Montana Crop and Livestock Insurance 101

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A down market, a lot of weather unpredictability, and new crop insurance options have raised many questions about risk management this winter. Eric Belasco, George Haynes, and I are putting together a series of insurance workshops and information this semester.

I’ve gotten a few questions already, and here I’ll try to answer a few questions off the top of my list. Mostly, these questions are for producers just starting to think about insurance options. If you have other questions, please comment here or get in touch with me. Or come to one of our workshops—check out the “Events” section of this website for dates and locations.

1. Who are all these government agencies? Who do I talk to if I want insurance?

The USDA’s Risk Management Agency (RMA) administers most crop and livestock insurance policies. To learn about options available for your operation, talk to a crop insurance agent. You can find one in your area here.

Some other government agencies provide agricultural insurance as well. Farm Service Agency (FSA) administers NAP (Noninsured Crop Disaster Assistance Program), which is a low-cost option for otherwise non-insurable crops. NAP insures a great deal of forage for grazing and has policies for specialty crops as well. You can find your local FSA office here.

Hail insurance, as the name implies, only covers damage caused by hail. In Montana, the Montana Department of Agriculture sells hail insurance, and you can find more information here.

2. What do most people choose for crop insurance?

Revenue Protection (RP) and Yield Protection (YP) are the most widely used crop insurance products across the United States. RP gives a revenue guarantee calculated based on a farm’s historical yield and futures prices. RP also comes in an RP-HPE option. (The difference between the two RP polices is in how prices are calculated.) YP policies provide a production guarantee, based on historical production. The value of that guarantee is based on the projected price.

3. What’s available for livestock?

A number of possibilities are available for livestock and forage. Pasture, Rangeland, and Forage (PRF) is one option that insures against livestock feed losses. PRF is based on a rainfall index. Other options, such as Livestock Risk Protection (LRP) and Livestock Gross Margin (LGM) insure price and margins (market value minus costs), respectively.  Whole Farm Revenue Protection (WFRP) gives revenue protection for all commodities on a farm, including specialty and organic crops, and livestock.

NAP (see above) also insures against grazing forage losses, although only for catastrophic losses—those where more than 50% of grazing is lost.

4. What else is out there?

RMA offers other policies for both crops and livestock, and you can start looking through them all at http://www.rma.usda.gov/policies/.  Also, stay tuned for our new crop and livestock insurance website, which will launch in the next few weeks.

Risk Management Education Grant RM16RMEPP522C049 provided support for this project. 

 

 

(Photo by renaissancechambara is licensed under CC BY 4.0)

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About Author

Kate Binzen Fuller is an assistant professor and extension specialist in the Department of Agricultural Economics and Economics at Montana State University. She holds an M.S. and Ph.D. from the University of California, Davis. Her extension and research program focuses on the economics of farm management decisions, including USDA programs and policies, pests and diseases responses, and issues surrounding leasing and land values. Kate’s extension program takes her on the road often, resulting in a rapidly expanding knowledge and appreciation for Montana’s interstates, highways, and (especially) gravel roads.

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