Crop Insurance

[sewen]

What does everybody think of this idea?

I think Crop Insurance should exempt this year from the yield averages for next year. Because this year is like no other and this would help keep everybody's coverage up.

[TOM4CWB]

Sewen,

I believe that with new weather rainfall puts and calls, specific dollar coverage levels should be insurable, just like hail insurance.

Since crop insurance has not typically reinsured this way, obviously with the increase in input costs, farmers must have enhanced crop insurance coverage.

The money spent on existing crop insurance can be better utilised if better risk management is done by crop insurance itself, and I believe the folks at crop insurance know this is going to be expected of them.

The big downside to this weather disaster for the next few years is that reinsurance premiums will be up 10-20% because of this year... so we will have to be prepared to pay more...

[charliep]

Sewen

The question you ask is a political one in that it involves task payers money - the underwriter of insurance will have different ideas. As with car insurance, you have an accident and your premium goes up.

I agree with Tom4cwb that there are some other new innovative ideas for handling risks - including weather. Not helping this year but something to look forward to. Hopefully we can get some discussion going this winter.

The scariest question I have been asked me over the past month is what if the instability in weather we have seen over the past few years is normal. The question they then asked is what does the ag. industry do different. Thoughts?

The US has the Conservation reserve program. Environmently sensitive land is pulled out of production plus other poor quality land. In a disaster year like we are experiencing, this land is used as emergency pasture/haying. Does this have merit?

[sewen]

Let's hope this isn't normal weather because nothing grows on a 1/2 inch to a inch of moisture. I still have a couple fields that have recieved less than an inch of rain. Still missing the showers of late. Just finished cutting hard red spring wheat on summerfallow for feed, let's hope this isn't normal.

There has been crops written off at 0 bushels to 1 1/2 bushels, so you can see the averages will not be very good for next year. There are rivers in this area, so maybe the government should look at setting up irrigation.

Also how does the government convince farmers to spray for grasshoppers. Even with the government program hardly any spraying was done in this area and there were some areas that were very very bad for hoppers. Dad and I both sprayed some fields and two weeks later they were worse than they were before because the neighbours had twice as many as we did. Yet they refuse to do anything, very frustrating.

[charliep]

Just a question as to why more farm managers don't use the Crop Insurance variable pricing option. Anyone who used it this year will have the benefit of increased per acre coverage for most crops. It will also act as a hedge against a contract you forward priced last spring at a lower levels and are forced to buy back at todays high drought prices in the case of a write off.

[sewen]

I took the varible pricing option at 80% high price and high protein. All I could get minus the hail rider, figure if it can't rain how can it hail. So far I'm right on that one.

Also heard that only 40% of the farmers in the northeast took insurance, hard to figure given the dry spring.

[TOM4CWB]

Sewen,

A knee jerk reaction to the dropping of the 30% discount could attribute a big reason why many long time crop insurance customers dropped insurance this year...

Of course this was a tempting way to react, and any other year in the last 50 it would have been a good decision, but... not 2002...


The record cold March and moist cool April fooled many into believing long term forcasts for a wet cool spring and summer...

FIPD and CFIP will have big time demand, I wonder Charlie, has anyone done the numbers on what these programs will need to pay out???

I was told in the last few years FIDP costed 100-200 million a year for Alberta, this year it could be 600-800 million, maybe even a billion???