One farmer in Oklahoma lost 30 specially-bred cattle in 90 days. Another farmer in Alabama lost two prize bulls overnight. In Texas alone, cattle rustling crimes have tripled since 2007, with 7,400 cattle being stolen in 2010 compared with 2,400 in 2007.

Courts are taking seriously the crime. In an effort to curb thefts, penalties have increased from two years to a minimum of ten years in prison and up to twenty years.  So why do thieves do it? Because it’s lucrative – cattle can be sold at auction for upwards of $1,000 a head. Compare that to what legitimate owners can get on the open market – up to $4,000 depending on the cattle.

One preventative measure farmers can take involves implanting an RFID transmitter in each cow. Inspectors can then use handheld scanners to identify the cows and ensure the seller information matches the owner information. Branding is an option, but it requires farmers record the brand with county officials.

Other preventative measures:

- Take a daily headcount of all herds.

- Vary feed times; the less predictable you are, the less likely thieves can know exactly when to strike.

- Use videotaping in stockyards.

- Lock all gates at all times.

- Organize files and keep proof-of-ownership, receipts, etc. for all equipment and herds.

- Keep transport equipment out of sight and locked.

- Locate pens away from roads and access drives.

- Patrol fences, as much as three times a day, varying your schedule to avoid being predictable.

Check with your farm insurance provider to make sure you’re taking the necessary amount of precautions to prevent cattle theft. When in doubt, review your policy with a farm insurance broker who specializes in agriculture coverage.

How many instances of cattle theft have you heard of in your state?  Have you ever had cattle stolen?

Flickr photo credit:  muscapix

That’s because economic conditions, business changes, legislative changes, and even insurance policy changes can leave you unprotected in the event of a loss. Yet many farmers tend to renew their existing policies, assuming the coverage levels will remain adequate or that cost-of-living increases will cover any additional risks.

Not so. Many loss exposures outpace your policy’s coverage limits. For example, suppose you purchased your policy with a $1 million coverage limit two years ago. You assumed $150,000 of exposure, which is what you have reserved for emergencies or loss occurrences. 

Since that time, you’ve replaced old tractors and expanded your operations to include another livestock herd. The new equipment far exceeds the value of your older tractors, and the additional livestock bumps the value of your entire operation up to $2 million. You still have the $150,000 of assumed risk, but now you’ve added an additional $1.85 million in value – value that isn’t covered by any policy or cash reserves. One event – a communicable disease that kills off your herds or a fire that destroys buildings, livestock, and equipment – could wipe out your reserves and leave you without adequate resources to rebuild.

In order to protect against being underinsured, review your operations. Ask yourself these questions:

• Has it been more than two years since I reviewed coverage with a broker?
• How have my business processes changed – am I working more efficiently or am I now understaffed?
• What new equipment, business areas, or business practices have I added since I bought my policy?
• Did I opt for less coverage to save money on premiums – does that decision still make sense?
• What new risks have I assumed since purchasing the policy?
• Have I reduced my business size or scope in any way – am I over-insured?
• What are my deductibles and are they still adequate?
• What if I lose my …

If you’re unsure, review your business with your farm insurance broker. Make sure your limits match your needs. 

Flickr photo credit: Random Factor

The risks are not that far removed from US soil. Neighboring Canada had its own scare in June 2010, when foot-and-mouth disease was suspected. Tests ruled out the disease, but operations were halted until testing was completed. That left haulers wondering what to do with truckloads of pigs that were turned away at processing centers. Canada’s biosecurity laws prohibit animals being returned to the farms once they have left the premises.

While the US has implemented aggressive trade restrictions on countries experiencing the disease, there is a risk of foot-and-mouth disease reaching the states. In order to aid the prevention or spread of any disease, farm owners should take the following precautions:

• Purchase animal bedding, feed, and biological products from reputable suppliers.
• Regularly monitor animal health and report immediately to state veterinary officials any illnesses or suspicious symptoms.
• Require workers use “barn use only” designated clothing and boots when working around animals.
• Prohibit people who have been in an infected country from entering the farm premises for at least 14 days after returning to the US.
• Make sure all vehicles entering or leaving the farm are disinfected and cleaned according to USDA regulations each time they enter or leave the property.
• Vaccinate herds against foot-and-mouth disease.
• Quarantine any animals with suspicious symptoms. Also separate from the herd any animals that animal may have come in contact with.
• If you suspect your farm may be infected, close the facility to outside visitors and vehicles, and do not allow your vehicles to leave your farm until cleared by a state official.

