November 9, 2022
U.S. farmers are harvesting smaller than expected crops due to the unusually high temperatures and lack of rainfall in June and well into July of this year, according to USDA’s crop production reports.
Conventional wisdom says those crop losses should be covered if farmers purchased Federal Crop Insurance. But that may not always be the case as some growers are learning as they file claims for 2022 losses.
“Everyone knows there was a drought so why should my client’s claim be denied?” asked Grant Ballard, an attorney with Ark Ag Law PLLC who has represented farmers on crop insurance issues across the country. “The question may be, did the lack of moisture cause all of the loss or did the farmer fail to follow good farming practices?”
Ballard, who spoke during a National Agricultural Law Center Webinar on “Drought and Federal Crop Insurance – Common Issues Faced by Producers,” said drought monitoring systems used by the Federal Crop Insurance Corp., can also be problematic for farmers.
“With the drought conditions we’ve had throughout the country we’ve had an uptick in questions and inquiries about crop insurance claims,” said Harrison Pittman, director of the National Ag Law Center. “We reached out to Grant Ballard to discuss this during our webinar.”
Farmer representation
Ballard issued a disclaimer at the start of his presentation: “I represent farmers – I’ve never represented an insurance company. When everything is going smoothly with the crop insurance program, I don’t get the call. I get the call when crop insurance is not working for an insured producer.
“I see what people would consider to be out-of-the-ordinary situations, but I’ve seen enough situations where coverage failed an insured producer to recognize there are situations that come up regularly in the context of crop insurance.”
Droughts can be a particularly difficult area for Federal Crop Insurance claims because unlike hailstorms or floods or other natural disasters droughts don’t always impact all areas in a region the same.
‘Someone will say ‘What’s the problem? Everybody knows it hasn’t rained,’” he said. “But it may have rained more in some areas. Was the loss to your crop 100% due to drought? Did the lack of moisture cause all the yield loss or did the farmer fail to employ good farming practices?”
In some cases, crops can suffer because there wasn’t enough rainfall after planting. Then, during harvest, the crop received excess rainfall, which appeared to lead to significant loss in yield or quality.
“If you’re a farmer who said, ‘I lost my crop due to drought,’ it’s not uncommon for an insurance company to say ‘well, we think a certain percentage of your loss is from drought, but some of it is uninsurable because we don’t think you applied sufficient insecticides to control insects or you failed in your weed control practices,’” said Ballard.
“That’s an issue that comes up quite often because a grower may decide the crop is not developing as it normally would and does not need certain applications of fertilizer or pesticides,” he said. “That becomes a point of debate between the insurance program administrators and the insured farmer.”
Timely notification
Timeliness can also be an issue. “Was the approved insurance provider (the individual or company who sells the farmer crop insurance) notified in time to verify the cause of the loss?” said Ballard.
“If the insurance provider’s adjusters don’t get an opportunity to see the crop, and they didn’t authorize destruction of the drought-damaged crop, that will always be a point of contention. And finally what documentation verifies drought as a cause of loss? Did it rain or did it not? Or, in some cases, did the producer provide enough irrigation?”
USDA’s Risk Management Agency, which reinsures Federal Crop Insurance policies written by approved insurance providers or AIPs, has stepped in and asked producers to give an estimate of the acre inches of water applied to a field.