Margin Insurance the way of the future?

[mbratrud]

So to Clarify if I spend $150 per acre on Seed/Fert and Chem and buy $100 Margin I am covered for $250 per acre on a 4000 acre farm that is $1000000 coverage. What triggers a payment anything that causes my numbers to bellow that. Frost, Drought, Flooding, Price Callapse.

Your quote always atarts with your expenses, which could cost you say $5 - 10 per acre depending on the farms strength. then you can buy $25,$50,$75 or $100 Margin. the little over $15 i refered to in our case would be for expense plus $100 Margin.

Freewheat, Bingo if you have this Insurance it covers those costs and allow you to focus on production, instead of holding back on Fert if you are concerned about drought for example you can go ahead and put the groceries down to grow a good crop.

The more research I do the more GARS makes sense, but It still makes sense to carry 50% crop insurance. If anything cut back on Hail.

Somthing else i like about GARS is its stand alone so benefits from other insurance sources don't hurt your benefit with GARS in the case of a claim.

As far as GARS abilities to handle a catostrphic event, all the insurance is reinsured, through at least 9 large multi nationals.

Leaning heavily towards GARS right now, they are working on getting premiums lowered, and are talking to reinsurers over the next while. Likely won't be making official quotes until Dec, so they say. My quote was using last years numbers which they are very hopefull will be better come Dec.

[mbratrud]

Hopper, There is no doubt they are out there to make money, and that is why they are a bit more selective on who they offer insurance to. My chances of collecting will be extreemly low, but at the end of the day If i know X$ coming in regardless what happens does give peace of mind and the abiillty to make business decisions based on that. The best description I have heard it refered to as is business interuption insurance.

[freewheat]

Thanks for the info. I do feel more
inclined to look into them a bit more
with that info. I do know though, that
for now, crop insurance is cheaper, and
will cover for a fair amount more. But
as a stand alone program, of course I
could do both, if I choose. Is 100
margin their maximum coverage? I do also
like the price drop feature, heaven
knows we would take a beating if we saw
3 dollar wheat 8 dollar canola, and 2
dollar barley. regular crop insurance
would do diddly . I do like the push
your agronomy factor with no
limitations. I like pushing my land.

Some positives and some negatives. Less
negatives though than I originally
supposed.

[Hopperbin]

Arrrrg this makes no sense at all.

OK Mark you said,
Your quote always atarts with your expenses, which could cost you say $5 - 10 per acre depending on the farms strength. then you can buy $25,$50,$75 or $100 Margin. the little over $15 i refered to in our case would be for expense plus $100 Margin.

OK unless your margin is actually 150 in which case you cannot collect unless you drop below 100 margin is that correct? What was your margin would help to clearify?

so if that is so, then I can see how that can work for the insurance company, plus your accountant is going to charge you a fee also am I correct or is the ins company going to pay for that also. Anyways why don't they put it all on a website so one can decide for themselves before talking to them. I kinda don't like to do business that way as you know. Soon your talking to a high pressure sales man that only wants to make the sale, and has no skin in the game afterwards, sorta like FBC accountants firm works.

[mbratrud]

Insurance is the toughest dollars we spend on the farm it seems like a complete fn waste.

If you are well established farmer towards the end of you career maybe you can choose not to insure. Some day I hope to be in that position. For now though we are to valnurable to see all our hard work in our young farming careers to see something out of our control take it all away. So we have to do something even though it is a painfull check to write. All we can do is walk down the tool isle and decide which ones are best for our toolbox.

[mbratrud]

Yes so Hopper, Your Margin is dollars over your seed fert and chem costs. It makes total sense that they just use these three, most consistant costs between farms. So if your 1000 acre farm sells $300000 worth of Grain and your Chem/Fert/Seed costs are $100000 your Margin is $200000 or $200 per acre. If you were insure through Gars at cost $100 Margin using those Numbers I would be insured for $200000. Now if it was too wet and I didn't seed and only had a little Chem bill for the year my coverage is $100 margin plus the Chem bill. Clear like mud? Thay have actually made it very easy to administer, if you are already using Accruel accounting its really easy.

