Crop Insurance is a Valuable Tool for Growers

vineyard with an overlooking lightning strike

By: Trevor Troyer, Agricultural Risk Management

I am not sure how many of you made it to Unified in Sacramento this January.  I did, it was my first time back since the pandemic.  I had a good time catching up with friends and making new ones.  The company was good and so was the wine. 

  If you had a chance to go to any the sessions you might have come across ones dealing with climate and weather conditions in the vineyard.  I attended some of these and they were very informative.  One was dealing with how to mitigate cold damage in grapevines.  Another one talked about how to deal with drought in the vineyard. It is interesting how we adapt to the conditions around us and how we adapt those plants and animals we have domesticated. 

  One thing I have learned over the years is that, things do not stay the same.  Change is inevitable.  This is especially true in farming.   You cannot expect to have the same growing conditions every year nor can you expect have the “right” crop every year.  Times change and so do tastes and desires in food and wine.  I know of plenty of vineyards that have pulled out one variety and planted another as trends changed.  As a grower you have to mitigate these risks and stay relevant. 

  Growers that adapt and learn new techniques are able to get by in tough times.  Things are not getting easier; input costs are still extremely high compared to years past.  Water regulations in some states are problematic. And climate and weather factors make it difficult, to say the least. Grape crop insurance can be a useful tool to help you continue making a living.

  With all that being said I have heard growers say that they can’t afford crop insurance.  With margins getting tighter, crop insurance is a tool, in my opinion, that you should not forego.   In the sessions I went to they discussed methods of handling the vineyard to mitigate damage. But what about those instances when you don’t make a crop or do not make much of one?  This is when crop insurance is important.  If you don’t have money to grow a crop the following year, you are out of business.

  Crop insurance is designed to help a grower get enough money to be able to produce a crop the following year.  It is not set up to replace profits lost.  I have had winery owners complain to me that it doesn’t cover the cost of how much their wine is worth.  While I can totally understand this, it is the growing costs that are being insured against. Crop insurance does not cover the production costs of making wine or juice etc. 

  Here are the Causes of Loss for Grapes out of a National Fact Sheet from the USDA:

Causes of Loss

You are protected against the following:

•   Adverse weather conditions, including natural perils such as hail, frost, freeze, wind, drought, and excess precipitation.

•   Earthquake

•   Failure of the irrigation water supply, if caused by an insured peril during the insurance period.

•   Fire

•   Insects and plant disease, except for insufficient or improper application of pest or disease control measures.

•   Wildlife or

•   Volcanic eruption

     Additionally, we will not insure against:

•   Phylloxera, regardless of cause; or

•   Inability to market the grapes for any reason other than actual physical damage for an insurable cause of loss.

  Risks are different depending on growing regions throughout the US.  Regional issues play a large part in decisions on whether or not crop insurance is right for you.  And then how much coverage is needed for the risks involved in making a profitable crop.  Are you concerned with late frost or freezes?  Have there been issues with wildfires?  Do you have a wildlife problem in certain areas of your vineyard? 

  Grape crop insurance is an Actual Production History (APH) policy. This means it uses the vineyard’s historical production per variety to determine how much is covered. Basically, you are covering an average of your tons per variety. Since crop insurance is subsidized the insurable varieties, prices per ton, premiums are set by the USDA. This also means that there is no difference from one insurance company to the next. Essentially you are insuring your future crop not your vines.

  You can cover your historical production from 50% to 85% in 5% increments.  You cannot cover 100% of your production.  Because of this there is a built in “deductible”.  For example, if you chose to cover 75% of your production then you would have a 25% production deductible.  If your average is 5 tons per acre, at 75% you would be covered for 3.75 tons per acre.  Your deductible would be 1.25.  If you harvest less than 3.75 tons per acre you would have a payable loss. 

  The states where grape crop insurance is available are Arkansas, California, Colorado, Connecticut, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Virginia and Washington.  Grape Crop insurance is not available in all counties in the above states though. 

  Crop insurance premiums are partially subsidized through the USDA Risk Management Agency.  Take advantage of this valuable tool to keep yourself in business.

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One thought to “Crop Insurance is a Valuable Tool for Growers”

  1. It’s great that you pointed out how crop insurance is designed to help a grower get enough money to be able to produce crops the following year. I was watching a video guide for farming earlier and I heard about the use of insurance plans for crops. Crops are usually very sensitive to quite a lot of things, so it is best to have insurance.

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