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Risk Management Considerations Before Hail and Wind Damage

For many producers in FCSAmerica’s territory, wind coverage is an important risk management tool. This year’s persistent spring winds in areas of our territory have led to earlier and more frequent conversations about wind coverage, said Trent Janssen, who manages crop insurance for Farm Credit Services of America in the Columbus, Nebraska office.  

“Some producers buy wind and hail every year and don’t blink an eye,” Janssen said. “More producers are considering it this year with all this wind and dirt in the air that we’ve had. If the plant gets damaged from dirt blowing, acting like sandpaper on the stalk, it can cause blemishes on the stalk, which will increase the opportunity for disease to get in the plant and cause late season standability issues.

Wind insurance is bought as an endorsement to hail coverage through private companies. Many farmers purchase crop hail insurance and include a wind endorsement at the same time they lock in their multi-peril crop insurance

Multi-peril insurance protects the bottom side of a producer’s investment. It will cover wind and hail damage when it is severe enough that production or revenue on a field falls below a producer’s guarantee. 

Supplemental hail and wind policies, by comparison, protect yield not covered by multi-peril policies, covering the top side of a producer’s investment.  

“It will pay out whatever the loss is, whether it happens from wind or hail or a combination of both,” Janssen said.  “Once the liability is exhausted though, coverage on a private product is done, unless additional coverage is purchased.”

map-hail risk 2022 - hazards-fema-gov This map from the Federal Emergency Management Agency shows the degree of risk that comes from hail. Wind and hail can work together to decimate a crop.

Protecting Higher Potential Revenue

Farmers who purchase hail and wind insurance are adding coverage on top of multi-peril, a smart option when prices are higher, Janssen said. The 2022 spring crop insurance price for corn is $5.90 per bushel, an increase of $1.32 over last year’s price of $4.58. Using Nebraska’s average corn yield of 194 bu/acre in 2021, a farmer who saw potential revenue of $888.52 last year is now looking at $1,144.60 per acre on that same yield.
194 bushels/acre x $5.90 spring price for corn = $1,144.60/acre

December corn futures have climbed above $7.00, and irrigated production can take producers above that average yield, growing the potential revenue per acre above $1,500 this year.
220 bushels/acre irrigated x $7.00 December futures for corn = $1,540/acre

Consider Higher Input Prices

There’s another piece that goes into protecting this year’s crop, and that’s the amount spent on inputs. Fertilizer, diesel and other costs are exceptionally high this year, which makes the stakes higher for producers, Janssen said. 

“If you’re having trouble sleeping during the growing season as the storms move through,” he said, “hail and wind insurance cost the same early in the season as they do later. You might as well sleep better by locking in the policy early. Make your premium dollars work for you sooner.”

Janssen understands that some growers in drier regions without access to irrigation might want to wait until a little later to make sure the crop is up and thriving. But once the crop is looking healthy, it’s time to protect it.

Janssen said some insurance companies have deadlines on wind endorsements as early as June 1. But hail coverage with a wind endorsement generally can be bought later in the growing season. 

FCSAmerica crop insurance agents can explain the different policy options and deadlines. With the variety of these insurance products on the market, Janssen said, it’s best to sit down with an agent and discuss the specific needs of your operation.

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