Farm Insurance: crop & livestock

Hail, disease, death and theft: obstacles that farmers face. How can they defend their crops, animals and themselves against these common hazards?

Farmers have a demanding job; long hours, gruelling manual labour and a close relationship with, and reliance upon, the land and weather. Always trying to second guess if it will be in their favour or work against them. Farm insurance is one way to insure their career and livelihood and to protect what’s dearest to them – though don’t be conned into thinking it’s the only way.

Farmers not only require the usual combination of property, contents and business insurance, but depending on the type of farm they run, they could also need a combination of crop, livestock, specific farmers’ auto insurance and a policy for specialist farming equipment.

Farm insurance is complex and plentiful, but the decision lies with the farm owner. They can be blasé and take the risk of minimal or no insurance and perhaps suffer the fallout later down the line. Or they can take the option of forking out monthly payments to a private insurance firm which could either a) help them recoup loss and restart business should unfortunate circumstances arise, or b) be in vain and simply line the pockets of the insurance brokers – a tricky decision, as you can imagine.

Below is categorised information about farm insurance, outlining which issues are dealt with and covered by government funding and those that require private insurance policies.

Crop Insurance

Crop insurance is a form of farm insurance that specifically protects growing crops. While farmers can try to reduce the risk of damaged crops with crop diversification, geographical dispersion or growing inside or undercover, ultimately one cannot control the weather. Long-lasting drought or considerable flooding could leave a crop practically worthless. Hence why it is advised that farmers suck-up the extra annual costs of crop insurance, in order to cover their back should evermore common severe weather fronts hit their harvest.

Regardless of the increased occurrence of severe weather – suspected to be a direct result of global warming – and in contrast to the US, there are limited means for farmers to obtain crop insurance in the UK. There is little government assistance for crop damage, and farmers must seek out private insurance if they choose to consider the cautious option of insuring their produce.

The main form of crop insurance is against hail, but the take-up rate for that is low. Agricultural crop insurance is considered expensive, and so many farmers in the UK choose to operate without it. Instead they implement some of the risk-aversion tactics mentioned above.

The high price of crop insurance, which is off-putting for the majority of British farmers, is partly due to lacking government subsidies. This is in contrast to the US agricultural industry, where crop insurance is heavily subsidised by the government, and thus the uptake is far greater.

Livestock Insurance

Livestock insurance is a part of farm insurance that aims to safeguard farmers against a range of problems that might arise regarding their valuable animals. This includes disease, death, transit and theft. Animals are worth a lot to a farmer, be it for meat, dairy products, breeding or materials, so it is logical to insure them in the same you would with anything else of high personal value.

There are various different livestock insurance policies one can take out, depending on the animal, breed and use, so again this can be an arduous task for the farmer to determine what level of insurance they wish to take out.