Crop Insurance

What is a Margin Protection Policy?

Margin Protection is a new policy for the 2018 crop year and beyond. It is an area plan that covers gross profit margin in lieu of gross revenue like most other insurance policies. Coverage levels are available up to 95%, and Margin Protection can be a great way to add increased, subsidized coverage to your operation. A few things to keep in mind:

  1. Margin Protection coverage is an area plan and will not cover you for individual farm losses. Market Value, Estimated Yield, Estimated Inputs, Final Yield, Final Inputs, etc are all set on a per crop, per county basis by RMA.
  2. Margin Protection claims can be generated by loss of bushels, loss of commodity market value OR unexpected increase in input costs
  3. Margin Protection can be purchased by itself OR with an underlying MPCI policy (great if you are worried about individual farm losses)

The deadline to sign up for this policy is 9/30


Is Hay Insurance Available?

Yes you can insure your hay. If your county has a PRF (Pasture, Rangeland and Forage) policy available, you can use this policy to insure your hay or grazing ground against lack of rainfall during any (minimum) 4 month period of your choosing. Sales closing for a PRF policy is 11/15.

If you are not in a county in which a PRF policy is available, we may be able to still get your hay crop covered by making a special request to RMA. Contact our office and let us know before 3/15 if you are interested in this option.


Can you use my FSA information to report my crops?

You are still not required to certify your acres at the FSA office. However, all crops are required to be reported by identification numbers (CLU). If you decide to certify your crop, we are able to use the FSA 578 form to help meet this requirement, but you will still need to check their forms for accuracy, and we might still need additional information and signatures from you. If you do not certify or want to come to our office before meeting with FSA, we can also report your acres at our office and then assist you in providing that information. Again, you may still be required to go to the FSA office, check for accuracy and sign their respective forms.


How do I know what the important dates are for Crop Insurance?

You can access all important dates for crop insurance by going to the Important Dates link. If you would like reminders throughout the year, sign up for our automated texting (text the word CROP to 797979) or sign up for email updates


Am I required to go to the FSA office and certify my crop to be eligible to sign up for Crop Insurance?

A farmer is still not required to certify at the FSA office to be eligible for crop insurance. However, it might be in your best interest to contact your FSA office to check on a couple of things:

1. Conservation Requirements: It is required that every farmer must comply with the highly erodible land and wetland conservation requirements of the Food Security Act of 1985 (form 1026A). Farmers who do not sign and file a form stating their compliance will not receive any subsidy for their crop insurance premium. If you are new to farming or have created a new entity for your farming operation, make sure you fill out the form at FSA to comply with the conservation program. In addition, contact our office so we can fill out any supplemental conservation compliance forms.

2. Supplemental Coverage Option Unavailable with some FSA programs: If you are seriously considering signing up for SCO, please consider the programs that you wish to sign up for at FSA, as they have a direct connection on your eligibility to sign up for SCO, specifically the ARC program. If a producer elects to sign up for ARC, he will not be eligible to sign up for SCO at the same time. This is the first time that a program at FSA has had a direct impact on any component of Crop Insurance. However, we expect this trend will continue as the connection between FSA and the Federal Crop Insurance Program furthers. Please refer to the included FSA Changes flyer for more information on the available programs at FSA.

 


What are the most recent programs at the FSA and how do they affect my crop insurance?

Price Loss Coverage: Price Loss Coverage (PLC) will make payments to farmers if a covered commodity’s national average marketing year price is below the reference price (for corn it is $3.70, for soybeans it is $8.40, and for wheat it is $5.50).  Payments made on up to 85% of a farmer’s base acres, and farmers will get a one time opportunity to update their payment yields for the program as opposed to keeping their CCP yields.

It is important to remember that if a farmer does not inform FSA of their program election by the deadline, which right now is December 15th, 2014, he will be in no program for 2014 and will be automatically enrolled in PLC from 2015-2018.

 

Individual Area Risk Coverage (ARC): Individual ARC pays out when the actual revenue from all covered commodities on the farm is less than the Individual ARC guarantee, which is based on the 86% of the farm’s actual yields and the higher of the national marketing year price or the reference price for the commodity (included in the 2014 Farm Bill. Reference prices are $3.70 for corn, $8.40 for beans, and $5.50 for wheat). Individual ARC pays you on 65% of the farm’s base acres.

 

County Area Risk Coverage (ARC): County ARC pays out when the county actual revenue is less than the County ARC guarantee, which is based the 5 year olympic average of the county yields and the marketing year average price. County ARC pays you on 85% of the farm’s base acres.

