SPOKANE — There’s no quick-and-easy answer for farmers to determine which type of crop insurance is best for them, industry leaders say.

But there are some good questions they can ask themselves and their crop insurance agent to reach an answer.

The Tri-State Grain Growers Convention offered a crop insurance panel discussion Dec. 2 in Spokane.

The drought this year meant an “unexpected swerve” for many farmers, who found themselves underinsured or discovered that their crop insurance program didn’t work the way they thought, said Andy Juris, a Bickleton, Wash., wheat farmer and vice president of the Washington Association of Wheat Growers.

Juris suggested growers look back 10 years at their gains and losses, analyzing their risks.

“We’re paying a lot of money for these insurance policies,” he said. “Most of us probably wouldn’t buy a high-priced piece of equipment and then just go hands-off and not worry about it.”

Randy Fortenbery, small grains economist at Washington State University, received phone calls this year from farmers concerned they weren’t receiving the same price covered in the insurance as their neighbor, or that grain elevators were offering a lower price than the price on the Portland market.

“You’re not getting guaranteed the market price, you’re getting guaranteed the Portland price for your insurance product,” he said.

Fortenbery outlined how the USDA Risk Management Agency determines soft white wheat prices for crop insurance programs.

The agency looks at soft red winter wheat daily futures prices on the Chicago Exchange from Aug. 15 to Sept. 15 for the contract that expires in September of the following year. The agency uses the average as the guaranteed price for the next summer’s harvest. The risk of the price changing between that timeframe and harvest is determined by the implied volatility of the last five days of the discovery period.

To calculate the soft white wheat price in the Pacific Northwest, RMA takes the soft red winter wheat futures contract and adjusts for a soft white wheat premium, using the five-year average between Aug. 1 and Aug. 31.

Farmers have the option of buying a crop insurance revenue product with harvest price inclusion, Fortenbery said. If the harvest price is higher than the price guaranteed in the previous September, that’s the price used to calculate expected revenue and determine an indemnity payment.

For a higher premium, farmers could buy harvest price exclusion, which means they would not benefit from a price increase between the time they bought their insurance policy and the time they collect on it. It’s not a popular option, but some growers use it, Fortenbery said.

“It’s really important to think carefully about what it is you’re trying to insure, what risk you’re willing to take and what risk you need to give up when you pick between these products,” he said.

Panel moderator Nicole Berg, a Paterson, Wash., wheat farmer and vice president of the National Association of Wheat Growers, weighs the cost per acre of insurance.

As an example, if the cost is $1.90 per acre to cover 65% of her farm or $1.95 per acre at the next level of coverage, she weighs whether the additional bushels of coverage for her farm are worth the higher price.

Juris recommended farmers be hands-on, and ensure their crop insurance agents are providing adequate service and correct paperwork. He noted it’s knowledge he’s gained over the years through “error and trial.”

“If you have an agent that sends you a stack of paper in an envelope with a sticky note that says, ‘Sign,’ and no explanation, I would probably look for another crop insurance agent,” he said. “I like to know what I’m signing, especially when we’re paying high-dollar amounts. It’s not just something I want to sign without understanding exactly what I’m certifying and verifying.”

Crop insurance agents should explain the difference between insurance plans and keep farmers in the loop on new developments, usually mentioned through grower associations or events, said Ben Thiel, director of the RMA regional office in Spokane.

“A good agent is going to explain things that are new that might be of particular interest to you,” Thiel said. “(If) you bring it up, and they don’t know what it is, your agent may not be the most knowledgeable on new things going on.”