by John Berry, Extension Educator, Lehigh County
Crop insurance has become the risk-management tool of choice for many farmers, because it works. The program was created to ensure that the private sector would help shoulder part of agriculture’s risk.
Crop insurance not only prevents taxpayers from shouldering the full burden of a farm disaster, but also gets payments to farmers relatively quickly. Mother Nature does not just strike large crop farms and a crop-insurance indemnity does not make a farmer or rancher ‘whole’ any more than a check from an insurance company replaces a house lost in a tornado. However, the AGR and AGR-Lite insurance products are intended to benefit the diverse and sometimes modest sized farms on the east coast.
Crop insurance is a public-private partnership, designed to ensure that when disaster strikes, the private sector – crop insurance companies – are there to help shoulder the risk and the financial burden of rebuilding. Crop insurance policies are purchased by the farmer and suited to the farmer’s needs, comfort with risk and financial situation.
USDA’s Risk Management Agency (RMA) recently announced the Adjusted Gross Revenue (AGR) insurance for farmers and ranchers is again being offered for 2014. The application deadline is January 31, 2014. Current AGR policyholders also have until January 31, 2014, to make any changes to existing contracts. AGR provides whole farm income protection under an umbrella-type policy that covers income from all crops and some livestock, provided the income from livestock and livestock products does not exceed 35 percent of total farm income.
Unlike traditional crop insurance guarantees based on yields, AGR provides a guarantee against a significant decline in overall farm income from the average of the most recent five years (2008 – 2012). As a result of substantial premium subsidies provided by the USDA, AGR can be a very affordable way to guarantee an income flow from your farm operation.
In addition, a similar product called AGR-Lite, which crops and covers livestock and has a limitation of $1,000,000 in coverage. AGR-Lite is available in almost all counties for the states listed above for 2014. The sales closing date for new AGR-Lite contracts is March 15, 2014. Current AGR-Lite policyholders also have until January 31, 2014, to make any changes to existing contracts.
Farmers are strongly urged to contact a local crop insurance agent, as soon as possible, for more information and premium quotes for both products. For a list of crop insurance agents, farmers may contact their local USDA Farm Service Agency office or log on to the following Risk Management Agency web site: http://www3.rma.usda.gov/tools/agents/