March 15 is the deadline to purchase crop insurance for the 2009 crop year. Producers need to analyze how crop insurance fits into their risk -management and grain-marketing strategies for the coming year. Some farm operators have asked how the new ACRE or SURE (permanent disaster program) will affect 2009 crop insurance decisions. In my opinion crop insurance decisions should be made independent of the ACRE or SURE programs. Crop insurance coverage is based on the needs for individual farm units, as defined by crop insurance guidelines. The ACRE program is based on statewide revenue guarantees, and the SURE Program requires a county disaster declaration for eligibility. As a result, neither ACRE nor SURE are guaranteed to provide assistance to producers who have crop yield or revenue losses on individual farm units. Farm operators are encouraged to discuss 2009 crop insurance needs and options with their crop insurance agent before the March 15 deadline.
Bottom line on crop insurance decisions:
- View crop insurance decisions from a risk-management perspective.
How much financial risk can you handle if there are greatly reduced crop yields due to weather problems and/or lower-than-expected crop prices?
- Take the time to verify yields and keep good yield records from year to year.
You can greatly enhance your insurance protection with APH or CRC and RA-HP options at little or no extra cost by doing a good job of maintaining the maximum APH on farm units.
- There are a wide variety of crop insurance policies and coverage levels available.
Make sure you are comparing apples to apples when comparing crop insurance Premium costs for various options or types of crop insurance policies.
- Take a good look at the 80% coverage levels, as compared to 70% or 75 % levels, especially if you are forward pricing a considerable amount of grain.
You will be surprised how much additional protection can be added at these higher coverage levels for a modest increase in premium costs. Many producers will be able to guarantee over $500/acre for corn and over $300/acre for soybeans.
- APH (yield-only) insurance policies offer some very good dollar guarantees, and may be an option on some farm units for producers trying to control their premium costs.
Remember the APH policies protect against yield reductions only, and offer no protection against fluctuating grain markets.
- Be cautious when considering enterprise units,GRIP or GRIP-HP policies for 2009.
Enterprise units and GRIP policies become quite attractive due to significantly lower premium costs compared to optional units or CRC or RA-HP policies. However, enterprise units and GRIP policies are based on county-average yields, and do not necessarily cover losses from isolated storms or crop damages that affect individual farm units.
- Investigate the potential of the BYE on eligible corn acres.
There will likely be significant premium savings with the Biotech Yield Endorsement on corn acres in 2009. However, producers should find out all details of BYE prior to sign-up, and remember to follow the compliance regulations for the BYE.
- Where to get more information on 2009 crop insurance alternatives.
A reputable crop insurance agent is the best source of information to find out more details of the various coverage plans, to get premium quotes and to help finalize 2009 crop insurance decisions.
- Web sites with crop insurance information:
> University of Illinois FarmDoc: http://www.farmdoc.uiuc.edu/
> Iowa State Univ. Ag Decision Maker: http://www.extension.iastate.edu/agdm/
> USDA Risk Management Agency (RMA): http://www.rma.usda.gov/