes new farmers are penalized with area coverage or they have to take their fathers coverage. But funny if fathers coverage is high they have to take area coverage.
Its a premium you pay to sleep a little easier at night.
Crap insurance isn't a basket like GARS. Its a basket per crop. So if you get hailed out on 5 and have 60 bpa on 5 you probably will get nothing. But you have hail coverage for hail damage and its not a basket.
So again if you have savings or two years of grain stored in bins on the farm don't take it. If you have debt or just a little scared take and pay the premium its a tax deduction.
100% agree with you. It's not perfect but nothing is in this life.

Ice out Reply With Quote
Mar 16, 2016 | 13:12 23 Great to be so called self insured with grain in bins, deferral etc. What I don't understand is on a 5000 acre farm roughly 1.5 million of cash at risk yearly. Even if you have it why would you risk pissing it away. Personally don't need any insurance however still carry it to protect what we worked hard to earn. Anytime I can protect my investment for 3-4 percentage points is a no brainer to me. Before I would risk the engine that drives everything I do, I would drop insurance on house, buildings, bins. Big deal if your house burns down. Few hundred thousand your back in biz. So you had some bins blow over, oh well make a couple bags etc. Knock a couple mill out of your cash and equity position and its a whole nother story. Have seen far more crop wrecks than houses burning down in my lifetime yet we religiously buy the shit. Lived thru some lean times where didn't think would make it and under no circumstance will I ever put myself or family thru that stress again due to plain old mismanagement Reply With Quote
Mar 16, 2016 | 13:36 24 had it since we started , dont need it now but wouldn't be without it! people in the northeast are good and fair to work with . have never tried to screw them and they have never tried to screw us . necessary expense for me Reply With Quote
Mar 16, 2016 | 14:21 25 Most likely dropping gars and going full on crop insurance. It was a costly experience to do 50% with crop insurance and getting nothing from gars even with 1/3 crop wipeout in 2014. If we had 80% crop ins on peas we would have got an additional $200,000. All GARS we still would have got zip.
We need crop by crop insurance, Gars only would pay out in a virtual total wipeout.
If gars goes to crop by crop we may look at it again. Reply With Quote
Mar 16, 2016 | 17:59 26 I started farming the first year Crop Insurance was offered in Alberta around 1974. My father said take it, the governments are paying 1/2 the premium and it is supposed to be operated at cost, non profit so you should average out a little ahead, you will get some of your taxes back. I have never had a compelling need for it but have been totally in for 41 years. It worked exactly that way I always insured for the maximum 80% so little drops in production would reclaim my premium. Always carried the hail rider. In the end I have more or less broken even on the crop part and received about double my premiums on the hail rider. When on rare occasions things went really badly it paid and I have never spilled any red ink, or lost much sleep. Reply With Quote
Mar 16, 2016 | 21:00 27 To add to your good comments JD green

For house insurance especially and even vehicle insurance, take as high of a deductible as you can.

For your house, you should be able to get a $10,000 or higher deductible and save yourself a few hundred per year.

I only want an insurance agent at my place if the house burns down. Not for shingles in a hail or windstorm, not for theft (because I would only have 10% of contents S3 has, definitely no farm webcam) Reply With Quote
LEP
Mar 17, 2016 | 07:58 28 From the discussion here, I wonder why I farm where I do.

When I get a wreck it is a severe wreck. Could be hail or drought but we are talking big payouts.

I have had three since I started farming 27 years ago. I always take 70%, but this year I am bumping up to 80.

My son is starting farming and they have a three year phase in program wherein the first year he gets 50%, the second year 75 and finally a 100% of my yield premium and experience discount.

Personally, I wouldn't farm without it.

You buy life insurance, but you don't want to use it. Reply With Quote