Crop insurance farming

Hmm, wonder why a farmer would want to rent this drier sandy ground when he has so much more available. Oh yeah, I've heard it called "insurance land". What the heck. Dont crop insurance companies have some way to moniter and address this issue of what I would say is fraud. You have to insure ALL your acreage if you insure any, right? You insure against your average yeild, right? So you rent alot of awesome ground and get your yeild average way up, right? Then ya also rent poor land,cheap, plant cheap seed, minimize spraying on it, and barely fertilize. Then in the fall you collect the insurance payment because the yeild on these feilds are so poor compared to what your aveage is becasue you have many great yeilding feilds. Is this the game some of these big guys are playing with wanting to rent the poorer soils around here??? It seems like it to me. I think it is unethical, and also kind of makes me mad that I have to out bid a big guy that wants it just for strategic insurance cost management. Am I way off on this or have I figured a little secret?

Youre way off to put it simply. Crop insurance policies generally cover all of a producers ground in each county. No claims unless all the land in the whole policy has a "failure" In rare instances you can pay extra premium to break up the policies by individual land sections. There is no advantage to chasing a claim.
Now if youre talking a large parcel with an out of county operator coming in and getting fresh county average yeilds to base the coverage on, I guess you could "farm the insurance" for a few years and move on.

You are right and you are wrong Dave.

You insure in units. In other words my insurance is in split by sections. All the land I farm in a section is on one policy. If I farm in 3 sections then I have 3 units.

You only collect when the total actual yield average is below your established yield for the insured unit. Not on individual fields.

Ex:Field 1 yields 145 on 20 acres.

Field 2 yields 150 on 20 acres.

Field 3 yields 135 on 20 acres.

My established yield is 140. I do not collect on the 135 field cause the average for the whole unit is above the 140 average.

Also your established yield is a average of the last 5 years. So every time you collect your established yield goes down.

I had neighbors who had a established yield of about 70 bu before they quit farming cause they collected every year and the yield kept going down.

Now if I would go out and rent a new to me farm with a high established yield I could work the system like you say and just farm it for the insurance.

I have seen it done.

Clear as mud right?

Gary

Well, thanks for the answer. I hope it works as you say, but then I still have to wonder so many guys want this land that as they always say- "puts me in the red every year"

That makes sense Gary, Thanks. Hindsight I have asked the moderator to remove this post because I was worried there would be some name slinging by some folks, so if it disappears it was by my request.

Great way to explain it Gary. I insure by the section as well, it cost 10% more basically. I didnt think anyone else bother to insure by section because of the extra cost. Of course in low wet ground like you apparantly had this spring it would really pay. Youll probably have great yeilds in the hills this year!

Matt I had 25 acres that got totally wiped out by the Coralville Reservoir. So you would think I will collect. Wrong.

It is in a unit with 140 acres of corn.

I insure at the 70% level so I am at 138 bushel per acre coverage.

The remaining 115 acres will probably make 175 bushel average. So the total average for the 140 acres is 143. No collecting with a wipe out on 25 acres.

Gary

You do have the option to insure all your land together or in separate units by section, and from what I understand it is fairly common to split it up by units. It costs a little more, but if one section gets hit and another doesn't you're covered. Lee

Well I still like to raise a crop and not a claim how ever it works out. But that 25 acres turns a above average yeild into well below pretty easy. I insure by the section mostly for the hail insurance protection I get. John Deere risk protection offers a hail program that gets pretty good coverage in association with the regular multi-peril more little $/acre. Only JD I have on the farm is the insurance!

