As farm operators begin making their 2011 crop insurance decisions, they will have some new terminology and policies to become familiar with. For several years, the USDA Risk Management Agency (RMA) has been negotiating with the various major crop insurance companies that sell crop insurance products to producers, in order to make to needed revisions in the crop insurance program. It is important that producers be aware of the changes in available crop insurance options, before finalizing their 2011 crop insurance decisions. The 2011 crop insurance enrollment deadline for corn and soybeans in the Upper Midwest is March 15.
The new Common Crop Insurance Policy (COMBO) is in effect for the 2011 crop year. Sign-up started last fall for fall-seeded crops such as winter wheat; however, most producers in Minnesota, Iowa and other Midwestern states will be making their 2011 crop insurance decisions in the next six weeks. The new COMBO insurance policy options are actually a simplification of the many and varied crop insurance choices that existed previously for individual policies.
COMBO Insurance Policies
The minimal level of insurance coverage that will still be available for 2011 is the Catastrophic Yield Coverage (CAT) insurance policy. CAT coverage is based on 50% of the APH yield and 55% of the YP price level. CAT coverage only costs $300/crop in each county, but the insurance coverage is very minimal; however, it does keep producers eligible for government disaster programs, if a producer chooses not to secure any other crop insurance coverage.
The COMBO policy crop insurance changes for 2011 are regarding insurance policies for individual producers. There were basically no changes in the group insurance policies, including Group Risk Plan (GRP), Group revenue Insurance Plan (GRIP) and GRIP with a Harvest Price Option (GRIP-HPO) for 2011. These policies insure against widespread yield and revenue losses for all producers on a county basis. The group policies have not been widely used for corn and soybeans in the Upper Midwest in recent years.
The 2011 crop insurance policy options under the new COMBO insurance policies have some new names and acronyms: YP, RP and RPE. However, how the various crop insurance policy options under the COMBO policies will function very similar to comparable insurance policy options in 2010 and previous years. Actually, once producers understand and get used to the YP, RP and RPE terminology, they will probably find it easier to understand than the variety of insurance options that existed previously.
Farm operators should start investigating 2011 crop insurance options well before the March 15 enrollment deadline. A reputable crop insurance agent is a good source of 2011 crop insurance options and premium levels. Following are some very good resources with 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 firstname.lastname@example.org.