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West Central Missouri | It's a risk assessment that varies for each of us.
Years ago (maybe 20), I built a spreadsheet (don't have it anymore, was just a one-time thing) to compare different coverage choices with my own historical yield averages and current (at the time) current premiums for each potential choice. I looked back 10 years at my actual yield history, calculated the premiums based on current choices, and looked at what each choice would have paid out based on my actual annual results. It was a huge spreadsheet. This was before Enterprise or Whole Farm were choices, but we did have revenue (CRC) and county-based options, so I did this maybe sometime around 2005 or so. At that time, it appeared to me (in my location, on my ground) that there were only 2 choices that were long-term economical IF I could withstand much of the production risk myself -- CAT and whatever the choice was called that paid based only on county averages. In general (obvious) the spreadsheet showed that the higher levels of coverage cost more over time for me (did not pay enough to offset the higher cost -- the higher the coverage, the higher the net cost). The drawback of CAT was that it wouldn't cover replants, although the cost was nearly nothing and would cover 50% of a total wipe-out, so that was what I would have recommended as a minimum coverage for anyone. Not sure what is the current equivalent of a CAT policy. The drawback of the county policy was that I could have a disaster even if the county generally did not (that's never happened to me yet), even though over time the county policy was the only one that actually would have returned more than the higher premiums paid over time because it paid out based on a multiple of the loss (more than the actual loss).
What it really comes down to is a series of questions like -- how much of a loss can you weather (do you have adequate working capital, would a 1-year or 2-year wipe-out put you out of business) -- are you growing, stable &/or on the backside of life -- how often do probable or potential losses occur in your area or on your ground -- what types of risks are most likely (replant, flood, drought, hail, etc) and what insurance is most likely to satisfactorily offset those risks that are excessive for your situation -- what does your lender require -- do you own your ground, rent on shares, variable cash, fixed cash -- etc.
You can't predict the future, everyone's situation is not the same, you get what you pay for (hopefully), everyone perceives risk in their own way.
Personally, I farm less than 1/2 what I did 10 years ago, outright own most of what I now farm, am past retirement age, and have no beneficiaries interested in farming. I have considered dropping MCPI altogether and carrying only hail insurance, but I do still have a 75% MPCI Revenue Policy with Enterprise Units for now. I did have a potential revenue claim in 2024 at one location, yet it was small and greatly offset by yields elsewhere. Past several years, the only claims I've had are replant claims. Optional Units would create more pay-out claims, but the 25-30% or so higher premiums (on everything) would not make it a net benefit based on my own operation. If/when I change my policy, it will be to eliminate MPCI or carry only the lowest insurance possible, perhaps plus hail coverage.
Edited by WCMO SFForum 2/19/2025 14:21
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Crop Insurance Level Determination
