Fluctuating markets, stormy weather, unreliable equipment, and farm accidents... these are among a long list of challenges that make farming a risky business.

Recent changes to the federal farm program have increased those risk factors. The federal agriculture improvement and reform act has increased price risks by eliminating the deficiency payments that farmers used to receive. Farmers are likely to see wider price swings and changes in net income than they have experienced before.

"Fortunately, farmers have more options for handling risks than ever before," said Greg Ibendahl, Extension farm management specialist from the UK College of Agriculture. "Such tools as diversification, forward pricing and insurance are just of few of the alternative strategies now available to help producers gain control of their situations. "

"Because crop insurance has more options now and is also partly subsidized by the government, it should be given serious consideration by most farmers," said Ibendahl.

The traditional crop insurance product is based on crop yields. This insurance pays when a farmer's crop yield falls below a certain level. Now there are better policies that will fit into a farmer's plan.

Group risk plans were initiated in 1993 . This policy is based on county yield averages.

It may provide benefits in more situations than traditional crop insurance, it is cheaper than other crop insurance policies and individual farm production history is not needed. There is also less paperwork with this product.

"The major qualification of this product is that individual farm yields should move up and down with county yields, otherwise this policy will not provide an additional risk reduction benefits," noted Ibendahl.

Catastrophic crop insurance was introduced in 1994. This policy works much like traditional insurance, but pays less should a problem occur but the cost is much less than the traditional crop yield insurance. There is only a sixty-dollar administrative fee per crop to purchase CAT coverage.

Another recent innovation is crop revenue coverage or CRC. This is the first policy in the state that is based on farm revenue and not just yield. Farmers actually gain price risk protection with this product. The premiums are usually higher for this form of insurance because it may provide benefits in more situations than traditional crop yield insurance.

Local crop insurance agents can answer questions regarding all the details and paperwork involved in each form of insurance.

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