The COVID-19 pandemic has upended almost every industry, but farmers have been particularly impacted by the virus. Not only has soft demand affected the prices of corn and other commodities, but the United States Department of Agriculture (USDA) also reduced crop insurance guarantees for this year’s harvest. This leaves farmers throughout the country with less protection and may even impact your ability to secure funding from lenders.

USDA Lowers Crop Insurance Guarantees

Every year, the USDA recalibrates the guaranteed prices for crop insurance based on commodity prices in February. These rates, which are set in March, cover crops planted across the country for the rest of the year.

Due to increased soybean acreage, ready supplies of cotton, and new retaliatory tariffs on corn products, commodity prices are significantly lower than they’ve been in years. In response, the government reduced the minimum guaranteed price for corn to $3.88 per bushel, a 12-cent reduction from last year. This year’s insurance guarantees are lower than they’ve been since 2016.

How Lower Insurance Rates Affect Farmers

If a fire, tornado, or other covered event ruins a harvest, lower guaranteed payouts significantly reduce your revenue from the year. However, they can also affect eligibility for loans, which many farmers rely on to cover operating expenses.

Lenders use insurance guarantees to measure a farmer’s annual revenue. If your minimum income level drops, you may be unable to qualify for the loans you need.

How to Protect Yourself Against Lower Guarantees

Because the minimum payments are so low, many producers are deciding to purchase crop insurance that pays based on the prices at harvest. While these rates may be lower than February commodity prices, reduced supply and increased demand may inflate prices. Depending on market conditions at harvest time, choosing this option can protect your farm and ensure you get the compensation you need after a disaster.

Protect your harvest with reliable crop insurance from a trusted agency. Since 1981, Nebraska Crop Insurance Agency, Inc. has served agricultural producers throughout southeast Nebraska. With their understanding of the market and dedication to providing unbeatable service to every customer, their agents will protect the revenue you depend on. Visit their website to learn about their services, or call (402) 223-2694 to explore your coverage options.