Idaho insurance officials have noticed a large jump in demand for whole farm insurance policies this fall, especially among alfalfa growers seeking to cover damaged hay.
The policy, in its second year, guarantees producers a minimum revenue from all of the commodities they produce on their farm, more broadly protecting against price and quality declines and low yield than multi-peril insurance for individual crops.
The policy insures up to 85 percent of either a farm’s five-year gross revenue average or its projected gross revenue for the coming year, whichever is lower. Coverage is capped at $8.5 million for crops and $1 million for cattle.
Dan Bramwell, senior claims supervisor with Rain & Hail, LLC., the largest writer of federal crop insurance in the U.S., said his company generated $8.9 million in combined premiums and federal subsidies from whole farm policies in Idaho during 2015. According to the Risk Management Agency, Idaho had 131 whole farm policies in place in 2015, compared with 98 in Oregon and 569 in Washington, where it was especially popular among fruit producers.
Bramwell wouldn’t be surprised to see his company increase whole farm sales in Idaho by $5 million for next season.
Since Jan. 1, Bramwell said he’s hosted 24 meetings in Idaho, Utah and Nevada to educate growers about the policy.
“We’ve never had this much reception, or this many growers showing up for the meetings,” Bramwell said.
He said whole farm insurance allows growers to cover specialty crops that aren’t covered on an individual basis.
“The No. 1 group that’s been coming to the door has been the alfalfa producers,” Bramwell said. “Now I can cover rained-on hay. There’s never been a (federally re-insured) product out there that’s done that before.”
Bramwell said it’s also been pushed by bankers who “finally have a tool to protect against that operating loan.”
Bramwell believes the need for a policy providing better coverage for quality was driven home to Idaho producers in 2014, when heavy August rains caused sprout-damaged grain and moldy hay. This season, Bramwell said he’s received several calls from malt barley growers who have had loads rejected due to the presence of vomatoxins, caused by Fusarium headblight infection. Though multi-peril insurance covers such damage for only 60 days after harvest, he said whole farm insurance offers coverage until the crop is delivered.
The new whole farm insurance policy replaced Adjusted Gross Revenue Light in Idaho, which offered whole-farm coverage but had a $1 million cap. It never caught on in Idaho, generating $556,000 in Idaho sales in 2014, Bramwell said.
He said Idaho potato growers have historically balked at whole farm insurance, concerned it would lead to over-planting of spuds, so the current policy prohibits participation by growers who make more than 83.3 percent of their income from potatoes.
Based on applications thus far, Heber Loughmiller, an insurance agent with the Leavitt Group in Burley, said it’s likely his company will triple its whole farm policies for next year. He said the new policy is also more heavily subsidized and has a lower premium than AGR-Lite
Loughmiller said the federal government redirected revenue from direct payments toward whole farm insurance wanting “the farmers to at least take some ownership of their risk management.”
Bramwell said multiperile insurance will still fill an important role. Growers qualify for a discount on their whole farm revenue policy if they also have multi-peril insurance. Furthermore, Bramwell suggests that surface irrigators keep multi-peril insurance because whole farm insurance doesn’t adequately cover crops that aren’t planted due to short water supply.