That's thanks to crop insurance. Those who had crop insurance coverage -- like the 70% of farmers in Missouri who utilized revenue-protection policies -- were able to stay afloat financially despite yields that barely justified running the combine this fall.
"In a tough year like 2012, crop insurance is the difference between a financial hardship and getting the crop into the ground next year," says Federal Crop Insurance Corporation (FCIC) manager William Murphy, who recently spoke on the topic at the University of Missouri (MU).
Specific to that state, MU ag economist Ron Plain says crop insurance has, at least in the last decade, made financial sense considering the payout from federal crop insurance indemnities was almost twice the amount paid into the program by farmers ($1.80 and $1.00, respectively). "For the state of Missouri, it's a good investment," Plain adds.
But, if you suffered a major crop failure on account of the drought and collected an indemnity payment of $200,000 or above, MU Extension economist Ray Massey says, in a university report, that you "should expect to be audited by FCIC."
Keeping up the claims pace
Another thing to expect this year as you file crop insurance indemnity claims is a little longer wait time in getting that claim processed and getting the money in your pocket, says Dereck Klaassen, Field Supervisor for Farmers Mutual Hail Insurance Company of Iowa based in Indianola, Iowa. He says he and his agents have experienced a spike in claims this year, and while that wasn't unexpected, he says it's added to the time it takes for farmers to ultimately receive their checks.
"I am getting a lot of calls wondering when the adjusters are going to be there to work their claims. I know that everyone wants to be first to get their insurance checks but producers need to have patience, we will get to everyone," Klaassen says. "Some producers will get done next week and some probably will not get done until into the new year."
There are ways to help trim that delay, namely by getting all the paperwork ready for the agent before an agent's visit so that the process can begin quickly thereafter.
"The two biggest things that are slowing us down right now are producers not having their summary sheets from the commercial facilities where they took grain to this fall, because we cannot use scale tickets to settle claim when the grain is stored in a commercial facility. These scale tickets must be supported by a summary sheet, settlement sheet, ledger sheet or assembly sheet. Also, on these sheets the producer needs to mark where the loads came from," Klaassen says. "And, producers need to have 100% of the production off of a unit that they share crop with another person. For example, if a producer has their 50% share in a bin at home and the other 50% was taken to an elevator and they do not have the summary sheet for the other 50% that belongs to the share person. To settle a claim we need to have total production from the unit."
And, back to that audit Massey mentioned: All of these records Klaassen says are critical to expediting the insurance claim process should then be kept together "in a safe place" in the event FCIC comes calling with an audit.
"Any claim that goes over $200,000 per crop per county will need to have a 3-year APH audit done on that policy. This 3-year APH audit basically means that the production history will need to be reviewed for the last 3 years that the crop was grown in the county that the $200K+ claim is to be paid in," Klaassen says. "Thus the producer will need to supply productions record to the company so that we can verify the yields that he or she has reported are correct for the last 3 years that the crop was grown."
Ultimately, Klaassen says doing all of this ahead of time and being completely prepared could mean the difference between getting your indemnity check sooner or later. But even if you do, don't be surprised if the process takes a while longer than you expected.
"Producers need to be ready for when the adjuster calls them to work their claim. If the producer is not ready when the adjuster calls them, the producer could face delays because the adjuster will move on to other producers who are ready to have their claims worked in the area," Klaassen says. "Claims will still be open well into 2013 in many areas where losses were heavy and widespread."
Here are a few of the latest national crop insurance statistics released Tuesday by National Crop Insurance Services (NCIS):
- More than $3.5 billion has been sent to farmers.
- While crop insurance can be purchased to protect 128 different crops, the top five crops that suffered the most damage from the 2012 drought are corn, wheat, cotton, soybeans and Pasture Rangeland and Forage.
- Farmers will invest more than $4.1 billion to purchase more than 1.2 million crop insurance policies.
- Those policies protect more than 281 million acres of eligible crops.
- 15,000 crop insurance agents and 5,000 loss adjusters are working around the clock to help farmers get their claims processed.