Review your outbreak prevention process with your farm insurance broker. Also, make sure you have adequate coverage in the event of an outbreak.

Have you had any disease outbreaks on your farm? How did you handle them?  Did the disease spread or was it contained?

Flickr photo credit: Andrew Huff

In Pennsylvania, local farmers have cultivated strategic partnerships with local grocery stores and have managed to bring in an impressive $370 million in the process. In western Pennsylvania, the push for locally grown food has created a demand from large retailers, including local supermarket Giant Eagle, restaurant chain Eat ‘n Park, and Whole Foods Market. 

All are purchasing products produced within 125 miles of their store locations.  The term “locavore” was coined in 2005 by San Francisco Bay Area resident Jessica Prentice for World Environment day.  The definition of a locavore is one who limits their diet to food gathered or harvested from within a 100 mile radius.  In 2007 the New Oxford American Dictionary even chose it as its word of the year!

The demand for locally produced food has been so strong that farmers have gone to extremes to extend their normally short growing season. Domed fields are now a common sight, with low tunnels and high tunnels, as they’re called, serving as makeshift greenhouses over fields of produce. The tunnels add three months to the growing season. Even livestock growers are seeing a 25 percent increase in business thanks to an increase in farmers’ markets and consumer demand. One livestock grower realized a 20 percent increase in revenue thanks to the growing interest in locally grown food.

If you’re interested in building one or more partnerships with local stores and farmers’ markets, consider what types of risks such partnerships might expose your business to. Areas to consider:

• Transportation and delivery – How often will you need to supply your partners with product?
• Food safety in various locations – Farmers’ markets may not be automatically conducive to safe storage processes. What will the costs/risks be to set up in a temporary location regularly?
• Product recall concerns – Even on a micro level, products can suffer the same contamination as any large-scale operation.

Review now your risks before taking on a more local market. With some common sense planning, you could increase your profitability without increasing your risk exposures. Another thing to consider, of course, is your insurance!  If you begin something new – delivering to local vendors, or operating at a farmer’s market, or your own vegetable stand, you should certainly let your agent know.  The change in risks could affect your premium and your coverage.

Understanding the risks involved in your egg production operations requires a comprehensive risk assessment and coverage review.  

A few areas of loss potential include:

• Automated processes. Your operation relies on machinery in order to speed your product to market. Keeping equipment in working order should be a top priority. Also, having contingencies in place for equipment breakdown can reduce loss of product and profit.
• Electricity. Automation cannot happen without electricity. Also, refrigeration, animal safety, and safe storage practices are driven by power availability. Ventilation, water, and feed processes often require power to keep poultry safe and to increase egg production. What’s your power backup source?
• Buildings. A direct loss of one or more buildings could irreparably damage your operations. You could lose not only housing for your animals, but also the animals themselves. What is your contingency for loss of a building?
• Poultry. Without chickens, you have no business. Making sure to have healthy animals that are housed and fed properly is essential. Birds respond quickly to changes in environment. Put in place now a process by which you can reduce the impact of operational glitches on your poultry population.
• Workforce. From transportation to poultry handlers, your farm business relies on manpower to maintain a lucrative operation. Understand how a loss of either farm hands or transportation providers can impact your business.

When examining your risks, look at future loss potential, including income loss. Don’t forget to evaluate the impact of new regulations for animal handling and housing as well as food handling and quality standards on your operation. If you’re unsure what to include in your risk assessment, contact me for a risk consultation. I can show you how your current farm insurance coverage stands up to the risks your business faces.

Flikr photo credit: †whiteknight†

Looking at the UK’s response, US farmers can learn some valuable lessons. Most importantly, the UK government did not designate the outbreak as a medical emergency, which tied the hands of those agencies set up to respond to outbreaks. Then when the emergency was proclaimed, the agencies were slow to assemble their emergency response teams.

