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Simpler Crop Insurance Choices

May 25, 2010
 
 

Beginning in 2011, your crop insurance choices for grain and oilseeds got simpler. According to the Risk Management Agency (RMA), policy premiums should not differ more than 5% from what you paid in the past.
 
In a nutshell, if you want individual coverage on your farm:
-          You have three choices: Yield Protection, Revenue Protection or Revenue Protection Without Harvest Price.
-          Both the yield and revenue contracts will be available in all counties that previously had Crop Revenue Coverage (CRC), Revenue Assurance (RA) or Actual Production History (APH).
-          The new "Basic Provisions” are the same for all crops and all policies (except pasture, range and forage), making paper work much simpler to digest.
-          Revenue and yield policies will have the same (minimum) starting price, and it will be based on prices traded at the commodity exchanges such as the Chicago Board of Trade.
-          Harvest time prices no longer will differ between CRC and RA since they are now one policy.
-          Rating methods to determine premiums will be the same for all the insurance products, eliminating the differences between CRC and RA that were often seen in the past.
 
The new Yield Protection replaces the multiperil (MPCI) Catastrophic Coverage (CAT) or Actual Production History (APH) coverage. As in the past, the price per bushel is the one set early in the year; there is no adjustment for market price movement.
 
The Risk Management Agency combined or converted the former CRC, RA, Income Protection and Indexed Income Protection into one revenue policy. Like the former CRC and RA-with harvest price option, the new Revenue Protection will lock in minimum coverage early in the year and then calculate a fall price and the higher of the two will apply. Unlike past policies, in which you specified you wanted the fall harvest price option, under the new Revenue Protection plan, you get the fall option automatically. If you don't want the fall price option, you will have to specify that you want the Revenue Protection with Harvest Price Exclusion.
 
Here is how the old policies convert to the new policies for corn, wheat, cotton, grain sorghum, rice, soybeans, canola/rapeseed, barley, malting barley and sunflowers. Other crops remain largely unchanged except they have the same Basic Provisions now.
 
2010 Policy
2011 Policy
Crop Revenue Coverage
Revenue Protection
Revenue Assurance
     With Fall Harvest Price Option
Revenue Protection
Revenue Assurance    
     Without Fall Harvest Price
Revenue Protection
     with Harvest Price Exclusion
Income Protection/
     Indexed Income Protection
Revenue Protection

     with Harvest Price Exclusion

CAT Income Protection/
     Indexed Income Protection
Revenue Protection

     with Harvest Price Exclusion (50/100)

Actual Production History
     (CAT endorsement)
Yield Protection
 
Based on your purchase last year, your policy will automatically convert for 2011. You should receive a letter from your crop insurance agent/company confirming what you have; you'll need to let them know if you wish to change. Wheat growers will receive letters very soon (sales closing date is Sept. 30 for all types of wheat except Durum); spring-planted crops will get their letters this fall, according to RMA.
 
CAT terms (no optional units, no enterprise units) are unchanged.
 
GRP and GRIP are unchanged.
 
Prevented planting, quality claims, etc. are largely unchanged.
 
Visit: /files/combofr.pdf for the regulations. More information and, especially, details on discovery periods for projected price and harvest price and list of which exchanges will be used will be posted to RMA's site as soon as they are available.

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RELATED TOPICS: Farm Business, Crop Insurance

 
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