Managing multi-peril crop insurance


Managing multi-peril crop insurance

Published: 07 October 2016

Norms and rules

The aim of multi-peril crop insurance is to protect the individual producer against catastrophic events beyond his control. Drought remains the single biggest risk covered under this insurance product. However, the difficulty lies in distinguishing between crop losses as a result of uncontrollable factors such as drought and crop losses as a result of a lack of acceptable farming practices.

For this reason the producer has to adhere to a set of norms and rules in order to qualify for cover for his crops under this product.  

What can be regarded as bad or unacceptable farming practices?

Unfortunately it is not easy to establish a set of rules that will apply to everyone. In principle, farming practices that can be deemed the proven norm for the area or the same production conditions, must be followed. Below are two of the factors that could play a role in this:

  • Last acceptable emerging dates

One norm that is applied strictly is the last acceptable emerging date. It is estimated that the average decline in maize production for the first four to six weeks after the optimum planting date for an area has been reached could be as high as 50 kg/day. Although it is possible to still achieve a good crop in some years once the optimum planting window has been reached, the risk is very high.

One of the biggest risks with regard to late planting is frost. It should be borne in mind that there is already a 10-30% chance of frost by mid-April in the cooler summer grain-producing areas of South Africa. Another factor is the lack of heat units: This is a problem particularly in wetter years when temperatures are lower and there is more cloud cover. The recent season cannot be regarded as the norm as it was extremely dry with very high temperatures and consequently more heat units in the late summer and autumn. Frost also occurred later than normal. 

  • Plant density that is too high

This is a very controversial matter as it has a lot to do with cultivar and area. The “best plant cover” also differs from season to season and depends on climatic conditions. Note that the term “plant cover” is used, but that it actually refers to the combination of the width of rows and the number of plants per hectare. Plant cover is the percentage of area covered by plants, as seen straight from above. It is the size of the factory receiving energy from the sun for photosynthesis. The term then used is radiant use efficiency, in other words the amount of grain or dry material produced per unit of energy received. Therefore, if water is not restricted, the area of the factory should cover as close to 100% of the ground surface for the most efficient use of solar energy.

If water is restricted, water use efficiency should be high to make the best use of the available water. A fully covered leaf surface requires a lot of water to transpire continuously otherwise the plant will suffer heat and drought stress. Theoretically, a smaller percentage leaf covering therefore results in less water use through transpiration (through leaves). However another factor, namely surface evaporation, affects water use efficiency. Water lost as a result of surface evaporation does not contribute to the crop.  

The problem, however, is that in times of drought or when water is restricted, plants with a large leaf surface covering still transpire maximally or need water. On the other hand, smaller leaf areas expose larger ground surfaces to the sun and after a while the topsoil is dry and no losses occur as a result of surface evaporation. However, better use is now made of the water in deeper soil layers as with a smaller plant cover that has to transpire there is less demand for it.

Other factors that play a role are soil temperature and the movement of wind between plants.

Plant cover therefore has to be a function of the rainfall character (how regularly and how much it rains) and heat units. A denser plant cover can do better with favourable groundwater conditions and heat units, but definitely increases the risk in dry periods. The best practice is to reduce yield volatility and rather strive for a slightly smaller yield in very good years but still acceptable crops in bad years. Plant covers that are too dense therefore increase the risk of drought damage and plant covers that are not dense enough in turn increase the risk of not meeting the target. Therefore the norms of the area as well as the norms of the specific cultivar, as recommended by the seed company concerned, should be adhered to in order to ensure that the right balance is struck between radiant use efficiency and water use efficiency.     


It is important to adhere to the norms so as not to incerase the risk of a poor crop, otherwise the Multi-risk insurance cover will not come into effect. An effort should also be made to farm more sustainably with less volatility in crops between seasons so that acceptable crops are still achieved in bad years.