Frontier Farm Credit Works With Farmers and Ranchers through Drought
CUTLINE: Edward Hageman, Jr., (far left) and his son, Brady Hageman (far right) watch with Janet Connell, Frontier Farm Credit Crop Insurance Specialist as Frank Newell, Frontier Farm Credit VP, Insurance Services, inspects an ear of corn north of Hiawatha, KS.
HIAWATHA, Kan. – The prolonged drought through the Grain Belt and High Plains made headlines through the summer and into fall. Farmers and ranchers in eastern Kansas have been focused on their business through a difficult and unpredictable harvest. Frontier Farm Credit specialists share that focus, and have spent countless hours consulting with customers, and even fielding calls from those who don’t do business with the financial services provider.
“It has almost become commonplace for a farmer to call our team of crop insurance agents,” said Frank Newell, Vice President, Insurance, Frontier Farm Credit. “Word travels quickly in a region. When a farmer hears how we’ve helped resolve a crop insurance claim, it doesn’t take long for a neighbor to seek answers.”
And answers, Newell said, can be complex. Every scenario is different, but there have been many questions regarding how revenue policies work or how they can prepare records for an insurance audit.
“There has been a great deal of volatility,” said Newell. “And harvest price, set this fall, is well above the base price, set in February.”
Farmers want to understand what to expect in the claims process, and are trying to predict income as they place orders for seed in the hopes that winter and spring moisture will bring better conditions for 2013.
Newell added, “Communication continues to be the most critical part of any crop insurance claim. Timely communication and reporting has been the top determinant of how rapidly a claim can be settled.”
Conditions change all of the time and vary by region, from severe drought stress to minimal losses, Newell said, even varying with the same county.
“I’ve been in fields in which one timely rain made a crop,” Newell said. “Crops that were able to be harvested are a testimony to the tremendous advances made in varieties and technology. And, where those advances weren’t enough to make up for weather stresses, people are thankful for crop insurance.”
For producers anticipating crop insurance claims, it’s also important to consider tax consequences.
“Normally, crop insurance proceeds are taxable in the year of receipt,” said Dennis Roddy, Sr. VP Business Services, Frontier Farm Credit. “However, if a producer meets certain requirements on yield loss, an election is available to defer the proceeds for one year.”
Drought consequences aren’t just felt by crop producers, Roddy added.
“The lack of quantity or quality of feedstuffs, increased cost of feed, and deteriorating water supplies can cause livestock owners to reduce herds,” Roddy said. “Livestock producers marketing production early and culling breeding stock due to drought should be aware of tax rules they can utilize as they look to the future.”
Another present – and future – consideration for farmers and ranchers is cash flow for inputs, equipment repairs and land payments. Financial Services Officers work with customers to structure loans to match individual operations, said Doug Hofbauer, President/CEO, Frontier Farm Credit, part of the National Farm Credit System.
“The Farm Credit System remains well positioned to meet the borrowing needs of rural America and will continue to do so through the difficult conditions brought on by the drought,” said Hofbauer. “Financial Services Officers within our organization are working collaboratively with borrower-owners on a case-by-case basis to ensure continued access to loans and other financial services, including use of the Flexible Solutions program for operators experiencing distress as a result of the drought.”
It times of uncertainty, Newell acknowledged that people want reassurances that everything will be OK.
“Crop insurance is a Property and Casualty line of insurance, like auto or homeowners insurance,” said Newell. “The difference is that we all need farmers to carry crop insurance so that they can recover from weather disasters and market volatility to have the means to plant another crop.”
And, planting another crop is critical to food security.
“There are still farmers who remember growing up in an era of consecutive dry years,” said Newell. “They bluntly share their memories of food being scarce and have a deep motivation to do all they can to keep this country from knowing hunger.”
More information can be found at www.frontierfarmcredit.com.
Vice President, Marketing & Communications