Protect Your Operation’s Cash Flow With Crop Insurance

Farm.jpgYou are no stranger to the risks of volatile markets and extreme weather, and this year’s drought reminded many of you how these factors can dramatically affect your operation. The year began with an early planting season and hopes of the largest production yet. But this year's drought revealed how the right risk management plan and crop insurance agent can ensure your success.

"This year’s drought confirms my belief that crop insurance stabilizes cash flow for producers. Designed not to guarantee profit, but it ensures the business has sufficient cash to continue one year to the next. And you can make these decisions with the help of a John Deere crop insurance agent," says Scott Mickey, a farm business consultant at Clemson University in Clemson, S.C.

In the agricultural field for 17 years, Scott teaches producers the importance of aligning crop insurance with crop marketing strategies. He also trains John Deere crop insurance agents on how to combine marketing with risk management, and encourages agents to look at crop insurance from the producer’s perspective.

Identify Your Revenue Needs

According to Scott, the first step to ensuring success is understanding how much cash you need for financial commitments each year. With this information, you can make the best decisions for crop insurance and crop marketing.

Start by identifying your total cash requirements for any given year – Family Living expenses, Operating costs, and Interest and Debt requirements – or your FLOID. While operating costs may be similar when comparing farms in a small geographic area, the impact of family living, interest and debt may differ widely.

By identifying your total FLOID amount, you’ll understand your basic operating expenses and the cost to support your family and service your debt. This means you’ll know what your true break-even point is for the year. A price above FLOID is the starting point to create equity growth for your business.

Incorporate Crop Insurance to Protect Your Cash Flow

This year confirmed that crop insurance is a critical risk management tool to protect your revenue flow from year to year. This is why it’s important to work with your crop insurance agent to understand how your policy works, and analyze it yearly so you are comfortable with the coverage your risk management strategy provides for your total expenses.

Expect More From a John Deere Crop Insurance Agent

The knowledge that your agent has about risk management strategies is critical in protecting your operation.

John Deere crop insurance agents have access to the right tools to help you analyze your total revenue needs. They also understand crop production expenses and how crop insurance works to protect your cash flow.

As each year begins, spend time with a John Deere crop insurance agent to determine what changes you need to make for your operation. With the help of a John Deere crop insurance agent, evaluate your policy — specifically the coverage level and the unit structure — to ensure the best risk management strategy for your operation.

Find Your John Deere Crop Insurance Agent

To learn more about incorporating crop insurance into your marketing plan and John Deere Insurance Company products, or to find a John Deere crop insurance agent in your area, please visit www.JohnDeereCropInsurance.com or call 1-866-404-9057.

John Deere Insurance Company of Johnston, Iowa, issues crop insurance products through its Managing General Agent and affiliate, John Deere Risk Protection, Inc. (DBA in California as JDRP Crop Insurance Services). John Deere Insurance Company and John Deere Risk Protection are equal opportunity providers. Coverage is subject to availability, terms and conditions. John Deere Insurance Company is not licensed or does not do any insurance business in AK, CT, D.C., HI, MA, ME, NH, NV, NY, RI, and VT. John Deere Financial is not an insurance company.


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