The economic stability of the U.S. agriculture as a whole as well as the individual vineyard and grower is promoted through the system of crop insurance by the USDA Risk Management Agency. It’s a federally subsidized safety net and risk management tool that protects against natural disaster and crop failure.
“It’s mother nature insurance,” explains Fred Carvajal of American AgCredit, “one or a combination of perils during the year, too hot, too cold, or wildlife that cause damage or loss can trigger the insurance.”
The crop insurance deadline for the 2015 grape harvest is January 31, and based on Carvajal’s 12 years of experience with crop insurance policies, the most common misconception is that crop insurance is too expensive.
“It’s a very good investment and easily pays off in those bad years,” agrees Steve Hill, Parmelee-Hill Vineyards. “One of our worst years we ever had was 2008, and it was caused by a frost early in the spring.”
Because the crop insurance program is federally subsidized and the parameters are set by the United States Department of Agriculture, the difference between agents lie in service and expertise.
American AgCredit’s agents meet with clients face to face and customize the policy to the individual’s farming and risk tolerance preferences. The premiums are based on farming operations, grape prices, and historical production. “An average production level is established based on the past four to ten years of data,” explains Carvajal. “When a new customer comes on board, if your crop suffered from the frost in 2008, we can opt to only use data from 2009 forward for that new policy.”
One bad failed crop not only lowers the production average, but without insurance, it is a capital loss that a business can never recover.
An experienced agent will guide the grower through the multiple kinds of crop insurance that cover different types of perils and ranges of loss. “It’s about crop insurance,” says Carvajal, “but it’s also about relationships in the community. Most of my clients have been with me for over ten years, and most new business is referral based.”
“American AgCredit has been fantastic to myself personally and to our family through all aspects of our business.” says Ned Hill, La Prenda Vineyard Management, whose been a crop insurance client for 13 years. “I tell people to get crop insurance based on our own experiences.”
For more information about crop insurance, contact American AgCredit.