Risk management for crop production is a critical component of a modern ag operation. While many operators use crop insurance, few understand even the basics of how it functions when things go sideways. Understanding this federally regulated program is important to the modern farm operator. It has come a long way since 1936 and is currently a booming industry of 13 companies insuring 120 different crop types to the tune of about 1.2 billion dollars of premiums being written.
While I am as a rule, dismissive of federal politicians, this one has a good sound bite a staffer no doubt put together for him:
“Through the crop insurance program, insurers can extend coverage to crops of all kind, providing farmers with the protections they need to do what they do best: grow food. It is a success story, and even if you are not a farmer, you have benefited from its existence. It has helped you receive more affordable food and helped American maintain its agricultural preeminence.”
-U.S. Representative Luke Messer.
The types of crop insurance are worth taking a peek at. Catastrophic coverage covers 50% of yield at 55% of the price and has a flat premium. Buy up coverage can be yield or revenue based and are calculated off historical proven yields or futures prices at planting and harvest calculated against a revenue calculated price.
Producers have to follow strict deadlines for reporting and sign up with no room to give for any circumstances. In the end, most crop insurance is traced back to the same source, federal government. These type of crop insurances are directly controlled by federal rules and not state or local rules.
Crop insurance for hail coverage is another critter all together. These are private products reinsured by companies that are backed by the feds but are regulated by state level government agencies.
When you disagree with the crop insurance adjuster’s determination, it is time to lawyer up. Attempting to work your way through federal regulations and rules by yourself is an invitation to disaster. The burden of proof is often on the operator and not the agency. The agency can find a myriad of reasons to deny a claim, to include lack of good farming practices. That term is not readily defined. You must make a claim within one year of being denied, no excuses and you must go to arbitration, not state court to resolve your claims. These are just a few examples of the deep morass that issue the world of disputed crop insurance claims.
Iowan’s have little direct contact with federal land regulators. Afterall, Iowa only has .3% that’s right three tenths of one percent of its land mass owned by the federal government. We have essentially no large active-duty military bases, forest reserves, grazing lands, or few national monuments that impact the land use decisions that private citizens make. In fact, the most federal contact Iowan’s have is probably through the USDA office for FSA and NRCS programs and crop insurance claims.
Other states are not so lucky. Consider Utah, which has over 60% of its land in its state owned by the feds. Feds, as you will no doubt be surprised to learn, do not pay taxes to the states on the ground they own. They do pay something called PILT (Payment in lieu of taxes) but it is not the same. Why is this a big deal, who cares? Well, if you are a county in Utah, you might have 5,000 people living in your county on 5% of the land. Hard to provide for essential services like fire protection, EMS, rescue, and sanitation when 95% of your land base is federal lands. Add in three million visitors to the federal lands per year and it becomes even more taxing… See what I did there? Taxing…
Federal officials in the west have noted that when somebody’s nose itches in Washington, people sneeze cough and gasp for air in the West. That is because of the power of the federal government has on affairs in the west because it owns so much of the ground.
Aside from the impact on locals, the federal government has a virtual alphabet soup of regulatory agencies that dictate who can do what on different types of federally owned land. The Bureau of Land Management controls some of the grazing on federal lands, but the Fish and Wildlife Service, the Forestry Department, and Bureau of Indian Affairs all have seat at the table. Each of these regulatory agencies have to follow their play book as proscribed by the federal register via published rules and congressional acts. Environmental activist groups are keenly aware of this process and watch the promulgated rules, comment on them and lobby for changes that suit their missions and desires. Other groups should but sometimes fail to see the changes coming down the pike via regulatory rule. A good example is endangered species listing. Activists seek to enlarge the list of protected and endangered species as those on the list can isolate and take habitat out of other beneficial uses like grazing and mining.
Water is another property right that Iowa doesn’t really have to deal with the way other states sometimes do. Water rights in the west are not the same system we use in Iowa. Tell a western cattle producer that you irrigate right out of a river with no permit or restriction on gallons and watch their jaw drop.
Be aware of the west and the troubles it has with the federal government. The fed has broad sweeping powers to declare lands federal preserves, restrict private activities because of endangered species listing and establishing new federal facilities. Right now, Iowa is relatively clear of federal entanglements outside of Farm Service Agency programs but that is not a guarantee.
First it was wind and now solar is all the rage. Much like wind easements, solar farm easements are not to be taken lightly nor signed up for without due consideration.
Most of the of the time, the solar farm lease is an exploratory lease that signs up all your acres for a potential installation of solar. You can do quick math on the per acre amount if a farm is installed on your fields and see nothing but easy street ahead. A close reading of the actual terms and conditions could result in the solar farm optioning just a piece of your property and leaving you with an odd shaped parcel to farm around that grows palmer amaranth all season long and frustrates your remaining acres into less productivity, not more.
Here are some things to consider when contemplating your new bright sun shinny day.
Every ag equipment operator has had it happen, a high dollar piece of equipment, with weather threatening on a weekend, is ground to a halt for a simple mechanical failure, like a shear bolt doing its job and well, shearing.
That simple break can bring a series of operations that rely upon each other to stand still unless another shear pin is available. Those are usually stocked after the first time a shear bolt strands the operation.
While shear bolts don’t physically manifest in other portions of an ag operation, they are metaphorically sure do. Taking time to identify in advance breaking points in an operation can cause you the pain and misery of threading a new bolt in the dark, with a little drizzle, while a semi waits to be loaded.
Hear are some “shear bolt” areas that your operation should be prepared to deal with
Sumner, Iowa Attorney practicing in Iowa primarily in Ag Law, Bankruptcy, Estate Planning, Real Estate Law. Lawyers at the Dillon Law P.C. are dedicated to serving Iowa, including but not limited to the cities of Allison, Charles City, Cresco, Decorah, Des Moines, Dubuque, Elkader, Grundy Center, Independence, Manchester, New Hampton, Waterloo, Waverly, Waukon, West Union & Vinton, and the communities that make up Allamakee, Benton, Black Hawk, Bremer, Buchanan, Butler, Chickasaw, Clayton, Delaware, Dubuque, Fayette, Floyd, Grundy, Howard, Polk, Winneshiek, counties. © 2023 Dillon Law P.C. Sumner Location | 209 E. 1st Street, Sumner, IA 50674 Volga City Location | 502 Washington St, Volga City, IA, 52077. West Union Location | 103 N. Vine Street, West Union, Iowa 52175 West Union, Iowa 52175 We are there most Fridays 10-3 and by appointment. Telephone: (563) 578-1850 Home | Attorneys | Blog | Ag Law | Bankruptcy | Estate Planning | Real Estate Law | Contact | Iowa Ag Law Attorney Sumner Taxation Commercial Transactions Production Contracts Labor Hobby Farm Liability Bremer Fayette County Lawyer