A recent cut in crop insurance premiums may help keep many of
Georgia’s farmers in
business.

Plunging prices and rising costs have many farmers
struggling to stay afloat. For many,
that means buying little insurance, or none at all. And a University
of Georgia scientist said that can be dangerous for the
state’s $6 billion farm
industry.

A sound crop insurance program can keep the United States
from depending totally on
other countries for food, said Don Shurley, an
agricultural economist with the UGA College of
Agricultural and Environmental Sciences.

“That’s an extreme case, but it could happen,” Shurley
said. “For
farmers to remain in business, they must have acceptable
methods to manage risk.”

Without farm income, many Georgia towns would virtually
close up, said Dale Rackley, a
crop insurance specialist with the U.S. Department of
Agriculture Risk
Management Agency in
Valdosta.

“Think of it like this,” Rackley said. “If farmers face a
disaster one
year and can stay in business with insurance payouts, the
nation may have to import food
that year. But the farmers can still work to produce a crop
the next year.”

Shurley said most Georgia farmers buy crop insurance. But
they don’t always buy enough.
“And as the cost to insure increases, fewer farmers buy
enough to cover their crop
adequately,” he said. “This price cut can help them get the
insurance they need
to stay in business through crop disasters.”

Shurley said the USDA’s insurance premium reduction will
help farmers in two ways. It
will cut farmers’ costs. And it will help more of them get
enough crop insurance.

Agriculture Secretary Dan
Glickman said low crop
prices were the main reasons for the cuts. “We want to
ensure that as many family
farmers as possible take advantage of the opportunity to
increase their coverage or
benefit from reduced cost.”

The price reduction is part of the nearly $2.4 billion
financial assistance package
Congress passed in the fall of 1998. It is intended to
strengthen the farm “safety
net.”

The goal
is to
help keep U.S. farmers in business. If prices fall below the
cost to raise food and fiber
crops, farmers can’t keep producing them, and U.S. farms may
shut down.

But farmers can’t just buy insurance, mismanage their
crops and then make an insurance
claim.

Adjusters work hard to make sure farmers filing a claim
really tried to produce a crop
using recommended farming methods, Rackley said. But other
factors — usually drought,
flood, insects or diseases — can keep them from making a
full crop.

Minimum, or catastrophic, insurance pays if a farmer
produces half or less of his
expected yield. The expected yield is stated on the
insurance policy. It’s based on the
10-year history of production on that farm.

Catastrophic insurance doesn’t cost much. But it pays out
only about a quarter of the
dollars a full yield would bring.

“Catastrophic coverage usually won’t even pay the costs
it took to raise the
crop,” Shurley said. “It certainly won’t provide a farmer’s
family, or any other
families, with food for the next year.”