Precision Farming and Crop Insurance (Sponsored)

Don Preusser
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Precision farming technology has been steadily growing for years and has provided significant gains in producer productivity and efficiency.

Today, roughly six in 10 production farmers use various precision technology solutions in their farming operations. From auto steer to variable rate applications, farmers have an abundance of new capabilities available to improve production farming.

Precision farming technology is already being used by some farmers to simplify – and make more accurate – their crop planting and production information for required reporting as a participant in the federal crop insurance program. Using equipment GPS monitors and farm management software, producers are able to collect and report both planted and production acres without traditional paper records like planting logs and scale tickets. In short, by leveraging their precision farming technology capabilities, farmers are able to “digitize” their planting and production records.

The creation of digitized farm data can also provide much greater insight into farming practices, including the ability to better understand crop production risk, particularly when combined with related data like weather, soil conditions, topography, and more. When greater insight and understanding of crop production risk is developed, insurers will be better able to not only offer new risk management solutions, but more accurately underwrite and price the risk.

The life blood of insurance is built on the availability and credibility of risk data and information. To effectively and accurately provide insurance, insurers require a clear understanding and confidence of the risk to be insured.

One of the key success factors in the U.S. federal crop insurance program is the long history of collection and use of planting and production information of U.S. farms. This field level planting and production data has distinguished the U.S. program from many other countries and has made it possible to create insurance products and loss adjusting practices across hundreds of crop types and geographical locations.

However, much of the variable farm field level historical information is captured in paper records. Moreover, many of the farming practices and related crop-care activities are less documented or not easily available to study and understand farming behavioral practices – activities that drive or influence production results. Because of this, even with good historical data, crop insurance today is still largely a standardized and group rated program that does not reflect individual farmer risk similar to other property/casualty insurance products.

digitized agricultural data 2 webPrecision farming technology is now helping to set the stage for crop insurance to be a more customized and individually farm rated insurance offering. Farm data and information at the point of collection is becoming more digitized with multi-sensor applications, telematics, and other solutions that convert “activities” into digitized agricultural data records. This digitized data is being used to power analytical and predictive modeling tools to help improve productivity and efficiency gains for a growing number of farmers. Soon, this same type of digitized agricultural data will not only drive a deeper understanding of agricultural risk, but will likely usher in a new era of agricultural insurance products and services for farmers.

While crop insurance is significantly different than many other lines of insurance, it does share some fundamental principles similar to home and auto insurance. For example, auto insurance today is underwritten and priced significantly differently than it was 10 years ago because of the use of telematics/GPS information obtained from the automobile. Auto insurers are able to more precisely underwrite and price auto insurance risk because this new data creates better understanding of driver risk (i.e. speed, braking, etc.). Digitized data generated from the automobile, combined with other traditional driver risk data, result in improved predictions of potential risk of an accident.

In a similar fashion, precision farming technology can provide insurers with more precise and greater insight about planting and production activity (i.e. seed spacing, etc.) that can improve the prediction of potential crop performance beyond what weather alone might cause.

Significant potential exists to leverage farmers’ use of precision farming and related technology to improve agricultural risk management, including crop insurance. Using these technologies to collect, organize, and digitize field data creates deeper understanding of farming practices and behavior at a very precise level on the farm.

So how might precision technology and crop insurance solutions look in the future? Digitized agricultural data may soon provide the ability to provide a farmer with a customized insurance product that reflects their unique farming operation with precision pricing of the insurance solution(s) calculated to reflect individual farmer risk.

Precision Farming and Crop Insurance (Sponsored)