Farming is inherently risky. Between Wisconsin’s unpredictable weather patterns, shifting global policies, and volatile market prices, much of a producer’s success depends on factors outside their control.
From Wisconsin farm hobbyists to large-scale operators, using insurance to protect your livelihood is a smart financial investment.
Use this as a guide when considering farm risk mitigation strategies.
1. Dedicated farm policy
The foundation of any Wisconsin agricultural operation is a dedicated farm policy. Unlike a standard homeowner’s policy, a farm-based policy is specifically tailored to the unique liabilities of rural life.
Homeowner’s insurance doesn’t cover things like livestock getting out on the road or chemical drift coverage when spraying a field. A solid base policy includes coverage that are often automatically built-in, protecting you against the “what-ifs” that only happen in agriculture. Policyholders can also add policy additions.
2. Strategic farm policy additions
Every farm is different. A fish farmer has different needs than a cash cropper, and a dairy operation has risks a beef farmer doesn’t face. This is where additions come into play.
Whether it’s a brand-new $300,000 tractor or a sentimental antique passed down from your grandfather, these assets can be insured for physical damage and liability.
Because farming is a high-risk occupation, life insurance acts as a vital tool for succession planning. It ensures the next generation can pay off debt or maintain the farm’s legacy if the unthinkable happens.
3. Dairy Revenue Protection
Dairy Revenue Protection (DRP) is a federally subsidized program that protects against declines in the quarterly revenue from milk sales.
When milk prices hit high, it’s encouraged to lock in protection. When prices eventually drop, that insurance becomes the difference between a loss and a profit for the year. It allows farmers to price protect their milk up to a year in advance, providing a safety net against the Chicago Board of Trade fluctuations.
4. Livestock Risk Management
The beef market has grown significantly in Wisconsin, especially with the beef-on-dairy opportunity. However, high cattle prices often come with high input costs. Livestock Risk Protection (LRP) is a tool used to mitigate the risk of falling prices before cattle go to market.
LRP has become so essential that many banks now require it before issuing lines of credit. It protects thin profit margins by ensuring a guaranteed income level when the cattle are sold, even if the market dips during the finishing period.
5. Multi-Peril Crop Insurance
Crop insurance is the ultimate safety net for row crop farmers and those growing feed for their animals. This federally subsidized program covers two major threats:
- Natural disasters: Protection against hail, drought, and other weather patterns.
- Price protection: Safeguarding the value of the crop in a shifting market.
Key deadlines include July 15, for acreage reporting after planting, and September, for the sign-up period for alfalfa (to protect against winter kill).
Beyond these five risk management insurance strategies, Rural Mutual Insurance provides a unique benefit for Wisconsin farmers, the farm dividend program. We are the only farm insurer in Wisconsin to offer a dividend back to our farm customers. For the last 12 years, the board has declared a 5 percent dividend, returning money directly to our policyholders.
As the number one farm insurer in Wisconsin, we provide knowledge and insight to help you make the best decisions to protect your farm and way of life. That’s why we go beyond the policy by providing educational content on best practices – from farm safety to succession planning. Reach out to a local agent to learn more.
