Crop Insurance Options Still Exist

June 24, 2008 07:00 PM
 
 
Greg Vincent, Top Producer Editor
 
While weather is cutting the list of planting options short for many Midwest farmers this year, there are some options still available with crop insurance programs. But producers need to be armed with knowledge of the programs and the coverage provided in their policy. Various options and scenarios are outlined on the Web site for USDA's Risk Management Agency.
 
Shirley Pugh, RMA's public affairs director, is hearing numerous reports of "weeds and mud” in the key crop growing regions, which prompted the agency to post the information to their home page yesterday. If a farmer is considering making a claim on prevented or delayed plantings, they must contact their local company or agent right away to ensure the options they are considering are covered in their policy, she says.
 
"The big deal, and we're trying to make sure everybody knows this, is to call their agent before they make any decision because they need to look at what they actually selected for their coverage.”
 
Insured farmers, however, are not limited to doing what is covered in their policy, if they choose another option, she says. "If you have insurance and you decide to do something that's not in your policy, that's fine. You just need to know how your crop insurance situation is affected by the actions you take after you're in the field.”
 
The case is the same if farmers have already made decisions and moved forward with replanting or if they have made a change in crops. Bottom line she says: "Talk to their agent now. Whatever status they're in right now, they need to talk to their agent to make sure they get the best possible solution out of this.”
 
Most policies have a provision for prevented planting, which means if you were prevented from planting due to weather conditions during the dates that are specified for that crop, then you likely have coverage, she says. But scenarios change depending on the policy chosen.
 
Following are the three corn examples taken directly from the RMA Web site are:
  1. Example 1: Insured producer takes PP payment after the final planting date and does not plant a crop for the year.
    Insured producer selects 75-percent coverage level on insurance policy resulting in $75,000 in total coverage (liability). Multiply $75,000 x 60* percent to get PP payment, $75,000 x 60 percent = $45,000 the insured producer would receive. *Could be different if insured producer has selected a higher level of PP coverage (either plus 5 or 10 percent above base 60 percent available by the sales closing date).
 
  1. Example 2: Insured producer plants corn after the final planting date but before the end of the late planting period (generally a 25-day late planting period available in all corn states) (for example, with a June 5 final planting date, the 25-day late planting period would be June 30).
    Production guarantee or amount of insurance will be reduced 1 percent for each day after June 5 the crop is planted. Example: Insured producer plants corn on June 12. The insured producer planted seven days after the final planting date for corn; thus the production guarantee or amount of insurance is reduced 7 percent. (In dollar terms, $75,000 - $5,250 = $69,750 insurance coverage in effect.)
 
  1. Example 3: Insured producer takes reduced PP payment on corn, plants soybeans no earlier than July 1, and still insures soybeans.
    With the late planting period for corn June 5-30, the producer cannot get PP payment if a crop is planted on land before the end of the late planting period. Producer will be eligible for only 35 percent of PP payment. Producer will also have to accept 10-percent reduction to soybean insurance coverage selection, since July 1 is 10 days after final planting date for soybeans. Finally, a 60-percent actual production history yield for the year on all acres claimed as prevented planting will be recorded for the year.
    For example, if the insured producer plants soybeans July 1 and collects corn PP payment on acres, then:
    • The coverage level is 75 percent with $75,000 worth of coverage (liability),
    • Multiply $75,000 by 60 percent to get PP payment ($75,000 x 60 percent = $45,000 PP payment),
    • Multiply $45,000 x 35 percent since the insured producer is going to plant another crop, $45,000 x 35 percent = $15,750 the insured producer would receive for corn prevented planting acres,
    • Insured producer will also have to accept a yield of 60 percent of APH for the year to be counted as part of their APH. (APH is a 10-year running yield average.) Example - APH is 140 bushels per acre, 140 x 60 percent = 84 bushels per acre recorded for APH that year, and used in calculating APH for future years.
 
Examples for soybean options can be found here.
 

 
You can e-mail Greg Vincent at gvincent@farmjournal.com.
 

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