Margin Insurance the way of the future?

[mbratrud]

I am reposting under a new topic to hopefully get the intended response.

The recent butchering of the Agristabilty program has prompted me to take a closer look at GARS (Global Ag Risk Solutions). In the past to me GARS did not make sence as Agristability for many was a superior program, and if you participated in Both Agristabilty clawed back the GARS benefit, so it just didn't make sense.

I have done a lot of homework on GARS, and am close to a conclusion but I wanted to put it out there for discussion.

I compared GARS $100 margin coverage to 80% crop insurance coverage, and on our farm it was very close. The advantages to crop insurance were more of a spot loss coverage. The advantage to GARS was the all perils and the certainty that the Margin coverage I chose would be there no matter the reason.

My conclusion with GARS so far is it is superior coverage if a commodity prices broadly fall by 25% or more, or if average input costs rise significantly. Also the more crops you grow on a farm the poorer the fit.

I know one thing it's changing the way I look at Insurance.

What is your take?

[freewheat]

I will stick with regular crop
insurance. These guys as much say they
are there for the wealthy, more
fortunate farms with a stellar track
record. This area has been hammered so
hard with wet weather, I doubt they
would take us on.

Crop insurance is finally reflective for
my farm with half decent prices.

If crop insurance were the ONLY
government program left, I would be fine
with that. The trouble with margin
insurance, is it rewards the fortunate
guys with a string of good weather, and
the unlucky ones are up a creek with no
paddle. Luck comes and goes. We all get
good luck and bad luck, no matter how
stellar our management is.

I would look into GARS, if they never
separated the lucky from the unlucky,
like they do on their website. they as
much as say, if you are unlucky, you
need not apply. I have been hoping for a
private sector insurance company to come
on the scene.... However, they are not
for everyone, unfortunately.

[TOM4CWB]

mbratrud;

Weather insurance ie. rainfall and temp. percent of normal would really catch my eye.

Less than 50 percent or over 150 of normal in June/July and insurance on frost in June and August might be a good ins. policy to buy.

How much to spend?

AB's Price insurance has not been cheap through Crop Insurance... BUT has helped us pull the trigger at higher prices as base income is covered!

Sooo I think it has paid back many times the investment.

Cheers!

[sumdumguy]

When does AgriStability change over to new
plan?

[Hopperbin]

Did you check your premium for the gars?

[$short]

GARS has a fit on our farm. With Agstability out
of the picture we have to replace it with
something else.

Crop insurance is a good program too. I think
you have to use both insurance products in order
to achieve the best possible scenario of off-
loading risk from your farm.

GARS is simple and straight forward. Easy to
calculate if you qualify for a payment or not.
Also, every dollar you spend on inputs you are
covered. Perhaps banks may look at it a
margining for security on operating credit?

It's a relatively new program but at least
someone is trying to offer a private sector
solution to risk management. However, it's hard
to compete with a subsidized premium that the
Sask crop ins offers.

[sumdumguy]

I wish them luck.

[wd9]

Way of the future? How about no insurance and if
you go broke let someone else farm. You
obviously want a fixed income. Go get a job if you
want a steady paycheck. Let risk and reward
moderate costs, not try to fix them to your income.

Is that the response you expected? Because it
should be. Get off the government tit and farm like
a business owner.

[bgmb]

I think if you are buying this type of product you either have a very low risk tolerance or are very highly leveraged. I would never buy these types of products.

[burnt]

wd9 - reality is not welcomed everywhere.

Now someone is going to have to start a fresh thread with a stale question.

Darn those killjoy realists . . .

[bucket]

wd9

Even as a an employee you have a government subsidized insurance plan - its called EI.

[bucket]

wd9

If you look at businesses that have specialized tooling, its pretty rare they let the toolmaker go without a trained person to replace him.

Farmers are much the same. Let them go broke because of the weather see how it works out. You will end up with a russian system of vodka making specialists.

[mbratrud]

Hopper: Our Premium would be simular to crop insurance at 80% across our farm. I find it funny how there are so many Negative opinions from people that havent even had the conversation with them.... Eye opener of how young this thing really is.

[freewheat]

mbratrud, the only thing I see as a
negative is that one needs to have a
historic margin to cover. For those who
have had bad luck for a string of years,
they do not seem keen on covering us. Do
not lump me in with the naysayers, I am
all for choices, and future potential. It
is a great thing, IMO. Some though, are
out based on random luck, or unluck, not
management like they seem to claim.

[sumdumguy]

Their exposure could be huge. Hope they are
very cautious or the company is at risk. I havent
seen the coverage, but if you say your premium
is comparable to hail insurance only, what is your
coverage?