What really needs to be consider is the following:
1. The timing of the hail
The cotton crop is most vulnerable early in the season and this coincides with the start of the summer storm season. The hail doesn’t need to be very large to kill enough plants to leave you either with an uneconomic crop or no crop at all. Clearly Bollgard cotton also has a very finite planting window and if you miss this replant opportunity, your season is over.
It’s important to keep in mind that whilst total losses account for only about 10% of losses they account for some 85% of the total claims paid by insurers. It’s the early losses at the end of the planting window or just after the window has closed that are the real risk for growers.
2. The prevailing weather conditions
It is true that partially damaged Bollgard crops can rebound well after hail damage, however that recovery depends on a number of factors including the timing of the loss and prevailing weather conditions. AgriRisk has seen many situations where weather conditions have remained poor or the season has shut down and the crops have literally “sat in a hole” for the remainder of the season. In addition the recovery is often based on the growers’ ability to drive the crop following the hail damage – this can be costly and insurance will generally meet this cost.
Special Considerations for Dryland Cotton Crops
The insurance of dryland cotton crops is not dissimilar to irrigated crops and there are a few important additional factors to consider:
• Yield Variability – AgriRisk would generally recommend you select a product that allows the highest level of yield variability. This will ensure that your coverage more closely reflects the yield potential of your crop. Not all policies are the same and this is an important issue that can make hundreds of thousands of dollars difference in the event of a loss.
• Cost Structures – AgriRisk prefers the Actual (rather than nominated) Growing Costs option. Again this will ensure that in the event of a total loss the growing costs deducted will reflect those that would have been incurred on that specific crop for that season.
If in doubt speak to your AgriRisk Account Manager they will be happy to assist you in understanding your options and structure the most appropriate cover for you.