Many farm operators in Minnesota and surrounding states will be facing reduced yields on some farm units in 2008, due to late planting, floods, drought and severe storms. Many growers purchased upgraded levels of federal crop insurance for the 2008 growing season because of the excellent revenue guarantees available at the crop insurance sign-up deadline on March 15, 2008. For producers who incur losses to their 2008 corn and soybean crop – even minor yield reductions – the added revenue guarantees that were purchased last March are likely to pay big dividends this fall. Here is an analysis of potential 2008 crop-loss scenarios, and the likely crop insurance indemnity payments with CRC or RA-HP policies:
- Soybeans – The base price was $13.36/bu. at the 2008 crop insurance enrollment deadline on March 15, which was the price used to establish the revenue guarantee for CRC and RA insurance policies for 2008. The harvest price for soybeans is estimated at $9.38/bu., as of Oct. 17. For a soybean producer with an 80% RA-HP policy and a 45-bu. APH yield, and an actual soybean yield of 35 bu./acre, there would be an RA-HP insurance indemnity payment of near $150/acre at the current estimated harvest price level. Actually, there would be some indemnity payment for yields up to around 50 bu./acre. Payments for CRC policies would be somewhat less, because the harvest price is limited to a low of $10.36/bu. Standard APH crop insurance policies are yield only, and would not be affected by the drop in harvest price.
- Corn – The base price was $5.40/bu. at the 2008 crop insurance enrollment deadline on March 15, which was used to establish the revenue guarantee for CRC and RA insurance policies. The harvest price for soybeans is estimated at $4.25/bu., as of Oct. 17. For a corn producer with an 80 % RA-HP policy and a 170-bu. APH yield, and an actual corn yield of 130 bu./acre, there would be an RA-HP or CRC insurance indemnity payment of near $180/acre at the current estimated harvest price level. Actually, there would be some indemnity payment for yields up to around 160 bu./acre.
Here are some things to keep in mind when calculating potential crop insurance indemnity payments for the 2008 corn and soybean crop:
- It is important for producers who are facing crop losses in 2008 to understand their crop insurance coverage and the calculations used to determine crop insurance indemnity payments. This information is also important to share with ag lenders, landlords and others.
- Producers who utilize an “optional unit” structure for individual farm units should be able to more fully maximize crop insurance benefits with APH and CRC or RA-HP policies. There is a lot of variation in crops from farm to farm and field to field in 2008. Producers should consult their crop insurance agent for assistance.
- Kent Thiesse, farm management analyst, has prepared an information sheet on 2008 crop insurance coverage with APH or CRC/RA-HP crop insurance policies. The sheet includes an example of the insurance coverage by an 80% RA-HP or CRC insurance policies for corn and soybeans. The table also provides an easy-to-use format for farm operators to calculate potential crop insurance indemnity payments at various yields, harvest prices and crop insurance coverage levels. To get the information sheet, contact Kent Thiesse at email@example.com or 507-381-7960.