Also, the outbreak was discovered on one farm during a bank holiday weekend. Charges that the government could have reduced the number of exposures by closing the establishment on Friday instead of waiting until the following week imply that the 93 cases at that farm could have been much lower.

What can US farmers do to reduce the risk of spreading infectious disease among visitors? If your operations are open to the public, put processes in place that limit the amount of exposures guests have to your livestock. Establish and enforce a hand-washing policy and supply jumpsuits and boots to all visitors to limit any potential virus from leaving your facility.

If your visitors are occasional, take the same precautions. Also, make sure visitor vehicles are not parked near your vehicles or animal enclosures. Your visitors could also be bringing the virus to you, so take extra care to ensure you limit exposure to outside equipment and people.

As for the animals, those that come in direct contact with visitors should be tested regularly for virus and other disease contaminants. If possible, keep those animals separate from your other livestock to prevent widespread outbreaks.

If you suspect or see any signs of illness, close your operations to visitors and quarantine any animals under suspicion.

What ways do you use to protect your livestock and visitors from viruses and disease?

Photo credit: Paul-W

The hen supplier Maine Contract Farming was recently handed an invoice for $25,000 in animal cruelty penalties and $100,000 to help the state monitor hen and egg operations throughout the state. The charges came after undercover video revealed allegations of animal cruelty, showing animals being mistreated and left to die in trash bins.

The fines aside, the company could see longer tailed business backlash from the incident. Since videos exist showing the instances of animal cruelty, the company could have a difficult time recovering from the negative image and the resulting impact on business profits. Maine Contract Farming has released statements reiterating their commitment to animal safety and welfare, but damage to the reputation can take years to overcome.

From an insurance perspective, such illegal or unethical practices may be covered under an employee practices liability policy, or errors and omissions policy. Also, larger farm businesses with less management oversight would do well to consider purchasing business reputation coverage. While many companies do their best to prevent such instances, larger operations may lack the supervisory capabilities of say an overnight shift or a large-scale operations spanning a number of facilities on the same property.

Preventative measures include installing video cameras in unsupervised areas. Alert employees to their responsibilities and train employees regularly on proper animal handling and operations oversight. Also, introducing accountability to your employees can help to reduce significantly the likelihood of cruelty or misbehavior that could damage irreparably your reputation and business practices.

If you’re unsure what your policy covers, contact me and I’ll go over your current policy with you. If you don’t have coverage for employee practices liability, contact us today.

Flickr photo credit: Max xx

How extensive the damage is remains to be seen, but the West Virginia Commissioner of Agriculture, Gus Douglass, has requested cooperation from the agriculture community and urban residents to determine the levels of damage caused by deer throughout the state. The state will measure direct crop losses; property losses; increased costs to deter deer, and; changes to what farmers plant in order to attract fewer deer. 

The study* will attempt to uncover the true level of damage caused by deer in the state, and hopefully will help with deer management programs going forward. But farmers in all states where deer live have their own issues with controlling the animals. If deer are a problem in your farm operations, consider the following preventative measures:

• Fencing. For fencing to be an effective deer deterrent, it has to be high enough to prevent deer from jumping over it. While most experts contend that deer choose to go under or through a fence rather than jump it, if they’re hungry, they’ll jump. Deer can jump up to ten feet high.  Researcher at Montana State University has shown that fences that are 6 feet high can be an effective deterrent to keeping deer and elk from crops.  Here is a resource for cost effective methods to modify existing fencing here. 
• Electric Fencing. Electric fences can be an inexpensive way to deter deer from destroying your crops. Fencing off small fields is a cheap way to decrease the deer damage. However, deer probably won’t be deterred by the shocks of an average setup unless it’s through the nose. Many farmers will place peanut butter baits on the fence, giving deer a jolt when their noses touch the bait.  
• Repellents. Used regularly, this can be an expensive option, but modern repellents are successful in keeping deer damage to a minimum.  Dogs can also be a very effective repellent – if confined to the property, the smell of their urine when marking the property works well, with the added bonus of rabbit, mice, and groundhog eradication. 
• Noise. Alarms, and automated lights are just a few ways to scare deer from the property.  However, to be most effective, they should be random, and motion activated.
• Deer management programs. Work with your local game commissioners to discuss and resolve deer control issues. Many commissions offer special hunting licenses for areas of heavy damage.

