To Insure or Not to Insure: Farming as High Stakes Gambling

Heather S. asked a good question about crops insurance in response to my posting about the citrus disaster in California.
Yes, it is possible to buy crop insurance against natural disasters like wind, hail, rain, freezing conditions, etc. The Crop Insurance Corporation sells many different policies for up to 100 crops, including yield insurance. The problem is that crop insurance is relatively expensive, and most small farmers have fairly small profit margins and little capital to expend on risk management. Many farmers take their chances with the weather b/c it costs so much money to grow and harvest the crop that it would be that much more to actually insure it. Some farmers insure only part of their crop or if they have some bad years, they may be more likely to insure (although they may be too broke at that point to insure).

For more on crop insurance, the USDA has a useful link. http://www.rma.usda.gov/policies/

They mention crop insurance against natural disasters like what happened in CA with the citrus industry and also yield insurance. Mostly, farmers hope for good conditions or if there are disasters, they may look to government programs for relief for specific losses.

Again, being a farmer with one major crop is like being a high stakes gambler. You can really lose big if you have hail, a freeze, a drought, or high winds.