This archive report was first published on 26 June 2020.
June 26, 2020
Does Crop Insurance Really Work? ¶
Despite being classified as an essential service during the COVID-19 pandemic, farmers are still facing significant losses due to natural disasters like flooding, which can destroy crops and livestock.
Imagine waking up one morning to find your livestock stolen or dead, with no other means of income. This is the harsh reality many farmers face, leading to severe losses that can make it difficult for them to continue farming.
However, there is a solution to this problem: crop insurance. This type of insurance can help farmers increase their resilience and production by protecting them from unforeseen setbacks.
When deciding to buy crop insurance, one of the most common questions farmers ask is: Can the insurance pay back? The answer to this question depends on the insurance company or policy chosen.
It's essential for farmers to understand the terms and conditions of the insurance services they choose, as different companies have different policies regarding the services they offer.
Some insurance companies are using modern technology, such as automatic weather stations and mobile payments, to help farmers get the compensation they need quickly and efficiently.
For instance, after planting seeds, undesirable weather events like delayed rains, drought, or excess rainfall can cause production losses. With modern technology relying on actual data and comparing it with expected rainfall for each growth stage of the product, this reduces the number of field visits and makes it easier to compensate.
Understand the terms and conditions of the insurance services you choose, as different companies have different policies regarding the services they offer.
Most companies pay for damages to crops arising from hail storms, fire, drought, excessive rainfall, frost, and floods. Others have an insurance cover that takes care of farm assets and equipment, such as greenhouses, solar systems, and irrigation facilities.
Insurance works on a guaranteed yield, which means the company needs to agree with the farmer to provide the previous history of the farm. This shows the need for farmers to keep accurate farm records.
With crop insurance, farmers have greater access to agriculture credit because financial institutions accept crop policy documents as a form of loan security. In case of a natural calamity, both the farmer and the financier do not suffer because the insurance compensates for the loss.
Get an insurance company that offers compensation within a short duration, enabling you to re-invest. Insurance companies also sensitize farmers by creating awareness to help them understand the effect of natural calamities and protect their farms.
With the insurance, farmers feel confident investing in their farms and produce enough food to feed their communities.
