When you open a business, insurance is an essential aspect of it. It keeps you protected in case something catastrophic were to happen. Crop insurance works the same way for farmers. It enables them to get financing while also helping them survive in such a risky business. Farmers have a lot riding on the weather, but it can’t be good every year, and that’s why crop insurance is so important. It’s especially important if you are just starting your operation because beginners are usually already stretched pretty thin and have no finances to fall back on if they take a major hit.
Crop insurance is the primary risk management tool that farmers use to recover financially from the many risks that can occur in their industry. Things as big as natural disasters or as small as not getting enough rain can have a large impact on farmers. One small drought can be the difference between keeping or losing their farm if they don’t have insurance to fall back on. Crop insurance lets them pay their suppliers, purchase their equipment, and give them confidence to make those long-term investments that will increase their productivity. Without effective and affordable crop insurance, all of these things would take a huge hit.
Farmers can’t control the rain, no matter how much they wish that they could. Yet, farmers do still buy seed in the hope that they can harvest a crop to pay for that seed. They buy equipment in the hope that they have a crop to pay for that equipment. This is a gamble that they take each year. They can’t make money without first spending it. They plant, fertilize, and control their crops, and then just hope for rain. Sometimes their wishes come true, and sometimes they don’t. But if you have crop insurance, you will be okay.
Every American consumer out there relies on agriculture in their daily lives. It provides them with very essential things like food and clothing. Agriculture is also a very important sector of the economy. It accounts for nearly five percent of Gross Domestic Product and ten percent of U.S. employment. This makes agriculture very essential to sustain since it produces safe and affordable food and fiber supply that supports the economy. So maybe you don’t know why insurance for your crop is so important. However, without it, many more farmers would have lost their way of life which would lead to more loss of agriculture.