Betting the Farm and Winning Every Time: Why Agricultural Insurance Is Vital

Insurance Blog

You might think that owning a farm that produces staple or specialty crops would be a sure thing in terms of profitability, but those in the agricultural industry can tell you farming is fickle. From poor harvests caused by drought, flooding, insects, and other factors, to being priced out by competitors, farmers can only cross their fingers and hope for the best.

Farmers can estimate how much they have the potential to earn each year, but their projected earnings may be substantially higher than what they actually bring in. While small-scale farmers may not have a need for commercial insurance, anyone who earns their living through buying, selling or raising livestock, or growing produce needs to have certain protections.

Knowing How Much Your Farm Is Worth

Many people imagine farmers as being the independent owners of hundreds of rolling acres filled with orchards, corn fields, cow pastures, and plenty of farm equipment. The truth is that not all farms are sizable, and every farmer doesn't have a large amount of farm equipment on hand. The value of a farm can change from one season to another, sometimes going up when a farmer decides to grow produce that is high in demand or switching from raising cows to bison.

Being Prepared for Low Profit Margins

A very large investment is necessary to keep a farm going. Livestock farmers can't do business unless they pay their veterinarians to keep their animals healthy, and a farmer who grows fruits, vegetables, or grains needs seeds, fertilizer, and fresh water just to get the crops going. Before a farmer can even consider what his or her profits are going to be for the year, the money put into keeping the farm going has to be subtracted first. An investment in commercial insurance is also necessary to help protect farmers from going out of business. Even if speculators believe that the price of produce is set to increase, experienced farmers know that having insurance on their farms isn't something that they can compromise on.

Moving Forward When Crop and Livestock Production Doesn't Meet Expectations

Even with a fantastic yield, farmers don't always get paid as much as they deserve. On the other hand, farmers also know that they are going to have years where their farms don't produce enough for them to sustain themselves. Agricultural insurance is essential in the farming industry, protecting both agricultural workers and investors—and that is why farmers no longer fret when they know a lean harvest is imminent.

Talk to a company such as Bennett Agency to learn more.

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