The final date to sign up for Vegetation Index is November 30, 2009.

As I sit down to write an article that discusses drought insurance, it is raining. It seems like it has done nothing but rain for the last week. The irony is inescapable as this article discusses a type of insurance that primarily serves protection from a single peril: drought. That being said, drought has been a peril and will continue to be a peril of major economic significance.

The product is called ‘Vegetation Index’ and it is a program administered by RMA (Risk Management Agency) that insures both hay and grazing land. In this article, we’ll briefly discuss the basics behind the policy and the evaluation process in determining whether or not it is applicable within your specific operation.

• What is it and how does it work?
This program is federally subsidized much like the MPCI policies carried on crops. It uses satellite data to measure the level of photosynthesis that is taking place. This data is then compared to the established standard (average data from 1989 to current) to determine if a loss has taken place.

Confused? Give me a call and I can help walk you through it. It’s really pretty straightforward.

• How do I know if it is a good fit for my operation?
There is an online simulator on the RMA website that allows you to evaluate the performance of this program since 1989. Basically, with a legal description we can run this simulator and evaluate the information and answer the most important questions.

What differentiates this program in years of draught?
What have the total indemnities on my farm been over the last 10 years?
Does this program help me to better manage risk in years of drought?

Here is one scenario that I ran for a rancher in Southwest Nebraska. The cost was $0.60 per acre on 1,000 acres.

Other simulations run in Southwest Nebraska have producer similar results. The scenarios have been favorable with a return on investment greater than 50%! Please don’t hesitate to call or email with any questions or if you are interested in additional information.

As the authorized John Deere crop insurance agent for this area, I am committed to having the knowledge and experience necessary to help you understand if this policy will fit the needs of your operation.

Matt Hanna
308.883.0803
mhanna@21stcenturyequip.com

Disclaimer: Past performance is not an indicator of future results.
21st Century Equipment is an equal opportunity provider.

Matt Hanna - Authorized John Deere Crop Insurance Agent mhanna@21stcenturyequip.com Cell: 308.883.0803 Learn more at www.johndeere.com Click on ‘Crop Insurance’

Click here to view larger

Click here for archived articles