New Crop Weather Insurance Policy Offered

It doesn't replace federal crop insurance; it is a supplement to go above and beyond what federal crop insurance covers.

Published on: Feb 1, 2012

A new type of crop insurance policy is being offered for sale to farmers for 2012. It doesn't replace federal crop insurance; rather, it supplements federal crop to go above and beyond what federal crop insurance covers. The new weather insurance is based on weather events, not crop performance. Purpose of the new policy is to protect your business against extreme weather.

Keep in mind that you have to sign up for the new weather insurance policy—which is called Total Weather Insurance and is marketed by The Climate Corporation--by March 15, 2012 just like you do for federal crop insurance.

The 2011 crop year yielded some harsh lessons rather than bin-busting crops. Record-breaking rains and flooding delayed planting for much of the country, followed by history-making drought in the Southwest and parts of the Southeast United States. Toss in the effects of Hurricane Irene, early frost events and a myriad of local weather challenges, and the result for many of these affected farmers was plenty of red ink on business financial statements.

Extreme is becoming more extreme; protect your business against the weather

As a farmer, you know that every season begins a new battle against uncontrollable weather challenges. But it seems as though extreme weather events have become the norm in recent years.

"Our customers tell us that the weather on their farms is more extreme and less predictable than it was even five or 10 years ago," says David Friedberg, founder and chief executive officer of The Climate Corporation, during a recent global tele-press conference about how companies have responded to extreme weather. "Farmers speak about the fact that the last couple of years' weather isn't anything like they've experienced or any of the generations farming their land in the past have experienced."

It's not just your imagination that the weather isn't the same as you remember from childhood. A special report released by the Intergovernmental Panel on Climate Change (IPCC) notes that the incidence of extreme weather events has increased and the frequency of extreme events is projected to rise in the future. The IPCC was established by the United Nations and is the leading international body for the assessment of climate change.

According to the IPCC report there is a 66% to 100% probability that the frequency of heavy precipitation events will increase in the 21st century over many regions. The report also notes that there is evidence that gives the group a medium level of confidence that droughts will intensify over central North America over the next decade. In addition, it is very likely (90% to 100% probability) that heat waves will increase in length, frequency and/or intensity over most land areas in the 21st century.

Effects of weather whiplash—weather is becoming more variable

According to the National Climatic Data Center the following weather records accrued in 2011, confirming many of the IPCC findings:

Illinois experienced the wettest April in the 117 years weather has been recorded. July was the hottest since 1955 and August was the driest since 1984.

Indiana experienced the wettest April and May in recorded history, followed by the hottest July since 1955.

South Carolina recorded the 8th driest year on record during 2011.

Minnesota noted the 9th driest July – December 2011 on record.

Tennessee saw the wettest April since 1912 and the 2nd wettest April in recorded history.

Kentucky experienced the wettest month of April in the 117 years weather data has been recorded. 

Profit squeeze: Can farmers afford not to insure against adverse weather?

You already navigate a multitude of challenges in order to be a successful farmer; one of the most significant is the squeeze between market price and input cost, notes Friedberg.

National agricultural input costs reached $320 billion last year, a record high and a 120% increase from the previous year. As the cost of inputs rises, you must take out ever larger operating loans just to get seed planted. When weather causes large yield shortfalls, it's easy to find yourself in a situation where large debts are only partially covered by current federal crop insurance programs. As a result, the amount of your uninsured financial risk increases each year due to the rising cost of inputs.

"It's vital to the security of the global food supply that agricultural producers have solutions available to them that mitigate their financial exposure to increasingly extreme weather," says Friedberg. "What we see is really acute pain experienced by farmers because they're suffering from more floods and more droughts than they've experienced before."

Protect your profits—weather insurance is a risk management tool

As a sign of the times that new solutions are needed to address the impact of increasingly extreme weather, there is an interesting new weather risk management tool for corn and soybean growers to consider.

Total Weather Insurance (TWI) from The Climate Corporation is a full-season weather insurance program that provides farmers with the ability to lock in profits by protecting against weather events that cause production shortfalls.

The program uses location-specific agronomic data to protect against growing-season weather events that negatively impact yields, explains Friedberg. TWI coverage goes above and beyond the federal multi-peril crop insurance, helping farmers protect their profits from Mother Nature. Total Weather Insurance for the 2012 season is available through March 15; learn more at