Ag Alert Sept. 22, 2021

NATIONWIDE NEWS Insuring farm buildings during lumber price hikes

The following information is providedby Nationwide®, the#1 farmandranch insurer in the U.S.* Emerging fromCOVID-19, the building material marketplace—especially lum- ber—sawprices skyrocket andbecame the poster child for pricing volatility resulting fromsupply chain disruptions. But volatility inconstructioncostshasn’t been limited to lumber. And the drivers of skyrocketing building material costs weren’t limited to the pandemic. The market has been volatile over the last 18 months fromfactors likehighdemand, low interest rates, strong farmincomes and la- bor shortages. Such volatility in construction costs is a call formaking sureyouhaveadequate in- surance coverage for your farmbuildings. Consider these options. Inflation guard is an optional coverage endorsement. It automatically increases yourbuilding limitsbyaspecifiedpercent- age throughout thepolicy term. Threeper- cent is avery commonpercentageutilized in an inflation guard endorsement. The endorsement protects you from inflation- costs if you have to replace a lost building. “Say you insure a pole barn at $100,000 and add an inflation guard endorsement with a 3% rate of inflation. You would ac-

crue $3,000 in additional limits through- out the course of the policy year,” said Nationwide Risk Management Property Engineer RyanMichalek. Since the rise of COVID-19, inflation guard has sometimes been insufficient. It can’t alwayskeeppacewithchangingcon- structioncosts. Thatmeans policyholders may find themselveswith inadequatecov- erage limits after a loss of a farmbuilding, evenwith the additional coverage. Keep an eye on buildingmaterial costs andyour coverage levels soyou’recovered if you have to unexpectedly replace or re- pair a building. Another tool available tomanage con- structioncost volatility is theuseof blanket limits. Blanket limit coverage combines all building values at a location. Then, it provides this as a single limit available to pay for any loss at that site. “If you have two buildings on a farm, one worth $50,000 and the other worth $100,000, blanket limit coverage gives you $150,000 to pay for replacing those build- ings,”Michalek said. Blanket limit coverage also has limita- tions. As a coinsurance policy provision, it requires policyholders to estimate con- struction costs of covered buildings to avoid claims penalties. And while blan-

ket limit coverage protects single building losses, it can leave you underinsured for catastrophicsite-wide losses like those caused by a tornado or wildfire. “Blanket coverage is agood tool toman- age construction cost volatility. But a dili- gent effort must still be made to estimate construction costs to a highdegree of pre- cision,”Michalek said. Involatile times,makesureyouhavead- equatecoverage limits toprotect your farm buildings.Askyour local constructioncon- tractor for reconstruction cost estimates. But barley competes with other, high- er- value crops, and finding a market can alsobedifficult.Hayes saidbarley growers need to establish towhomthey’re selling. Those clients could be major West Coast players, such as Admiral Malting in California or a trio of companies in the Pacific Northwest—Great Western Mal t ing, Skagi t Val ley Mal t ing and LINC Malt. Or they could be up-and- coming ventures. Barley Continued from Page 4

Then, coordinate these values with your insurance agent to adjust your property policy coverage limits accordingly. VisitAgInsightCenter.comforexpert tips and information fromNationwide to help you navigate the changing agricultural landscape, run a successful business and maintainthesafetyof your farmoperation. *A.M. Best Market Share Report 2020. Nationwide, the Nationwide N and Eagle, and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company.©2021Nationwide “There are a handful of other smaller malt operations, but growers need to have that local connection established or build their ownmalt facility,”Hayes said, adding theywouldalsoneedtohavebreweries that are interested inpurchasing their barley. Hayes sa id he and hi s team are happy to share exper t i se. He may b e r e a c h e d a t 5 4 1 - 7 3 7 - 5 8 7 8 o r Patrick.M.Hayes@oregonstate.edu. (Kathy Coatne y i s a repor t e r in Bend, Oregon. She may be contacted at kacoatney@gmail.com.)

The Produce Safety Rule is Here; ARE YOU READY?

Farm Employers Labor Service (FELS), an aliated company of the California Farm Bureau (CAFB), has partnered with the Safe Food Alliance through a California Department of Food and Agriculture grant contract, as their designated training provider for Central and Southern California, to conduct the required Produce Safety training for growers. Presented in a free two-day remote delivery webinar format! What sets Safe Food Alliance, FELS, and Farm Bureau apart is their total of over 100 years of experience and our dedication to providing technical guidance and leadership to the California agriculture community. Most farms are required to have at least one designated supervisor who has been trained in accordance with the Food Safety Modernization Act (FSMA) Produce Safety rule. Upon completion of the course, attendees will receive an ocial certicate from the Association of Food & Drug Ocials.

California Ag Alert

FOLSOM FOLSOM LAKE CHRYSLER DODGE JEEP RAM 916-355-9999 www.folsomcdjr.com RED BLUFF RED BLUFF DODGE CHRYSLER JEEP RAM 530-366-3166 www.redbluffdodge.com

REDDING CROWN MOTORS 530-241-4321 www.crowndodgecalifornia.com YUBA CITY JOHN L. SULLIVAN CHRYSLER DODGE JEEP RAM 530-742-6406 www.johnlsullivandodgechrysler.com

California Ag Alert

The Food Safety Training Partnership is offering these training courses throughout California. You can find more information and register at foodsafetytrainingpartnership.com, or call 916-561-5672. Supported by California Department of Food and Agriculture

California Ag Alert

September 22, 2021 Ag Alert 13