There is a sea change occurring with crop insurance. The Supplemental Revenue Assistance Payments program (SURE) offers disaster payments for crop farmers located in declared disaster counties or adjacent counties or who suffer 50% crop revenue loss due to weather.
SURE provides a whole-farm revenue guarantee, but it is directly tied to crop insurance coverage, says Dennis Daggett, manager of crop development for John Deere Risk Protection. If a farm's actual revenue drops below the SURE guarantee, SURE pays up to 60% of the difference. All guarantees and actual revenues under the program are calculated as the sum of all crops in all counties in the farm operation.
"You are not eligible for SURE unless you buy insurance on each crop of economic significance," Daggett says. "Farmers need to start talking to agents now about the best level of coverage."
Farmer Control. The revenue guarantee provided by SURE is based on the coverage selected, says Art Barnaby, Kansas State University economist. For example, a catastrophic policy will have SURE coverage based on 50% coverage at the 55% price, he says. A farmer who insures at 75% will have SURE disaster aid based on 75% coverage at 100% of the price election.
Crops not eligible for private insurance qualify for the Nonin-sured Assistance Program (NAP) through the Farm Service Agency. But it is not cheap. Compared with $100/crop in 2008, this year NAP rates ran $250/crop and $300 to $750/county, or $900 to $1,875/producer for all counties.
While most corn and soybeans are covered by crop insurance, only a small percentage of other crops, such as oats, wheat and hay, are typically insured, says William Edwards, Iowa State University Extension economist. In the future, SURE may change how those secondary crops are privately insured.
Pasture, crops that make up less than 5% of the expected total value of the whole farm, and crops for which the NAP premium is more than 10% of the value of the coverage offered don't require crop insurance to qualify for SURE.
Decisions Today for Tomorrow. What farmers have to make a decision on today is whether they will be eligible tomorrow, Daggett says. "If spring weather changes their planting intentions, and they switch crops, they have to make sure that crop is insured as well."
No premium is attached until the crop is planted. However, that's not the case for the NAP program. "They are going to require farmers to pay up front," Daggett says.
It's not too early to start updating actual production history (APH) for approval for crop insurance policies going into next year, Barnaby says. The incentive for updating APH now is that it ties into what you get from SURE guarantees, he says.
Top Producer, December 2009
- DECEMBER 2009