The one certainty of farming is uncertainty: You can’t know what the weather will bring, how the market will fluctuate and what your exact costs will be. Crop insurance, regulated by the U.S. Department of Agriculture’s Risk Management Agency (RMA) and subsidized by the Federal Crop Insurance Corporation (FCIC), covered about 85% of planted acreage for major crops and 73% of eligible specialty crops in 2015.. But, as Michael Vallery, farmer and partner at London, Ohio-based Vallery & Dorn Insurance, notes, “explaining crop insurance is kind of tough.” And now, crop insurance is changing. In the past, you could only get:
Now the RMA has approved Margin Protection Plans (MPP), which protect against an unexpected decrease in your profit margin, based on countywide yields. “So many factors are beyond the farmer’s control,” Vallery says about the need for margin protection. “You can be the best farmer and still lose your tail.” Here’s what you need to know.
When you’re considering whether you can benefit from MPP, Vallery says, “You have to ask yourself how much risk you are willing to take on yourself. That number is different for every farm.” Talk with your accountant and your insurance provider about whether MPP might work for you in the future.
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