For much of South Dakota, the 2022 crop year has been full of extremes.
The northeast part of the state had a lot of prevent plant acres due to too much rain; the west and southeast parts of the state have areas with severe drought.
Combine that with the fact that we have had not one, but two derechos roll through our region, and I think we can all agree that a “normal” growing season would be nice in 2023!
These weather extremes further outline the vitality of a proper crop insurance policy to a successful farm and ranch operation. Aside from the standard multi-peril, or MPCI, crop insurance policies, there are a host of products available to insure against losses.
Pasture, Rangeland, and Forage
Ranchers and forage growers should be looking at Pasture, Rangeland, and Forage (PRF) insurance.
PRF is designed to give you the ability to buy insurance protection for losses of forage produced for grazing or harvested for hay, which result in increased costs for feed, destocking, depopulating, or other actions.
The PRF program utilizes a rainfall index to determine precipitation for coverage purposes and does not measure production or loss of products themselves.
Livestock Risk Protection
Livestock producers might also be interested in a Livestock Risk Protection (LRP) policy.
LRP policies act like a put option to set a floor under cattle, sheep, and hogs and can prevent losses due to declining market prices. With where cattle prices currently are, this is a good policy to consider.
Phase 1 of the emergency relief program has been completed. Phase 2 is set to begin soon.
Phase 2 will assist producers that may not have had a crop insurance indemnity paid in 2020 or 2021 but had production still under their Actual Production History (APH). If it is low enough, it might trigger these shallow loss payments.
I’m happy to help anyone with further information on this; just give me a call!
Finally, since there will be some indemnity payments across the region due to drought, I want to stress the importance of talking with your crop insurance agent and tax advisor on how to handle indemnity payments.
There are some things that can be done for tax planning purposes, but make sure these questions are answered prior to receiving any indemnity payments.
I hope everyone has a safe harvest. As I have said every fall newsletter, this really is my favorite time of year.
The opportunity to reap what we have sowed is simply amazing.
The sunsets are usually the best this time of year, and giving combine rides is something I always enjoy.
Being able to cheer on SDSU football in the combine cab is a bonus!
Feel free to contact me anytime, and I hope to visit a few of you on the farm this fall.