Are you sure? Protecting your operation with the right insurance
The challenges severe weather brings to America’s farmers and ranchers on any given day can define their ability to keep their business in operation for generations to come. The question becomes, how much risk is an owner is willing to take on?
With a battling drought covering a majority of the western and midwest states, the heat of summer drones on and producers should educate themselves on what their current insurance policies offer in the form of protection and just as importantly, what isn’t protected.
A third generation rancher, Josh Geigle, owner of Bell Bar Ranch, located near Wall, South Dakota witnessed the historic, devastating blizzard of 2013 and is now living through the worsening drought conditions, leaving crop fields and grazing pastures sparse.
As Geigle transitions into being the third generation to manage his family’s cow calf and farming operation, he has learned how to walk the fine line of investing in quality insurance coverage and uncontrollable risk.
“There is a misconception with insurance – a person buys insurance for the bad weather events, and in the back of your mind, you think it will make your bottom line whole, but you know it won’t,” Geigle mentions. “By purchasing a good insurance policy, it’s going to cover the expenses, so you can stay in business and try again next year.”
Geigle works closely with the Crew Agency, LTD, located in Philip, South Dakota specializing in Agri-Risk Management, providing crop and livestock insurance coverage to ranchers and farmers in the state.
Taylor Mohnen, owner and agent of Crew Agency, LTD understands how much of a factor severe weather can affect a producer’s bottomline. “Step one – to any insurance policy is to incorporate the proper policy as a foundational part of your business plan,” Mohnen outlines.
Mohnen encourages producers to be proactive with their insurance agent to ask the needed questions, and learn all of the options. “Understanding what it costs and knowing what is feasible, will be the best way to educate yourself on all policies,” Mohnen says.
The power of three – a producer, insurance agent, and a banker will continue to keep America’s family-owned farms in business.
“A producer also needs a good banker to know where the break-even point is along with the uncontrollable weather factors and market voility,” Mohnen says.
Livestock Risk Protection
A popular policy coverage Mohnen and his team have worked with many local ranchers on this year is the Livestock Risk Protection (LRP) insurance policy. This policy is designed to help ranchers lock in a floor price, protection of a decline in prices, on purchased feeder cattle.
●Coverage prices range from 70-99.9% of daily livestock prices figured from the Chicago Mercantile Exchange (CME).
●The Government subsidizes premiums 35-55% depending on coverage level.
●Producer must own the cattle.
●Producer chooses an insurance period of 13, 17, 21, 26, 30, 34, 39, 43, 47 or 52 weeks out. All periods are not available all the time.
●If a producer sells insured cattle more than 60 days prior to the end date of the contract, the contract becomes null and void and premium is not refunded.
●Actual loss will be the ending value figured on CMF Feeder cattle cash settled index for that particular end date.
Because of the market voility in feeder cattle, Geigle himself has invested in the LRP policy to serve as a blanket of risk protection for his cow-calf operation.
“We have about 180 cows, and I usually buy it [LRP] on a 100 head of calves just to be cautious,” Geigle explains. “So, if it costs you $35 a head, that’s $3500 you have to pay for. If the market falls and you get your premium back, maybe plus some, but for a family of five, $3500 can cover a lot in living expenses.”
Geigle understands the risks on both sides and relies heavily on the information sourced from his insurance agent to make the smart investment.
“That is the struggle, is knowing which policy you should invest in,” Geigle says.
Pasture Fire Coverage
The Pasturage Fire program provides coverage to perennial pasture, and rangeland against defined fire losses. Coverage of a pasture ground is figured by dollars per the actual value of an acre.
Coverage and loss example:
200 acres of pasturage valued at $10.00 per acre
200 x $10.00 = $2,000
$2,000 x $1.50 rate = $30.00 premium
Fire destroys 175 aces of pasturage
175 acres $10.00 per acre = $1,750 loss
$1,750 – $100 deductible = $1,650 loss payment
Policies and rates may vary by region, with higher rates in fire-prone states. There is a $100 deductible, ranchers can choose their level of coverage. This insurance is not a federally subsidized product, it is considered a private product.
There is also a pasture and grain fire policy, which covers any type of fire, no matter how it is started. However, this would not cover any outside buildings, such as barns or corrals. Typically, outside structures would be covered in one’s property and casualty insurance policy.
Having Faith and Trust
“Even though everyone [farmers and ranchers] have the same mission, we all have different resources,” Geigle points out. “Each person has to decide how much risk they are willing to take on or do they balance that risk by purchasing an insurance policy.”
