Fruit and vegetable farmers: Nov. 20 crop and disaster insurance deadline looming
Michigan State University Extension urges fruit growers to carefully evaluate the costs and potential benefits of crop insurance for their farms.
The deadline for tree fruit and vegetable farms to enroll in 2013 Crop Insurance and disaster, or NAP (Noninsured Assistance Program) is Nov. 20. The significant damage to the 2012 fruit crop due to an early spring followed by freezing temperatures is one reason growers should strongly consider purchasing some type of insurance each year, even if it is just disaster coverage.
Even a minimum program like NAP will have a positive impact to cash flow for Michigan tart cherry fruit farms for the 2012 cherry crop. The service fee is the lesser of $250 per crop or $750 per producer per administrative county, not to exceed a total of $1,875 for a producer with farming interests in multiple counties.
NAP covers losses greater than 50 percent of the farm’s APH (actual production history) at 55 percent of the national average market price.
An example in calculating the benefits of the crop insurance could be figured as follows:
100-acre tart cherry farm:
APH Yield: 7,000 pounds/acre tart cherry
2012 harvest: 0 pounds /acre
Yield coverage: 50 percent x 7,000 pounds/acre = 3,500 pounds/acre
Price coverage: 55 percent of the 5-year average market price (2012 average is $.222/pound)
Economic coverage: 3,500 pounds/acre x $.222/pound x 55 percent = $427/acre
For 0 pounds harvest the payment is reduced 20 percent
$427/acre x 80 percent = $341/acre payment
In this example, a premium of $250 for the 100 acre crop yielded a disaster payment of $341/acre, or a total of $34,188—an extremely good return on investment.
Crop insurance is not meant to be a farm profit center. It is a risk-management tool that helps insure the long-term viability of the business in case of a major disaster. Changes have been, and continue to, take place in crop insurance. For example, effective for 2013 crops, Mason and Oceana counties can enroll sweet cherries in the sweet cherry insurance pilot program—a revenue based policy that has been in effect in Leelanau County for several years—and also enroll sweet cherries in NAP.
More information about apple insurance can be found at the USDA Risk Management Agency website.