Rain, Rain Go Away: We only want to pick apples on Saturdays

Diversifying into agritourism is a time-tested strategy to generate additional revenue while hedging against downswings in agricultural product prices. But, farmers can’t easily insure against the risk of rainy weather keeping seasonal customers away. They can insure against price drops, which further reinforces the commodity structure of agriculture. Farmers in the northeast are forced to reckon with this as rainy weekends dampen the crowds.

When the New York Times runs a splashy headline like, “The Apple-Picking Apocalypse of Upstate New York,” it seems like something is not going well for the U-pick orchards of the northeast. The thing that isn’t going well is the weather, especially on weekends. Farmers attracting throngs of big city visitors to pluck apples from beneath their bows are exceptionally dependent on nice weekend weather.  Sunny with temperatures in the low 70s isn’t good enough for a Thursday afternoon- it needs to be on a Saturday or Sunday to motivate families trekking a couple of hours for their McIntosh fix.

When eight weekends in a row turn out rainy, it packs a real wallop to farms dependent on those crowds. This is exactly the situation faced by many of New York’s apple growers (and likely other growers, too; they just don’t happen to be close to a major media market). With rainfall above normal and it largely falling from the sky on weekends, revenue from visitors has fallen by a half to a quarter for many New York apple growers that cater to the crowds.

The shift to agritourism arrived in force in the late 1990s in response to declining wholesale apple prices. But, although agritourism has provided the bulwark many farms need to survive to the next generation, agritourism doesn’t bring the same risk management options. Farmers, especially those in historically important regions for their specific commodity (apples in New York, cherries in Michigan, and pumpkins in Illinois), have insurance options that cover risks. For example, farmers can choose from insurance policies that protect against decreased harvest or falling wholesale prices for many commodities. Federally subsidized premium prices keep costs affordable from year to year, despite repeated losses.

Agritourism doesn’t offer the same risk management options. Farms can’t easily ensure their revenue from u-pick or agritourism customers if poor weather (or a whole host of other risks) keeps customers away on the few days per year that seasonal operations are open. In theory, insurance products like “business interruption” coverage could be helpful. However, the pandemic proved how hard it can be to recover from an insurable interruption to business. Good insurance products depend on ample data demonstrating the predictability of risk- as well as a strong dose of unlikelihood that makes the policy profitable to sell. These factors haven’t been present in agritourism operations.

Diversification is still an effective, risk-reducing choice for many farms. Despite that, farming remains an industry with much exposure to vulnerability. Below we offer a few insurance resources for folks that may want to explore what options could be right for their operation.

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