The best strategy for producers to take is to be proactive and stay in contact with your local agent to learn what policy is the best fit for your operation and what is covered within it.
“We want to help young farmers and ranchers get into the agricultural industry and stay in for generations to come,” Mohnen says. “But to do that, every situation is different.”
By working with the right key players, doing the research, and having an ounce of faith, America’s farmers and ranchers will make it through these harsh weather conditions.
“Sometimes, you just have to have a good faith in the good Lord above, that he’ll provide for you,” Geigle remarks.
To research more information on LPR, visit, http://www.rma.usda.gov and learn more about the Pasture Fire program, visit your local insurance agent.
Publication: TSLN paper
Assignment: Farm/Ranch insurance – what is covered, what is not, and how can ranchers remember everything that they need to list on their policies?
Deadline: June 29 if possible
Print Date: July 3
Sources: An insurance agent- let me know if you need help finding one
Photos: Probably not necessary
Summary/Angle: With the hot, dry summer upon us, fires are inevitable.
It would be good to remind our readers that they may want to check their farm insurance policy to see what is covered, particularly for fire but also flood, hail, wind and other summertime disasters.
How about livestock (is it even possible to insure livestock against fire or hail or flood?) How can they remember to get “everything” on the list?
Josh Giggle, (605) 441- 4602 – firstname.lastname@example.org
Bell Bar Ranch
-Crew agency – cactus flat, 605-433-5411 (main office)
-Policies I do have is the livestock risk protection – LRP – by contract on calves – sets the price floor, $25 – gives you market protection, sends out offers on calves based on weight calves,
-180 cows, usually buy on a 100 head of calves to be cautious, if the market falls, you get your premium, for a family 5, 3500 goes a longs ways,
-Everyone has different resources, and how much risk they are willing to take on themselves or do they balance that risk by buying an insurance policy.
Quotes from Josh:
Josh Geigle, third generation rancher – Bell Bar Ranch, (Wall SD)
My great grandfather homesteaded the place back in 1907, a ranch that has been handed down from generation to generation, currently a cow calf enterprise operation, corn, winter wheat, forage crops to help get through the drought.
Our county is in D2, doesn’t represent how dry it actually is,
Experienced the blizzard of fall, 2013,
Farm insurance – did benefit from?
Transition and take over, from my dad’s experience in the past, he’s always carried hail insurance on his grain crops and there’s been year’s in the past we’ve had 85% damage on our wheat crop. He got a check, did it make him whole? No, but it did allow him to play again next year –
Some of the policies I do have knowledge on is the livestock risk protection – LRP
That is where you can buy a contract on your calves, it’s a policy that sets a floor on calves, it usually costs somewhere between $25-40 dollars per calf, pending on what level of protection you purchase. It basically gives you market protection, send out offers on different size of offers on weight classes and what they are willing to lock a price in on for – closing date,
For me, we have about 180 cows, I usually buy it on a 100 head of calves just to be cautious, if it costs you $35 a head, that’s $3500 you have to pay for. If the market falls, you get your premium back, maybe plus some, but for a family of five, $3500 goes a long way in living expenses, that’s the struggle is knowing which policy you should buy and which you shouldn’t.
Sometimes you just have to have a good faith in the good lord above that he’ll provide for you.
Every farmer and rancher, even though they do things similar, their resources are different. Everyone had a different financial situation where they’re at in their life, each person has to decide how much risk they are willing to take on or do they balance that risk by buying an insurance policy. It’s different for everyone.
Crew Agency LTD – Agri-Risk Management
Step 1 proper policies – part of your business plan (7:18)
Stay in contact with their agents, what’s covered and what isn’t
Be pro-active, don’t be afraid to call an agent and ask questions and what they offer
See what it costs and what it’s feasible to – be on the project active said
Education yourself as much as you can – we want to help these guys and young people to get in and stay in long term for generations like local ranchers – to do that, every situation is different. You have a good banker to know the break even point and break even, weather, market voility, education yourself on what is available and see what’s offered – benefits to a
Beginning farmer/rancher in the farm bill
Premium discounts – available through a crop agent –
Livestock risk protection on calves – 13:00 get a bottom locked in and comfort of mind
Drought and risk – pasture fire and LRP
Find out what is covered on their policy?
Haystack covered? Hay – way expensive this year
Get educated* four agents here full time, to call and visit no cost,
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