MISSISSIPPI STATE -- An ongoing case of rice insurance policies changing after they were purchased has demonstrated why farmers should be more careful than ever in protecting themselves from crop loss.

American Agrisurance Co. recently reduced a special offer on Crop Revenue Coverage after the deadline had passed to buy insurance for spring planted crops. Farmers who had bought this insurance package, known as CRC-Plus, now had much less coverage than they were promised, and with the purchasing deadline expired, have no way to increase the coverage.

Dr. John Robinson, agricultural economist with Mississippi State University's Extension Service, said the company announced the decision after massive response to the offer meant they took on too much risk.

"The problem is farmers may be mad at the company and not want to deal with them anymore, but they'll have a problem getting insurance from another company," Robinson said.

Minor relief was offered when, at U.S. Department of Agriculture prompting, American Agrisurance Co. agreed to give farmers until March 19 to cancel the entire CRC-Plus policy.

With these deadlines passed as well, farmers still have a few options. Farmers still have until April 7 to cancel the -Plus portion of their policy. Those who have canceled policies have until April 28 to purchase minimal catastrophic, or CAT, coverage.

Dr. Joe Street, MSU rice specialist at the Delta Research and Extension Center, said planned rice acreage jumped when the policy was offered, but dropped when it changed.

"People have been canceling their policies and reducing their rice acres since the change," Street said. "Rice acreage won't be as high without the insurance as it would have been with it."

Rex Morgan farms rice and some soybeans, corn and catfish on Morgan Farms in Cleveland. He purchased the CRC-Plus coverage for his rice acreage, and dropped the policy when the coverage was reduced.

"They cut about $60 to $70 an acre out of the coverage, and the premium was lowered by about $4 an acre," Morgan said. "When you lower the coverage by that much, then what you're insuring is very close to the loan amount on the same volume of rice, so it doesn't make a lot of sense for a rice farmer to buy insurance for the amount of the loan."

The federal government already has a long-standing loan program in place to support the prices of commodities such as rice if market prices fall too low.

This situation emphasizes why farmers should carefully evaluate the products they buy.

"There's going to be lot of innovation coming to insurance policies and farmers need to evaluate the products and do business with companies they trust," Robinson said. "If you thought it was hard to keep up with such things as new herbicides now, it's going to be even more challenging, but necessary, to keep up with all the changes in insurance coverage in the future."

Contact: Dr. John Robinson, (601) 325-7992