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Western OK | I'm on fence about it, maybe it's a "here" thing, but I can count on one hand the amount of times we could insure a profit. We grow mostly wheat, usually 2/3 wheat then either cotton, corn, or milo. We have never been able to insure a profit in corn or milo, not enough yield history in corn and milo is about on par with wheat on needing an awesome year to make any real money.
I have thought about doing away with it, but instead we just went all enterprise units and upped out percent coverage. This greatly reduces the cost, while still covering for widespread droughts, you know the kind where you get <1/3 your annual rainfall sometimes for years in a row.
While having the insurance has definitely helped keep us and others in business, I think it has come at a cost.
1-loss of diversification-My great grandfather at his peak farmed 3qtrs of land, 100 acres grass for milk cows. He grew wheat, barley, sorghum, and some sort of forage to be put up for the cows. He also had cows, pigs, and chickens. He had neighbors that also grew cotton. I think they did that not only for crop rotation, but also as a means to self insure in case of disaster.
2- less risk, people farm longer- if you were getting up in years you might consider retirement vs losing big on your one monoculture crop should you hit a disaster year, or years. People might have more incentive to hand the reins over sooner rather than risk their nest egg for retirement.
3- market volatility- without crop insurance there might be more potential for profit, due to more crop diversification, people would alter their planting plans based on moisture, profit potential, and risk tolerance. Planted acres would swing more giving at least some potential for market variations to reward good managers.
4- no more prevent plant- never collected any of that because we are expected to dust it in no matter what, I don't fault anyone for taking it, your just playing by the rules of the game.
There is probably more....
On the downside, I do see the point of where bankers like to see it for operating loans. I also realize it costs a lot more per acre to put a crop in in other parts of the country... but would it be a bad thing to see many more smaller, more diversified farms across the country even if they weren't full time? Ones that weren't dependent on a government safety net? I know a lot of us work in town also, but that is not a new thing. Farmers taking extra work to help make ends meet has always happened | |
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On crop insurance..
