Many farm operators are now finalizing their crop insurance decisions for the 2010 crop year. March 15 is the deadline to purchase crop insurance for 2010. Following are some considerations:

BYE Crop Insurance Option for 2010

The USDA Risk Management Agency (RMA) has announced that the Biotech Yield Endorsement (BYE) corn crop insurance policies will be available to producers in Minnesota, Iowa and other corn-producing states on several biotech corn hybrids for the 2010 growing season. The BYE endorsement will provide a crop insurance premium discount of approximately 12-15% to corn producers who plant eligible biotech corn hybrids in 2010. Corn producers with an APH, RA or CRC crop insurance policy for 2010 can qualify for BYE, provided that a minimum of 75% of the corn acreage on a given farm unit is planted to one of the qualifying corn hybrids, and provided that they comply with EPA refuge acre requirements for the BYE biotech corn hybrids. Growers who are interested in BYE for their 2010 corn crop insurance should contact their crop insurance agent for more details.

Enterprise Units:

In 2009, RMA increased the federal subsidy for purchasing APH, CRC or RA insurance coverage under enterprise units, which combines all acres of a crop in a given county into one crop insurance unit. Many producers now use optional units, which allows producers to insure crops separately in each township section.

There are some substantial premium savings by switching from optional units to enterprise units. Producers in the Midwest can likely upgrade their 2010 crop insurance coverage for corn and soybeans to 80% or 85% with enterprise units for about the same premium cost as 75% crop insurance coverage with optional units. However, producers need to be aware of the limitations of insurance coverage on individual farms with enterprise units. In 2009, some producers had crop losses on individual farms, but were on enterprise units, and as a result were not eligible for any insurance indemnity payments. Enterprise units appear to work quite well when a producer has most of their land in the same general area and when supplemental hail insurance coverage is also part of the overall risk management plan. Producers should contact their crop insurance agent to better understand insurance coverage with enterprise units.

ACRE and SURE

The Average Crop Revenue Election (ACRE) and the Supplemental Revenue Assistance Payment (SURE) programs were added as part of the 2008 Farm Bill. The ACRE program offers an alternative method of calculating farm program payments triggered by crop revenues (yield x price), as compared to the traditional price-based counter-cyclical payments (CCPs). The SURE program is the so-called permanent disaster program. It is also based on crop revenues in a given year and requires crop insurance coverage.

While there are some similarities in the calculations used for the ACRE and SURE programs to CRC and RA crop insurance policies, the ACRE and SURE programs function very differently. The ACRE program is based on statewide yield averages and national average grain prices, and potential payments are not made until nearly a year after harvest. SURE payments are based on a county being declared a Federal Disaster Area by USDA, the farm having sufficient losses to qualify, and national average prices, and again payments do not usually arrive until a year or longer after the crop was harvested. CRC and RA insurance policies are based on farm APH yields, prices are based on CBOT base and harvest prices, and payments are made as soon after harvest that final yields are verified. Enrollment in the ACRE program, or potential eligibility for SURE, should not be considered or be a factor when making crop insurance decisions for the 2010 crop year.

2010 Insurance Coverage

Other than the BYE, the use of enterprise units or considering Group Risk Income Protection (GRIP), most provisions for crop insurance policies are very similar to previous years. Most producers have a pretty good handle on the mechanics of standard APH (yield only) multi-peril insurance policies compared to RA and CRC revenue coverage policies (yield and price). There has been more interest in the past couple of years in GRIP insurance policies that are based on county average crop yields and CBOT prices, due to the lower premium prices for GRIP policies. Producers need to thoroughly analyze these types of crop insurance policies with their crop insurance agent before switching from the more traditional CRC and RA-HP policies.

The Crop Insurance base market prices for 2010 are as follows:

2010 APH Market Prices:

  • Corn – $ 3.90/bu.
  • Soybeans – $ 9.15/bu.
  • Spring Wheat – $ 5.29/bu.

2010 RA and CRC Base Prices (finalized on March 1, 2010):

Price estimates as of Feb. 19

  • Corn – $ 3.95/bu.
  • Soybeans – $ 9.15/bu.
  • Spring Wheat – $ 5.42/bu.

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 2010 crop insurance decisions. Following are some Web sites with very good crop insurance information:

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.