New weather insurance offered
Farmers know every season begins a new battle against uncontrollable weather challenges. But it seems like extreme weather events have become the norm in recent years.
“Our customers tell us the weather on their farms is more extreme and less predictable than it was even five or 10 years ago,” says David Friedberg, founder and CEO of The Climate Corporation. “Farmers say the last couple of years’ weather isn’t anything like they’ve experienced or any of the generations farming their land in the past have experienced.”
Addressing the extreme weather is a new weather risk management tool for corn and soybean growers. Total Weather Insurance, or TWI, from The Climate Corporation is a full-season weather insurance program that provides farmers with the ability to lock in profits by protecting against weather events that cause production shortfalls.
• This new type of crop insurance concept doesn’t replace federal crop insurance.
• It is a policy that is based on weather events, not on crop performance.
• The company enhanced the product and added approved agents to assist growers.
The program uses location-specific agronomic data to protect against growing-season weather events that negatively impact yields. TWI coverage goes above and beyond the federal multiperil crop insurance, helping farmers protect their profits from adverse weather. Depending on what coverage you choose, you can get paid if May is a wipeout due to too much rain or if July turns out too hot and dry.
Protecting against weather
In 2011 TWI was available from Weather Bill. In October, the company changed its name to The Climate Corporation.
Jeff Hamlin of The Climate Corporation says TWI isn’t meant to replace federal crop insurance. Instead, it’s designed as a supplement to help farmers capture the value of those top 40 or 50 bushels of corn per acre that might be lost to weather extremes. You may say, “I hate to pay the premium for crop insurance now. Why would I want to pay more?” However, you need to check this product out first, says Hamlin.
TWI policies offer the opportunity to bridge the gap between what crop insurance covers in case of disaster, and your original yield goal. For example, if crop insurance makes your corn crop whole to 120 bushels per acre, but your goal was 180 bushels per acre, you may be able to farm next year, but you may not net much profit. Restoring profitability is the niche this company hopes to carve out.
TWI doesn’t pay off at the end of the year based on how your crops performed. Instead, you pick parameters, such as an amount of rainfall in May, or number of 93 degrees F or higher days during pollination for corn. If weather exceeds those limits you get a check, soon after the event, no questions asked. What the crop actually yields is irrelevant. It’s all done on numbers, averages and statistics for weather, soil type and yields.
Different policy this year
The product this company is offering for 2012 is considerably different than what it offered before, says Hamlin. It’s more localized to your own area and even your soils. You have a say in picking the risks you want covered.
If your soils are droughty, expect to pay a higher premium. However, premiums aren’t paid until the end of the crop year. Another consideration is when a TWI policy pays you; it doesn’t affect what you get from federal crop insurance. The deadline to sign up for TWI is right around the corner, March 15.
You can learn more at www.climate.com.
Local crop insurance agents are offering the product. The company itself has geared up, increasing its staff. An influx of cash from outside investors has allowed The Climate Corporation to ramp up. The company spreads its risks, says Hamlin, by covering all sorts of crops all over the country. “It’s all about numbers and localized data,” he adds. “We want to help farmers fill the gap over and above what federal crop insurance covers.”
Source: The Climate Corporation
This article published in the February, 2012 edition of WESTERN FARMER-STOCKMAN.