MITCHELL, S.D. -- Well, what did I do last year?
That is the most common response crop insurance agents get when they ask producers what they want to do for coverage for the upcoming year.
Frankly, it does not matter what you did in 2014. That year ended when the last field was harvested. What you need to focus on now is 2015. To do this, you need to meet with your agent and review your policy to make certain you have the best plan to manage your risk in 2015.
As a producer, you have a lot of choices to make before the March 15 sales closing deadline for crop insurance. After that, you can no longer make changes. So before this date, you need to choose your plan of insurance, your unit structure, your coverage level and which options you want to elect.
To make these choices, you need to determine how much protection you need and how much risk you can handle. When making these decisions, it does not matter what you chose in 2014 or what your neighbor is doing. As a producer, you need to make these decisions based on your current situation.
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Tally crop expenses
To do this, you need to know your 2015 projected expenses for each crop. Once you have these figures, you may need to sit down with your lender to discuss how much guaranteed cash flow you will need to cover your current debt obligations and family living expenses for the year. After that amount is determined, you need to share the information with your crop insurance agent and make your coverage decisions.
There were some changes in the 2014 farm bill that positively affect producers and their crop insurance in 2015.
First, the farm bill will continue to offer subsidized crop insurance as it has in the past. Don't ever take this for granted. The subsidies could have been a casualty of the new farm bill, but luckily, they still are part of the bill.
In addition, the farm bill continues to offer the trend adjustment option that most of you can use to increase your actual production history.
Some new programs that were offered this year are the yield exclusion option, supplemental coverage option and some programs available to help beginning farmers and ranchers.
Other products to consider when you make your Multi-Peril Crop Insurance election are private products such as hail, production hail, wind snap, fire and other products.
Remember, it is not your agent's job to know your risk-bearing ability. It is their job to educate you on your choices and help you to decide what the best fit for your situation is. To allow them to do their job, you need to know your risk-bearing ability and know what kind of guarantee you'll need before you meet with them.
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At the South Dakota Center for Farm/Ranch Management at Mitchell (S.D. Technical Institute, we work with our clients to help them to accurately track their costs so they can make well-informed decisions on their risk management practices.
If you want more information on what we can do to help you on your operation, contact us at 995-7196 or sdcfrm@mitchelltech.edu .
Editor's note: Hofer is director of farm business management at Mitchell (S.D.) Technical Institute.
