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Vol. 17, No. 6
Article 3 of 6
April 20, 2007
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Crop Insurance and Freeze Damage to Wheat By Ray Massey Wheat farmers are closely watching their crop to see what damage was done by the record low temperatures during April 4 - 9, 2007. Missouri has just over one million acres planted to wheat; of that 575,303 or about 55 percent is covered by crop insurance. The predominant crop insurance form is Actual Production History (64 percent of acres), followed by Revenue Assurance (18 percent), Crop Revenue Coverage (15 percent) and group risk plans (4 percent). If a farmer believes that his wheat suffered damage, they need to contact their insurance agent to have an adjuster appraise any damage. If damage is high, farmers may consider whether or not to destroy the crop and plant second crop - either corn or soybeans. Of greatest importance is that farmers communicate with their insurance agent before they take any action on their existing wheat acres. This is the case regardless of the type of insurance they purchased on their wheat. If a decision to destroy the existing wheat crop and plant second crop is made, farmers may be asked by their crop insurance company to leave a strip of wheat until maturity so that an accurate assessment of the damage can be made. The crop insurance company will initially pay only 35 percent of the indemnity due to a damaged crop if a second crop is planted and insured on those acres. The remaining 65 percent of the indemnity will be held until the harvest of the second crop. If the second crop has no problems requiring an indemnity, the farmer will receive the 65 percent of indemnity that was held back. If the second crop does earn an indemnity, the farmer will need to choose whether to receive the indemnity on the second crop or the remaining 65 percent of the wheat indemnity. They will not be able to get both indemnities. This will be an interesting year to see how the group risk plans perform. Group risk plans are best suited for widespread disasters such as this freeze rather than for local disasters such as a hail storm or flooding of lowlands. If, in fact, damage is widespread from this freeze, the group risk plans may pay well this year.
Ray Massey |