Deer damage crops, trees, plants and flowers and the damage is increasing every year as populations continue to climb.  Disease and parasites which infect deer can affect livestock.  West Virginia is conducting a Deer Damage study*.  Farmers across the nation have issues with deer.  What deterrents or deer control methods have you used?  Which ones have you found to be effective, and which ones haven’t?  How much crop/livestock loss to you attribute or factor in to deer and other pests?

*Read the study details: http://www.wvagriculture.org/news_releases/2010/5-13-10.html

Flickr photo credit: The Crow Hand

Yet that’s exactly what one former tomato grower is charged with. Frederick Scott Salyer has pleaded not guilty to charges of conspiracy to inflate the price of tomato products. Of all tomatoes grown in the US, 95 percent is grown by five companies based in California. At the moment, there are no charges brought against Salyer’s alleged co-conspirators.

The U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration is cooperating with the Justice Department to provide evidence that the alleged monopolistic practices of the businesses in question have harmed market values. They’re also providing information on other alleged monopolies – namely, the meat packing industry. Allegations of price manipulation have been lodged against five of the country’s top meat packing businesses. Antitrust has indeed infiltrated agriculture.

In agribusinesses, much like any other business operation, the same rules apply. Just because the product is food doesn’t negate the need for market protection from price fixing.  For that reason, farmers along the supply chain and beyond need to carry the necessary insurance coverage to protect against any claims of illegal activity.

Ask these questions:

- Does your current general liability insurance policy cover errors and omissions? If so, does that include illegal acts?

- Where in the supply chain does your operation fit? Is there any collaboration among you and key decision makers on the purchasing side?

- What are your contractual obligations to your buyers? Have you assumed any additional liability in your contracts that could leave you on the hook for their misdeeds or errors?

- Has your buyer convinced you to sell only to his or her company or offered you some exclusivity deal?

If you’re not sure how much liability or liability coverage you have currently, contact a farm insurance specialist to review all your contracts and exclusions. Agreements made between you and your buyers could cause unnecessary litigation in the future.

*Department of Justice link relating to Salyer case:  http://www.justice.gov/atr/public/press_releases/2010/258324.htm

Flickr photo credit: Ben McLeod

The proposed cuts come from the crop insurance program and are three times that of past proposed cuts that were rejected by Congress. Worse, the Congressional Budget Office, having seen the proposal, has reduced the budget available for use in the next farm bill budget by a staggering $3.9 billion. With skyrocketing crop insurance liabilities – $80 billion in 2009, up from $31 billion in 1999 – farmers will be hard pressed to find essential coverage for all farm business risks. 

Farmers need to increase the emphasis on risk management and preventing those risks that can be controlled. Some areas of concern include:

Equipment safety. Make sure your machinery and all farm-related equipment is in proper working order and that all workers understand how to use equipment correctly. Train all new employees on equipment use and make sure your equipment is inspected regularly to safeguard against accidents.

Property safety. Inspect your buildings and grounds every week to ensure buildings are free from debris or damage and make sure the grounds pose no hazards such as uncovered wells, ground water contamination risks, or electrical hazards.

Emergency training. At least two people on your property should be trained in handling emergency situations. Ideally all employees should have basic first responder training. Also, make sure to stock necessary emergency supplies.

Animal safety. Keep dangerous animals separate from places where humans interact with other animals. For example, don’t pen bulls near horse-riding rinks. Make sure you safeguard visitors from livestock and pets, such as dogs.

Chemical safety. Store chemicals properly and away from both ground water sources and livestock. Lock all storage facilities and make sure the buildings are maintained to prevent contamination of the chemicals and potential fire or health hazards.

Limited operation entry. Make sure to post adequate signage spelling out clearly visitor requirements, such as hunting permissions and supervision of children.

As the new farm bill takes shape, it’s difficult to say if there will be a significant reduction in insurance coverage. The smart farmer will plan now to lower risk potential in order to offset any lack in future coverage.

USDA Standard Reinsurance Agreement:  click here

Flickr photo credit:  ƒernando