[mbratrud]

Hopperbin, I could tell you my margin number and then i would have to find out who you are and shoot you. They are fairly good.

[gustgd]

Mark has explained it well. GARS has built a
model using over 15000 farmers data to show the
reinsurers where to price and makee money. It
has to or everyone goes home.
Biggest risk to private insurance that I see is the
copycat companies that come in and try to
reverse engineer the program using Agristability
or even worse cash basis accounting. Then
farmers will start to see long payouts and fraud.

It is just math, if you spend a dollar in expenses
and are insured for that dollar it's covered.
Theory being that you won't spend it unless your
likely to see a return. Farmers hate wasting
money more than insurance companies. The
$25, $50, $75 $100 margin over expenses is
where the real decision is. IMO that's where you
self insure. Unlikely that with historically high
prices/ average yieds tonot ake money this year.

Anyone get 20 bus canola? What if it was $11.00.
I know I lose money there. What do you get from
crop insurance with 25 bu. of $5 wheat.....what did
someone say earlier this week about that whoosh
we heard.

Back to the fraud and risks to company. If they
insure you you allow them to have access to your
records for three??? Years after that crop. If your
neighbours pulling in $250 margins and your at
$150 red flags go up.

I hear pricing will come down this year as
reinsurers have more confidence in program and
to get more farms in program. Larger numbers =
less risk #counterintuitive.
Biggest pain in ass is the building of accrual data
which they will do for a cost. Or if your accountant
will sign off on data you supply.
Just like at the bank better more accurate
numbers mean better rates. I believe scotia, TD,
and Affinity CU all use GARS at 85% security
with others looking. Stay tuned

And yes cotton.

[freewheat]

"farmers hate to waste money even more
than insurance companies".

Sorry, don't tak this personally, but
sheesh if this were the case, there
would be fewer new drills, combines and
tractors out there, and land would not
be selling for 280 000 a quarter. lol

Regardless, of all that, If the highest
margin coverage they offer is 100 bucks,
for many, regular crop insurance will be
covering for WAY more than that at less
cost. Subsidized I know...Which is
unfortunate. It really is, but reality
is reality.

I guess I am in wonderment at the farms
who have been pulling off such big
margins, why they,

1. Have low crop insurance coverage if
their crops have been paying so well.

2.Would opt for 100 dollar an acre
margin coverage, and think that is a
good deal.

Still trying to get my head around this,
I feel like I am missing something here.

An example:

If a guy is covered for 28 bushels of
canola at 11 bucks for a gross of 308
dollars, he would have to spend 208
dollars in CASH on his canola?

And that margin is whole farm with gars,
right, so when blended with other crops,
it brings up ones average margin?

Sorry bout the questions, you all do not
have to answer them. Just working the
numbers is all.

In the too wet years my margin was still
over 100 bucks due to ci payout, no
inputs, and some grain inventory
carryover.

I guess my point is in this day and age,
100 dollar margin is pretty small
potatoes for most crops, I thought there
would be higher coverage. If the farmers
they are after are so stellar, why do
they offer only 100 bucks, and why do
the farmers think this is all that good?

[mbratrud]

Freewheat I agree that the $100 Margin coverage is not enough and they should offer more. As for crop insurance though you need to remember to average across your farm. We can't grow Canola on every acre. Also Crop insurance is primarily production, it does not protect you from a major commodity price drop or Sky high inputs. Having said that though this is really where I struggle with my decision. I believe the tools are there to manage input and commodity price risk and is really the production risk that threatens my farm.

Anyone that wants to email me direct mark@bratrudag.ca upon verification of which you are I will send you a calculator that I developed that you may find helpful. You can put in your farms information and It will indicate to you very quickly where you money should be spent. GARS or Crop Insurance, so far calcs I have done with few different guys can go either way depending on farming operation.

[mbratrud]

damn spell check, I looked at the spelling and grammer of my posts and decided to spell check LOL. trying to do to many things at once. love to get engaged in these conversations but dont have time ha ha ha. anyway WHO you are rather than WHICH, in my previous post.

[cottonpicken]

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