Crop Insurance Is Critical for Arkansas Rice Farmers

Without Crop Insurance, You Put Yourself at Serious Risk

According to University of Arkansas Extension, in 2017 Arkansas accounted for 46% of total US rice production in 2017. With 1,104,000 acres planted in rice last year, the crop ranked among the top three cash crops for Arkansas farmers.

But 2017 was also a tough year for Arkansas rice farmers. Young rice can only live 7-14 days when submerged in water, and last year, many Arkansas fields were under four or more feet of water for multiple weeks. Due to extensive flooding in late April 2017, over 100,000 acres of rice were destroyed and up to 300,000 additional acres were damaged.

Last year, Arkansas farmers paid about $40.4 million to cover their crops. Insurers paid over three times that, about $146 million, to cover losses.

Of the roughly 8,000 crop insurance policies covering Arkansas rice at the time, about 1,670 of them were CAT (catastrophic) policies, which means crops were only insured for about 50% of their total value. Under-insured farmers took a huge financial hit following last spring’s flooding.

Further complicating things, language in the 2014 farm bill stipulates that unless your crop is damaged late in the planting season (defined as mid-June for rice), when crops are destroyed, farmers are required to replant the same crop in the same field. But for rice farmers, replanting in early June is likely to result in reduced yield.

In 2017, it wasn’t just the rice planting season that was affected by weather. The 2017 harvest season was also compromised. This time, the winds from Hurricane Harvey pummeled fields, causing severe lodging and resulting in further loss of yield. Although the state remained the largest rice producer in the US last year, despite these challenges, overall production was down 24% from 2016.

New challenges for rice farmers

This year, rice farmers are facing different challenges. Rather than dealing with floods, in 2018 farmers have had to compensate for hot, dry conditions, which can also reduce yields. The input costs of rice have risen considerably this past decade, and with fuel prices on the rise this year—making harvesting more expensive—there is more at risk if rice crops fail.

Agriculture is a major economic driver in Arkansas, contributing about $9 billion to the state economy. Last year, Arkansas farmers paid about $40.4 million to cover their crops. Insurers paid over three times that, about $146 million, to cover losses.

Traditionally, insuring rice crops—at least beyond the extremely affordable CAT coverage—has been viewed as an unnecessary expense throughout much of the state. In part, this was because irrigation has historically been something farmers have been able to control in the Northeast Arkansas delta, where most of the state’s rice is grown.

But 2014’s Farm Bill changed the risk factors for rice farmers. In addition to stipulating how fields must be replanted, it eliminated certain crop protections and as a result, increased the importance of crop insurance as a tool for risk mitigation.

If you have questions about crop insurance, a Farm Bureau Insurance agent would be happy to go over our crop insurance policies. In addition to crop hail insurance we offer additional options such as revenue protection insurance and yield protection insurance.