Archer Daniels Midland Co. plans to use drones to gather data on crop insurance claims as soon as the summer of 2016, its risk services head told on Wednesday.

ADM's Crop Risk Services Inc won clearance to use drones earlier this month from the Federal Aviation Administration, which currently bans their commercial use, and will begin testing the technology in the U.S. Midwest this year.

The unmanned aircraft can gather data about crop damage from hail, wind, flooding and drought, and automatically upload the information to the company's claims software, Greg Mills, president of ADM CRS said.

The company is one of a small number of businesses with agriculture connections, including Monsanto Co.'s Climate Corp. and Trimble Navigation Ltd., that have received exemptions to the FAA's ban on commercial use.

The FAA proposed rules on commercial drones in February that limit their use, but final regulations may not be in place for two years.

Mr. Mills said cost savings from using the drones were likely to be "significant" for ADM CRS, but declined to give any detailed estimate.

"I think it will create some general efficiencies and some specific efficiencies for claims," Mr. Mills told, adding the company already owns two drones and has contracted for another two.

The FAA exemption allows ADM CRS to use only Phantom 2 Vision quadcopters made by Shenzhen, China-based Da-Jiang Innovations, which according to the company's website, cost about $900 apiece. ADM CRS would need further FAA approval to fly different aircraft.

Drones can be deployed to find and assess multiple areas of crop damage over a broad area. Currently, claims adjusters often have to physically walk out into a field to measure the extent of crop damage, Mr. Mills said.

"The goal is to test the savings to the business in the Midwest and then potentially release nodes of equipment by next spring to be used for the summer of 2016 for use in a larger area," he said.

The FAA exemption allows ADM CRS to fly its drones only within 400 feet of the ground and within sight of the operator. Pilots must also have a farmer's permission to fly over their land.

Crop insurance is used by farmers to protect their income from losses caused by natural disasters. About 90% of planted farmland is covered by insurance every year.

Source - http://www.businessinsurance.com/