Farmers face many challenges nowadays in a changing business environment. Labor shortages, supply costs, environmental factors, and regulatory standards are creating a complex and volatile environment to operate in. 2022 data from the USDA found that there are 2,000,000 farms in the United States. This means that there are 893,000,000 acres of farmland across the country.
In Washington, there are 15 million acres of farmland that produce 300 different crops that are sold globally. The industry generates over $20 billion in statewide revenue annually. Agriculture is and continues to remain one of the most important sectors of the national economy. In this changing landscape, farmers need to protect their crops and livelihoods. Although controlling numerous variables might be challenging, ag operations have a significant opportunity in risk management to safeguard their assets for both the present and future generations.
The Federal Crop Insurance program, overseen by the USDA, sets U.S. farmland apart from other global investment-grade assets. This program, established in 1938 in response to the Great Depression, ensures a distinctive feature for American farmland. By offering a guaranteed minimum annual revenue, Crop Insurance substantially minimizes risks for both farmland operators and owners. This program, administered by the Federal Crop Insurance Corporation, stands as a permanent fixture in U.S. agricultural policy.
MULTI-PERIL CROP INSURANCE
Multi-Peril Crop Insurance (MPCI) protects against an array of potential factors that may affect crop output, encompassing drought, excessive moisture, frost, diseases, pests, as well as natural calamities such as fire and hail. Beyond safeguarding against reductions in crop yield, MPCI policies can also extend coverage to include revenue losses resulting from market price fluctuations. It is essential to note that MPCI coverage must be acquired before the designated Sales Closing Date for the crops intended for planting in the upcoming growing season.
CROP-HAIL INSURANCE
Crop-Hail Insurance offers protection against crop damage resulting from hail, alongside other incidents like fire, lightning, vandalism, and transit damage up to the first storage location. In contrast to Multi-Peril Crop Insurance (MPCI), Crop-Hail Insurance can be acquired at any point during the growing season. The coverage becomes effective immediately upon policy purchase and remains in force until the crop is harvested.
WHOLE-FARM REVENUE PROTECTION INSURANCE
Whole-Farm Revenue Protection (WFRP) provides a risk management safety net for all commodities on the farm under one insurance policy. This insurance plan is tailored for any farm with up to $17 million in insured revenue, including farms with specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets. WFRP provides protection against the loss of insured revenue due to an unavoidable natural cause of loss which occurs during the insurance period and will also provide carryover loss coverage if you are insured the following year.
LIVESTOCK RISK PROTECTION
Livestock Risk Protection is designed to insure against declining market prices. Beef producers may choose from a variety of coverage levels and insurance periods that correspond with the time your marketweight cattle would normally be sold. You may choose coverage prices ranging from 70 to 100 percent of the expected ending value. At the end of the insurance period, if the actual ending value is below the coverage price, you may receive an indemnity payment for the difference between the coverage price and actual ending value.