Crop insurance selections can impact your bottom line

What’s your breakeven? Whether it be cost of inputs, rent, or labor, it is important to know where your hard-earned dollar is going in any given year. When asked your cost per acre for corn or soybeans, you may not know off the top of your head. But once you have the patience to sit down and truly figure the costs, it doesn’t take much time to determine a net income.

Even with all those calculations, there is still one expense that may affect your bottom line unexpect­edly: the unit structure on your crop insurance policy.

Each parcel of land for which premiums are calculated and for which potential claims are made is called an “insurance unit.” Unit structure is one of the most important choices you’ll make when determining your crop insurance policy. To understand how different types of units can affect the bottom line, you must first understand the differences between them. Specifically, let’s compare Enterprise Units (EU) and Optional Units (OU).

Enterprise Units are common among growers. The premi­ums are cheaper, and unit structure is simple to understand. However, EU can bring additional cost. EU takes all of the grower’s production and lumps it together per crop and county. If a grower has a crop failure in a single field, that production (for claims purposes) is combined with the production on the rest of their acres in that county. This can make a claim more difficult to obtain.

Optional Units have a higher premium and can seem intim­idating. With OU, the key difference is the ability to separate production and farms by section in the unit structure. If there was a crop failure in a single field, OU allows a greater opportu­nity for an indemnity claim because that field is being analyzed separately, with consideration for other fields of the same crop in the unit. In turn, there is potential for more frequent indem­nity payments that can improve your bottom line.

Ultimately, your coverage should be enough to keep you profitable when production falls short. MFA Crop Insurance agents understand the costs of raising a crop. They also under­stand that no two farms are alike. Your crop insurance should be tailored to fit your operation and risk tolerance.

For more information, contact your local MFA or visit MFA Crop Insurance HERE to find an MFA Crop Insurance agent in your area. MFA Crop insurance is an equal opportunity provider.

Important Dates to Remember

March 15: Sales closing for spring-planted crops (Feb. 28 for some areas)

April 29: Production reports due for 2020 spring-planted crops

July 15: Acreage reports due for 2021 spring-planted crops

CLICK HERE TO READ RELATED STORY: Policy endorsements may adjust coverage to reflect current yields.