The producer’s farming the approximate 450,000 acres of prime Nebraska and Iowa farmland along the Missouri River have to worry about at least two additional issues other producers may not worry about; obligations under forward grain contracts, and flood insurance coverage.
1) Forward contracts bind a producer to deliver grain to a buyer at an agreed upon price at a specific time in the future. Most contracts are not voided by natural disasters, which leaves the producer in a bind if the crop designated for future sale is wiped out by a flood. Generally, a producer is left with the option to deliver the grain from other stock (owned or purchased) or buy back the contract. Crop insurance may cover the contract price up to the production guarantee. However, the contract and/or buyer may require a penalty due to the failure to deliver the grain. In any event, the producer in this situation needs to take a look at the contract, contact their insurance agent and buyer, and try to work out a plan as soon as possible. The High Plains Journal also covered this issue in the state of Arkansas, which you can link to here.
2) While crop insurance may cover some of the losses, many farmers have, or will, have flood damage to their homes. Those who have maintained flood insurance may finally get value from their paid premiums. However, those looking to protect their homes now may be out of luck as flood insurance will not cover any flood damage incurred within 30 days of purchasing the policy. Furthermore, flood insurance purchased after a “flood event” will not cover any damage incurred by the flood event. On June 1, 2011, FEMA declared the entire Missouri River basin a flood event. Therefore, any flood insurance purchased for properties along the Missouri River after June 1, may be void until the flood event is over. Insureds should review their flood insurance coverage and be cautious if approached by agents looking to push flood insurance now.
Many of the issues facing those farming and living along the Missouri River Basin rise and fall with the water level. Always have, always will.
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