 

Comparing the 3 FSA Programs:

PLC

ARC Individual

ARC County

Payout Acres 85% of Base Acres 65% of Base Acres 85% of Base Acres
Price Coverage Yes – As set by Farm Bill Yes – Rolling 5-year Olympic  Average Yes – Rolling 5-year Olympic  Average
Yield Coverage No Yes – Individual Farm Yield with all covered crops combine (whole farm unit) Yes – County Yield
Individual Farm Coverage No Yes No
Payment Cap No Yes – 10% of the Benchmark Guarantee Yes – 10% of the Benchmark Guarantee
Affect on Crop Insurance Programs None No SCO available No SCO available
Can Mix and Match Coverage Yes – program is by crop and producers/land owners elect which base acres are enrolled No – all crops and base acres are enrolled if chosen Yes – program is by crop and producers/land owners elect which base acres are enrolled

 

Electing a program: All producers and owners with a share of production on a farm must make a one-time, unanimous program election. This program election is not enrollment. As a reminder, if a unanimous decision is not made, the farm will not be enrolled in any program for 2014 and will automatically default to PLC for the 2015-2018 crop years. Once an election is made, PLC, County ARC, and Individual ARC is in effect for the 2014-2018 crop years.

Restrictions on Eligibility: If the sum of the base acres is 10 acres or less, a payment will not be made

Payment Dates: Payments will be made after the end of the respective crop year, not before October 1st of that year.

Based on the current information available through FSA, it is our understanding that the County ARC program will have the highest payment amounts of any of the programs. However, any farm that elects to participate in Individual or County ARC will not be eligible to enroll in the SCO coverage. If you are interested in learning more, please contact our office and we can help.


What is Whole Farm Revenue Protection?

Whole Farm Revenue Pilot Program (WFRP) is a whole farm insurance product that provides producers with revenue protection over all of their commodities on the farm, including animals and animal products. It insures against loss of revenue due to unavoidable natural causes that occur during the insurance period. Coverage is based on the lower of a farmer’s average expected revenue using the five most recent consecutive tax years or the expected revenue for the current crop year. Losses are based on whether the revenue of commodities produced during the insurance year falls below the insurance guarantee. WFRP could be a good opportunity for farmers that produce uninsurable commodities or specialty crops, such as hay or fruits and vegetables, to cover their revenue.


I’ve had a few bad crop years. How will my production and guarantees be affected?

For crop insurance purposes, a record of all of your yields are kept on each farm for the most recent 10 years the crop is planted if you have individual coverage (RP, RPHPE, YP). The average of those years is then used to help establish your crop insurance guarantee for the next crop year. The effect of a good or bad production year on your insurance guarantee is dependent on how many years are in your crop insurance records. In addition, adding endorsements to your policy like the Trend Adjustment (TA), Yield Adjustment (YA), Yield Exclusion (YE) and Yield Cup (YC) can be a great way to take advantage of database increases and safety nets to make sure your production average doesn’t decrease due to loss years.


What is a Beginning Farmer and Rancher, and how do I know if I qualify?

As part of the 2014 Farm Bill, a new category of farmer has been established for crop insurance. A Beginning Farmer and Rancher (BRF) is an individual who has not actively operated and managed a farm or ranch in any county, in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than 5 crop years, excluding an crop year that the BRF was under the age of 18, in post-secondary studies, or on active military duty. Any individual who qualifies as a BRF is eligible to receive an extra 10% subsidy on their crop insurance premium in addition to having their administrative fees waived. Please note that a BRF status is different than a New Producer status, which is established on a by crop, by county basis.


What is the Supplemental Coverage Option?

The Supplemental Coverage Option (SCO) is designed to supplement a crop insurance policy by covering the deductible portion of an MPCI policy, up to 86%, with area-based coverage. SCO was included in the 2014 Farm Bill, and it is available through all crop insurance companies by county for wheat, corn, and soybeans for 2015. It is only available for individual policies (YP, RP, RPHPE).

SCO is an optional endorsement that must be added to a policy at an additional cost by the sales closing date for the crop (9/30 for wheat and 3/15 for corn and soybeans). Here is how it works:

Joe Farmer carries 70% RP coverage on 100 acres of wheat. He is in a county with SCO available and elects to add the coverage to cover his deductible. This will give him an extra 16% coverage on his 100 acres (86% – 70% = 16%). At claim time, Joe Farmer ends up with a loss on his 70% MPCI policy. Since SCO is area-based, Joe must wait until both the county yield and the final price are established by RMA before he knows if his 16% SCO endorsement is payable.

SCO may be beneficial to a farming operation by offering extra coverage at a nominal cost. However, if a farmer decides to enroll in ARC at the FSA office (see the attached FSA Changes Flyer for more information), he is ineligible to elect SCO coverage.