Here in Ohio it is called a enterprise unit when you insure everything in a
section together . I insure the way you do Gary BUT the opportunity is
available for lets say " less than honest " guys to farm the insurance Co .
You can insure every farm separate and most guys do that here .They don't
want to miss a chance to collect .
Dave is right that some guy's set out to collect when they go to the field
in the spring .
A couple years ago a bank reposed several hundred acres . A BTO came in and
rented it for 1 year . He got the seed corn from his grain bin . He used 6
ton of firt on it all , the rest he hauled home on ground he owned . He ran
his sprayer over it with just water in it but had bought spray ( witch he
hauled home for next year ) .
The corn wasn't worth shelling and he got away with it .
I used to think crop insurance was good but now I see it as a way for the
bigger farmers to stay ahead .
Example = Common practice here if for BTO's
Joe Doe owns Hog Acres Farms
Married to Jane Doe
Son John Doe
Crops are sold under Hog Acres , Joe Doe , Jane Doe and John Doe .
If it is a good year when they turn yields in they inflate the yields . Say
the corn made 130 they tell crop insurance that it made 163 . Same with the
beans .
That way when they do have a bad year they get more from the insurance co .
to pay the high priced cash rent .
First thing I ask when " how to play the insurance game " was explained to
me was . What about when they audit your sales ?
Answer , easy a copier and in about 15 minutes a Jane Doe becomes a Hog
Acres sales slip . You only have to be with in 10 % .
Landlords don't care that Hog Acres and the Doe family are liar's & crooks
when they offer fifty bucks more an acre .
I'm very sorry to say that this is more the rule than the exception with the
Ground Hogs around here .

Ego and Greed!!!!

I'am maybe a little naive on crop Ins.today because it has been over 25 yrs.since i carried it,but I believe it is just as true today as then."AGENT_AGENT_AGENT"on what you get or can do or get in Payment.I have heard what IaGary said about your yield going down if you collect,but I know people who have collected 30yrs.or better and they (at least)say what kind of money they are getting.Again AGENT.On the agent thing,I custom farmed a farm for a elderly Brother-Sister and they had Two Different Agents and we had a very bad drought year and filed claims,one got several thousand $$ and the other one got nothing(ZILCH)and I filed all the Paper work on both.Same Policy amounts and coverage amounts.Again AGENT.Sorry for the long post but I can make just as much or more in the long run without the Ins.

Egonomics : More acres =bragging rights at the coffee shop. Doesn't need to make sense.

I have been involved in crop insurance since 1981. First as an adjuster, then a quality control/trainer for the old Federal Crop Insurance. I have set in on many of the meetings then, and recently that address a lot of these issues.

First of all, If you suspect crop insurance abuse, call the fraud hotline at 1-800-424-9121
or check into the Risk Management Agency at www.rma.usda.gov

About 6 years ago RMA, at the request of congress implemented an agressive program designed to root out any "Fraud, Waste and Abuse"
Man I got tired of hearing that term!

Anyway, with a very sophisticated set of computers, and computer models, software, etc. They began several types of monitoring.
They do "Data mining", "Data reconsiliation" and a couple of other things hard to explain without charts and powerpoints.

The data mining cross references data from FSA, Crop insurance, and other sources and can match high loss farmers, with agents and adjusters that also work with high dollar loss policies. It also pulls out straggler losses, like a prevented planting claim in a county, but its the only one. Lots of other things they look at.

The Governments RMA web site has several stories each month of where a farmer, his realatives, his agent and adjuster have been fined, or in some cases put in the can.

It's not perfect, but you can step up and help by calling the hotline.

You could also tip off you county CED at the FSA office.


Gene

i got a neighbor who will plant his corn later then supposed to and just tell the insurance company that he planted on time. always does the worst land last so that way he rakes in the money from the insurance. i have had good luck with insurance. they cam out and looked at my new seeding alfalfa and zeroed it out. we had a cold spring and after 1st crop i grew thicker then hair on a dog! i didn't cheat them, mother nature did! last fall i had a corn field that only grew about 4 feet and had no cobs. zeroed out. only times i have ever gotten anything zeroed out! i burns my butt how people think they are smarter then the insurance company. if you have to lie to make your money, then why farm?
DF in WI

I dunno... The only way I've ever heard of anyone getting ahead of crop insurance is by having CI give a 100% loss on a field before harvest and then sneak in and pick up what's there so that you get the crop and the full insurance. I believe it's structured such here that if you have a loss before harvest, it doesn't count against your average either.
Otherwise, crop insurance is basically a pointless venture... You may lose a field here, or there, but we've seldom had it fall below our average. Even if we do have a poor year it just seems to drag the average down without paying out any more than a pittance.
Taking on a new contract where you haven't established an average is the other way to get ahead a bit, but even that's still not much...
We don't bother anymore.

Rod