Does My Farm Need Crop Insurance?

By Jeffrey Granstra, Sheldon Peoples Insurance Agent

12/29/2021

Ever since the 1880s, when a group of tobacco farmers insured their crops against hail damage, crop insurance has been a critical component of every farmer’s long-range plan for success.

Photo: Harvest
Text: The rural economy continues to be mostly dependent on farmers' ability to rebound after disaster strikes. Less than a decade ago, following the historic 2012 drought, federal crop insurance saved 20,900 jobs.

The rural economy continues to be mostly dependent on farmers’ ability to rebound after disaster strikes. Less than a decade ago, following the historic 2012 drought, federal crop insurance saved 20,900 jobs – with an annual labor income of $721 million – in Iowa, Nebraska, South Dakota, and Wyoming alone.

And while Iowa State University Extension farm management specialist Steve Johnson told Wallaces Farmer that 89% of all Iowa farmers carry some form of crop insurance, there remain some local farmers who choose to risk their livelihood and their future in exchange for saving a few extra dollars for subsidized peace of mind.

Today, the success of farmers and their crops remains more crucial than ever. After all, the American Rescue Plan Act of 2021 includes an estimated $22.7 billion in nutrition and agricultural provisions alone.

See, when planting for tomorrow, a lot more than seed goes into the ground. Our crops begin an agricultural and nutritional chain reaction that affects every American — even during a pandemic. That’s what makes crop insurance (which you may hear referred to as ag insurance or farm insurance) so important in helping you hedge against unexpected economic and environmental damage.

Do farmers need crop insurance?

In a word, yes. Here’s why:

Crop insurance can help you mitigate risk despite weather conditions.
It helps ensure steady cash flow and income stability.
It helps to introduce the use of new technology to improve crop production.

What kind of crop insurance should I choose?

Photo: Crops
Text: There are two types of crop insurances offered to Iowa farmers: Crop-Hail and Multiple Peril Crop Insurance (MPCI). MCPI covers the wide range of perils that can affect your investment in your crop, while crop-hail insurance is available to protect your investment in case of an untimely hailstorm.

There are two types of crop insurances offered to farmers: Crop-Hail and Multiple Peril Crop Insurance (MPCI). MCPI covers the wide range of perils that can affect your investment in your crop, while crop-hail insurance is available to protect your investment in case of an untimely hailstorm.

While MPCI policies must be purchased before planting and cover loss of crop yields from all types of natural causes (like including excessive moisture or drought, freeze, disease, and loss in revenue due to low yields or changes in market pricing), you can purchase a Crop-Hail policy at any time during the growing season.

Isn’t crop insurance expensive?

Crop insurance is actually a great deal — especially when you consider the catastrophic losses you’re guarded against! Here’s why:

The Risk Management Agency (RMA) sets the rates that can be charged for crop insurance.
Private companies must sell insurance to every eligible farmer who requests it. They retain a large portion of the risk on more than 80% of the policies written.
The federal government subsidizes the farmer-paid premiums to reduce the cost to farmers.
Also, it provides reimbursement to private insurance companies to offset operating and administrative costs that farmers would otherwise pay as part of their premium.

How do I get started?

At Peoples Insurance, we understand how much your farm means to you. Our agents have decades of local agricultural expertise and a long history in the insurance industry. Every day, we help Iowa farmers meet their insurance needs, and we’re prepared to design the right policy for you as well.

When you’re ready for crop insurance that fits your needs and goals, fill out the Quick Contact form, give us a call, or stop by one of our seven locations in Rock Valley, Lester, Sioux Center, Akron, Sheldon, and Hawarden, Iowa, and Jasper, Minnesota. We look forward to helping your farming operation thrive today and through all the seasons ahead.