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Good Insurance Can Lessen Crop Losses
MISSISSIPPI STATE -- Producers with insured crops in South Mississippi damaged or destroyed by Hurricane Georges can get relief for the loss by following the proper claims process.
Dr. John Robinson, ag economist with Mississippi State University's Extension Service, said Mississippi has about 60,000 acres of corn, cotton, soybeans and wheat in the 15 southeastern counties.
"In these counties, the corn is already harvested and the wheat isn't planted, so the only row crops that could be damaged were cotton and soybeans," Robinson said. "I suspect the rain and wind of Hurricane Georges totally destroyed these, leaving nothing for harvest."
Mike Manning, Mississippi field supervisor for Rain and Hail LLC, a multi-peril crop insurance company, said insurance agents should be the first told about crop damage.
"If they report damage immediately, the company should get an adjuster right out and will probably be on the scene before the farmer is able to do anything," Manning said.
Document damage if work is done in the field before the adjuster arrives. This includes taking pictures and leaving representative samples of the crop untouched.
"Leave a 10 foot strip the length of the field in each field for the adjuster to inspect," Manning said.
Joe McFadden, Farm Service Agency executive director for Wayne and Greene counties, said insurance adjusters assess damage to fields in part using information provided by FSA.
"Where there is a loss, the loss adjuster comes to our office to look at aerial photographs of where the crop is located, acreage, land use and when it was planted," McFadden said.
Local FSA offices also assess area damage and report this to the state office to determine the extent of statewide damage. McFadden said anyone with farm losses should report these to the local FSA for possible assistance from the Emergency Conservation Program.
Robinson said row crops are eligible for various levels of federally-subsidized, private crop insurance. Premiums are subsidized by the U.S. Department of Agriculture.
"In 1998, only 226 policies were sold in this 15 county area covering just 16,000 acres of corn, cotton, soybeans, wheat, and nursery and blueberry crops," Robinson said. "The total insured value of the insured crops was about $3 million."
Some of these policies were the minimum catastrophic policies, but others offered higher levels of coverage. Catastrophic policies apply when yield losses exceed 50 percent. Higher coverage policies take affect when losses reach 30 to 40 percent.
"The likely level of damage to cotton and soybean farmers from the hurricane implies that all the insured acreage will be eligible to collect insurance," Robinson said.
Catastrophic coverage does not cover the first 50 percent of the loss. When it does take effect, it pays 60 percent of market value on a loss more than 50 percent. For example, a producer with an 80 percent loss would receive a 60 percent market return on just 30 percent of his crop. The 20 percent left standing can be harvested and sold for whatever the producer can get for it.
"Farmers have tended to look at insurance as something like an investment that ought to pay off for them," Robinson said. "They have that mind-set because in the past, federal programs have provided benefits such as income support and disaster payments. In contrast, the proper way to view insurance is as a necessary cost of production."
Since 1995 when USDA required farm program participants to carry crop insurance, the majority of row crops in Mississippi have had only catastrophic coverage. Robinson said varying levels of much better coverage are available for just $3 to $4 more per acre.
Plan now for future crop insurance needs.
"Catastrophic coverage is essentially free, but it is inadequate coverage," Robinson said. "Some higher levels of coverage may be worth the cost. Farmers should visit with their crop insurance agent this winter to see which level of coverage is best for them."