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Montana Ag Network: the importance of crop insurance

Nate Aschim
Posted at 5:55 PM, Jun 21, 2022
and last updated 2022-06-21 19:55:37-04

SUNBURST — After extreme weather conditions have troubled Montanans over the past few years, farmers and insurance agencies across the state stress how critical it is for farmers to acquire crop insurance.

According to the MSU Extension Office, nearly 62% of Montana is farmland. As parts of the state continue to experience drought-like conditions, the need for crop insurance has increased as low crop yields and fire danger become more probable.

Gary Hielig Jr., Senior VP at Rain and Hail Insurance, oversees the crop insurance claims of 7 different states. He noted that last year “Montana was ranked with the highest loss ratio of all states. There was $566 million of claims paid out in the state of Montana last year through different approved insurance providers.”

Hielig stated that around 90% of eligible U.S. farmland is insured.

“They paid their premiums in the years where they did have losses and the program worked really well for them in the year they did have claims so it’s doing what it intended to do,” he said.

Crop insurance helps protect farmers if they have a low crop yield or when the price of their crop is low. Farmers pay a premium and protection will be provided on a corresponding level, much like other insurance. This helps ensure survival of the farm business as their profit is protected.

Nate Aschim, a fourth-generation farmer, commented on the value of crop insurance in his own agricultural community of Sunburst, Montana. He said, “With the way the weather’s been the last few years I think a lot of guys would’ve been up against it or have had to fold the tents probably without insurance.”

Korey Fauque of KW Insurance backs this claim up. He noted that out of 300 different farmers, all but a handful paid out the previous year. He said, “Just through this agency, you’re looking at somewhere in the ballpark of like $16 million of payments that flooded back into our economy.”

“You lose generational farms, you lose a community, you lose everything if you don’t have that protection,” said Aschim, homing in on the value crop insurance provides local communities.

Coverage can be purchased at any point during the growing season, protecting against hail, fire, lightning, wind, and other damages such as vandalism or theft. These damages must be due to unavoidable hazards beyond the farmer’s control.

For those who are unable to provide up to four years of production history, an estimated county yield known as the transitional yield will be produced by the Risk Management Agency for each crop in each county based on a historical average. This figure is updated periodically.

Buying crop insurance is one risk management option. Cultivators should carefully consider how perspective policies will work with other risk management strategies to ensure the best possible outcome each crop year.