Many AgriRisk clients achieved extraordinary yields on their dryland crops this season, with some yielding close to 12 bales/hectare. These results are well above expectations and highlight a particular issue for growers in terms of ensuring adequate hail insurance coverage.
Most cotton growers insure their dryland crops at an average yield of 2.5 – 3 bales/hectare, knowing that most variable yield policies allow a 25% increase in the yield and hence the sum insured. For this season, that calculation would have proved grossly inadequate with insurance coverage on this scenario capping out at 3.125 – 3.75 bales/hectare. Unless the grower actually requested an increase in the yield during the course of the season, most of those high yielding crops would have been significantly underinsured.
AgriRisk understands this volatility and generally recommends insurance with a 100% variability giving significantly higher coverage of up to 5 – 6 bales/hectare - but even this may have proved inadequate this season without a request to increase during the course of the season.
So the message from AgriRisk is – if you are growing a dryland crop, use solid yield estimates at the start of the season in the order of 5 bales/hectare and purchase a policy that allows significant yield variability (100%). At the end of the day you will only pay premium based on the crops final yield outcome so it won’t cost you anymore, but your coverage will be far closer to reflecting your yields in the event of a claim.