Crop Insurance Deadline
December 10 is a very important day for all corn and soybean producers who carry crop insurance policies on their 2004 crop. This is the final date that producers can submit damage claims on their 2004 corn and soybeans for CRC or APH (yield only) Federal Crop Insurance policies. The crop insurance period for a given year ends when the crop is harvested, abandoned, or destroyed, and all crop insurance damage claims must be reported within 72 hours of discovery of the crop damage. However, December 10 is the final date that losses for corn and soybeans in a given year can be reported in Minnesota.

What if a producer has not harvested all of the 2004 corn and soybeans by December 10?
Producers in many areas of Minnesota could face this dilemma this year. If the producer suspects a crop insurance damage loss, they must report that loss to their crop insurance agent by December 10, even if the corn and soybeans are not totally harvested. If the crop is deemed unharvestable, the crop insurance adjuster will adjust the salvage value of the crop and determine the crop loss and indemnity payment. However, if the crop insurance adjuster and grower agree that the remaining crop could still be harvested, the damage claim may be kept open and finalized at a later date, after crop harvest is completed. This scenario will likely occur in numerous situations with the 2004 corn crop.

What is producer’s responsibility in the event of a crop insurance loss claim?

  • Report the crop loss to their crop insurance agent within 72 hours after the loss or by the December 10 deadline.
  • Do not destroy any crops until given permission by the crop insurance agent or crop insurance adjuster.
  • Leave representative samples in fields, as instructed by the crop insurance agent.
  • Provide yield and production records by farm unit, as required by the crop insurance agent.
  • All pertinent yield and production data must be submitted within 60 days after the final harvest price is announced. The final CRC harvest price for 2004 will likely be announced on one of the first few days of November.
  • Communicate with the crop insurance agent well before the December 10 deadline regarding late harvest strategies for 2004 corn and soybeans.

Crop Insurance Thresholds
The CRC harvest price for corn and soybeans will be significantly lower than the base price on March 15, thus the estimated amount of indemnity payment under a CRC crop insurance policy will be enhanced from initial estimates. The reason for the potential higher insurance indemnity payments is because the “guaranteed revenue” per acre is calculated using the higher of the base price or harvest price, and the value of the harvested yield is calculated using the harvest price. The base prices for CRC policies in 2004 were $2.83/bu. for corn and $6.72/bu. for soybeans. The CRC harvest prices were determined by the average Chicago Board of Trade (CBOT) prices during the month of October for December corn and November soybeans. The 2004 CRC harvest prices are $2.05/bu. for corn and $5.26/bu. for soybeans.

It is also important to note that the “yield threshold” where CRC indemnity payments are initiated increase as the harvest price is lowered below the base price. For example, indemnity payments on a 80% coverage CRC policy, with a 150 bu./acre APH, at a CRC base price and harvest price of $2.83 /bu., would be initiated anytime the harvested corn yield on a given farm unit drops below 120 bu./acre. However, if the harvest price for corn drops to $2.05/bu., the CRC indemnity payments are initiated when the harvested corn yield on a given farm unit drops to 165 bushels per acre or lower.

Similarly, soybeans with an APH of 46 bu./acre and a CRC base price and harvest price of $6.72/bu., the indemnity payments on an 85 % CRC policy would be initiated anytime the yield dropped below 39 bushels per acre. However, if the soybean harvest price drops to $5.26/bu., the CRC indemnity payments are initiated when the harvested soybean yield on a given farm unit is 50 bu./acre or lower. This will result in many more producers with CRC insurance policies being eligible for crop insurance indemnity payments on their 2004 corn and soybean crops.

Every year is different, and thus the results from the various crop insurance policies also vary from year-to-year. However, there has been a fairly consistent advantage in the results of CRC type insurance policies in recent years, as compared to comparable standard APH (yield only) crop insurance policies. Before purchasing crop insurance for the 2005 growing season, it is a good idea for producers to sit down with their crop insurance agent in order to review the various policy options for corn and soybeans, including the premium costs and potential indemnity payments under various yield scenarios.

Editors 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.