Top Of Mind: Insurance Scramble

Top Of Mind: Insurance Scramble

You, dear reader, have weeks to make a decision that may impact farm profits for the next five years. No pressure, right? Crop insurance provisions in the new farm bill are supposed to strengthen and expand insurance coverage options for farmers and ranchers. The big change for farmers—and one we’ll continue to see—is a shift from traditional commodity price support to insurance, meaning farmers have more skin in the game. It boils down to the fact that direct payments are gone (a $14.3 billion haircut to the federal budget), replaced by two new programs that provide farmers the option to secure revenue- or price-based coverage.

One choice is Agricultural Risk Coverage (ARC), which is available on an individual or county level. This is the so-called “shallow-loss” program. If you choose the individual coverage option, all crops must be enrolled in that program because it is a whole-farm approach. Another program is Price Loss Coverage (PLC), which uses target prices to determine if farmers can earn payments. Oh yeah, and you can mix and match which crops are covered under which program. Confounded yet?

Make The Decision The program choice is a one-time election that locks you in for crop years 2014 through 2018. If you don’t decide, USDA will automatically enroll you in PLC, and you get no payment for 2014 if one is made. “One interesting change to note is that landlords no longer have to sign off on the program in a cash-rent situation,” says Roger Bernard, Informa Economics. 

In addition, farmers can exclude one or more yields from their actual production history (APH) if the county (or contiguous county) yield in that year was at least 50% below the counties’ simple average for the previous 10 years. The biggest impact on top producers is that crops will now be separated by practices to establish enterprise units. 

“The producer also will be able to elect different levels of coverage, a huge positive,” says Jamie Wasemiller, The Gulke Group. “In many cases, a producer with irrigation will have less concern about yield, so they might elect a lesser coverage level—unless they are concerned about price decline.”

Whew. This decision is going to take some education and time with your spreadsheets in the office. Keep up on the latest information about crop insurance by reading coverage from Farm Journal Media at Then make a date to visit with your crop insurance agent to determine the best fit for your farming operation. Time is of the essence. 

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