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Risk Management Tools

Crop insurance and revenue protection are purchased to help protect you farm from losses due to natural disasters and/or revenue declines. Some lenders will require you to purchase these before they will issue a loan.

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Questions

Basic Questions

Because they insulate you from crop losses and price declines or because a lender requires it to approve a loan. These programs only pay a portion of your losses, so pay close attention to the costs vs potential reimbursement for losses. For example, if the potential reimbursement for loss would be $1,000 but the program costs $350/year, it probably doesn’t make financial sense because in 3 years, you’ll pay in ($350 X 3 = $1,050) more than you would be reimbursed ($1,000). These can be great tools when the terms make financial sense; and can help you make loan payments if a disaster happens.

Whole-Farm Revenue Protection insurance provides coverage against the loss of revenue that you expect to earn. Detailed financial records are necessary to demonstrate revenue losses.

Crop insurance provides varying risk management tools that protect farmers against the loss of their crops due to natural disasters such as drought, freeze, flood, fire, insect, disease and wildlife, or a loss of revenue due to a decline in price.

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