Crop insurance options in drought

COLUMBIA, Mo. – The current drought has many crop producers looking for salvage alternatives and animal producers looking for feed. “The latter could create an opportunity for a mutually beneficial partnership,” said Rex Ricketts, director of the University of Missouri Extension Commercial Agriculture Program

“But before doing anything out of the ordinary, farmers should contact their insurance agency to determine the impact of their actions on their insured crop,” said Ray Massey, economist with the Commercial Agriculture Program.

Massey said that there are several options available for an insured crop severely damaged by drought.

The first option is to do nothing out of the ordinary. Wait out the season to see what will finally happen. When the crop is finally harvested, yields should be reported to the crop insurance company and the insured would receive any indemnity for reduced yields.

A second alternative for corn is to harvest the crop as silage.

“However,” Massey said, “before harvesting corn planted for grain as a silage crop, the farmer must first contact his insurance company and ask that an adjuster come to determine yield in the field. The adjuster may make a determination of yield upon inspection of the field or may ask that a strip be left until harvest, which will be used to determine the yield of the field. Once the insurance adjuster has determined how to estimate expected yield, he will be able to give permission to harvest the crop as silage.”

The crop can be harvested as silage and sold, or it can be used by the farmer. If a second crop is not planted on those acres, the insurance indemnity will be the same as if the farmer had left the crop standing until harvest time.

Farmers who decide to harvest corn early as silage may have the opportunity to plant another crop. If a second spring crop (e.g. soybeans) is planted, it will affect the crop insurance on the corn harvested as silage. In such a situation, the farmer would receive 35 percent of the indemnity payment on the corn until the second insured crop is harvested. If there is no loss on the second crop, the remaining 65 percent of the corn indemnity will be paid. If there is a loss on the second crop, the farmer will get to choose to receive the remaining 65 percent of the corn indemnity or the indemnity associated with the loss of the second crop.

“The bottom line,” said Massey, “is that farmers who purchased crop insurance should not make any decisions on destroying the crop or harvesting it before maturity without first contacting their crop insurance company. Options exist but only if the crop insurance company is brought in before the decision is implemented.”

For more information, contact the University of Missouri Extension Commercial Agriculture Program office at 573-882-0378.