Insurance protects against possible farm-related catastrophe
Agriculture is an industry that relies on volatile elements such
as rain, sun and bees. A few days of bad weather can make or break
a year’s crops.
Insurance protects against possible farm-related catastrophe
Agriculture is an industry that relies on volatile elements such as rain, sun and bees. A few days of bad weather can make or break a year’s crops.
Agriculture is one of the largest industries in San Benito County. In 2006, the gross value of agriculture in this county was more than $270 million.
Because agriculture is such a high risk industry, many local farmer are choosing to invest in a little safety net called crop insurance.
Wayne Shortes, President of Gold State Crop and Ag West Crop Insurance Services, which works with Sandy Rose Insurance, has been providing growers with insurance coverage for years.
“Crop insurance protects against the perils of Mother Nature,” Shortes said. “Everything from weather to locusts to drought.”
Other areas of protection include: Earthquakes, adverse weather, wind, volcanic eruption, fire, insects, failure of irrigation supplies, wildlife and plant disease, though some stipulations may apply. For example, conditions of fire protection are limited, since arson is a constant concern.
Last winter when San Benito County had unusually cold temperatures, citrus growers were hurt by the freeze. Back in January some of the local lemon growers lost much of their crops when weather dipped into the 20s and even teens.
Insurance may have saved some of those farmers from suffering significant losses.
“Like any other insurance, crop insurance is designed to help growers cover their losses,” said Paul Matulich, the Agricultural Commissioner for San Benito County. “I know a number of farmers locally that carry it.”
Ken Walker, a local grower, has been using crop insurance for almost a decade. He grows onions, tomatoes and beets on a piece of land he leases in the south county area.
“My plot isn’t that big, but I’d hate to think what might happen if I lost it,” Walker said. “It’s definitely an expense, but I look at it as a necessary expense. If I don’t have to use it, great, but if my crops are affected, I’m covered.”
He pays the minimum, about $100 per acre per year, Walker said. He said he sees it as an investment since he’s never had to file a claim.
Shortes explained that the two most basic types of crop insurance are Multiple Peril Crop Insurance (MPCI) and Crop Revenue Coverage. Crop Revenue Coverage is not available in California, Shortes said.
Multiple peril is a broad-based crop insurance program administered by the Risk Management Agency of the United States Department of Agriculture. It is subsidized by the Federal Crop Insurance Corporation. It provides protection against an unavoidable loss in yield due to nearly all natural disasters, according to a 2004 magazine “Primer, Crop Insurance and Risk Management.”
For most crops, that includes drought, excess moisture, cold and frost, wind, flood and damage from insects and disease. MPCI does not cover losses resulting from not following good farming practices, low commodity prices, theft and specified perils that are excluded in some policies, according to “Primer.”
There are specific restrictions on some crops based on acceptable farming practices. Most MPCI programs guarantee a yield based on an individual producer’s average production history, according to “Primer.”
Shortes compared the two types of insurance to ladders.
“Multiple Peril Crop Insurance is like a wood ladder. It’s the backbone of the industry,” Shortes said. “Catastrophic is like the first rung of the MPCI ladder. In contrast, Crop Revenue Coverage is like a higher quality of ladder, maybe aluminum.”
