Crop insurance is something that has been around since the 1930s. It is designed to protect farmers from major crop losses, and it is one of the best ways a farmer can budget. Farmers generally have to learn effective budgeting skills because they do not receive weekly paychecks, and this is one of the ways they can do this.
What Is Crop Insurance?
Crop insurance originated to help farmers protect against major losses. A farmer must spend a lot of money buying seed and equipment, and he must spend a lot of time planting, maintaining, and harvesting. All of this is done in hopes that he will be able to sell the crops and make money.
If the weather is right and the fields get the right amount of rain, a farmer can make a good profit from his efforts, but this is not always the case. There are seasons when it doesn't rain enough, or seasons when it rains too much. There are also times when frost kills the crops, and there are situations when other types of weather problems cause crops to die.
With crop insurance, a farmer doesn't have as much risk. The farmer purchases the insurance, and the insurance pays him if he experiences losses due to weather.
Why Is This So Important To Farmers?
Budgets are important to farmers because they may only get paid in the fall when they harvest. They must learn to budget this money throughout the entire year, because they may not get paid for a whole year.
Crop insurance helps with this. A farmer purchases the insurance and can pay annually or monthly. If the farmer gets a good crop, he makes money from it. If the crop is damaged, he turns in a claim to the insurance company and they reimburse him for the losses.
Without the crop insurance, the farmer would have no money for the next year. This would create personal financial problems, and it would also create problems when he needed to buy farm supplies the following year.
Why Is This Important To Consumers?
Crop insurance is also important for consumers because it keeps prices down. If farmers had trouble with one particular crop during a season, the prices on this crop could skyrocket. This would cause supply to decrease, yet demand would stay the same. Consumers would have to pay a premium for this particular type of food.
When a farmer has crop insurance, skyrocketing prices are not as likely. Farmers wouldn't have to charge more because they would receive compensation from their insurance companies. With crop insurance, everyone benefits. If you are a farmer and would like a quote, contact a company, such as Fritch Lillian Insurance Inc., that offers crop insurance.