2010 Crop Insurance Considerations

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  • Some producers chose optional units, while others chose enterprise units for 2010
  • Corn and soybean producers have the option of selecting crop insurance policies ranging from 60% to 85% coverage levels
  • Grain-quality losses could potentially be a covered loss for crop insurance policies

 

With federal crop insurance, every year is different, and with the multiple options available to producers, there are many variable results from crop insurance coverage at harvesttime. This year (2010) will be no different, with some producers choosing APH (yield-only) policies vs. crop revenue coverage (CRC) or revenue assurance (RA), with a harvest option (RA-HP), policies (yield and price). Producers also have differences in the level of coverage; some producers chose optional units, while others chose enterprise units for 2010.

In the Midwest, most corn and soybean producers in recent years have tended to secure some level of CRC or RA-HP policies for their crop insurance coverage rather than standard APH policies. Producers like the flexibility of the CRC and RA-HP policies that provide insurance coverage for reduced yields, as well as in instances where the harvest price drops below initial base price. In 2010, the APH policies and CRC or RA-HP policies will function similarly, with all losses being based on yield losses below guaranteed yields. The only difference will be that the payment rate that is used to calculate potential crop insurance indemnity payments in 2010.

The payment rate for APH policies is set at $3.90/bu. for corn and $9.15/bu. for soybeans, for every bushel that the harvest yield drops below the guaranteed yield. However, potential indemnity payments with CRC or RA-HP policies will be paid at a much higher rate for every bushel of yield below the guarantee yield. Final prices for CRC or RA-HP policies will not be finalized until later, but were estimated at $5.36/bu. for corn and $11.44/bu. for soybeans, as of Oct. 25, 2010.

Corn and soybean producers have the option of selecting crop insurance policies ranging from 60% to 85% coverage levels. While 85% coverage levels are fairly common with APH policies, coverage levels of 70%, 75% and 80% are much more common with CRC or RA-HP insurance policies, due to more affordable premium costs. The level of insurance coverage can result in some producers receiving crop insurance indemnity payments, while other producers receive no indemnity payments, even though both producers had the same guarantee and the same final yield. For example, at a proven corn yield of 180 bu./acre, a producer with 85% coverage would have a 153-bu./acre guarantee, while a producer with 75% coverage would have a yield guarantee of 135 bu.

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