Last month I wrote about how much crop insurance you need and how to use formulas to determine what policy is best for you.
I believe crop insurance will continue to be the government's tool for dealing with disasters associated with production agriculture and providing income protection. If you don't use these programs, you usually don't qualify for any additional disaster funds that may be available. In fact, there's discussion about providing disaster funds for areas hit with short crops this year.
The crop insurance industry, in conjunction with USDA's Risk Management Agency, will continue to look at developing new and better products to help you manage risk. You need to analyze these and determine if they fit into your risk management plan.
A client from Pennsylvania faxed me information about a new crop insurance plan available for Pennsylvania farmers for 2003. It's called Adjusted Gross Revenue-Lite. It's a pilot program developed by Pennsylvania, approved by USDA and available through regular crop insurance agents.
The new plan is a whole-farm revenue insurance product that covers all farm production, even crops for which there previously was no crop insurance policy available. For example, milk, honey and even greenhouse operations are eligible. Since it's a revenue policy, it covers price and production risk.
This is an excellent example of how state initiatives, coupled with federal programs, can provide additional products for managing risk.
Farm Bill Issues:
Farm Bill signup continues until April 1. Farm Service Agency offices are using LDP'd bushels to verify yields.
When you get yields verified, put them in a spreadsheet available from a number of sources. Use some various price alternatives, including very low, medium and high grain prices, to determine the best decision on updating your base acres and/or yields. Since the decision you make will last for the term of this Farm Bill, it gives you better data with which to make informed decisions.
Making the most informed decision on the option you choose can mean big dollar changes on certain price scenarios.
You can't manage what you can't see and/or visualize. People and companies that make the best decisions generally have tools others don't. As I've said before, if there are jobs you don't like doing or aren't good at, hire someone to help you. It can be one of your best investments.
Last summer I wrote about the Conservation Security Program (CSP) provision of the new Farm Bill. With CSP, you may qualify for payments by meeting some or all of the soil, air, water quality, plant and animal resource concerns on your land. This applies to all ag land. (See “Cash In On Conservation,” page 20.)
Based on your plan, you may qualify for Tier I, II or III payments. These payments may be 5, 10 or 15% of the average land rental rates for your region. The rules are still being written and it has not yet been determined which funds will be available for landlords or tenants.
There will likely be payments for addressing resource concerns as well as non-degradation practices.
Keep in touch with your Natural Resources Conservation Service office to find out when this program will be available. Again, this may be a program where you hire someone to do your plan. The added benefit is that you're also putting best management practices in place.
Moe Russell is president of Russell Consulting Group, Panora, IA. Russell previously spent 26 years with Farm Credit Services as a division president. For more risk management tips, check his Web site (www.russellconsulting.net) or call toll-free 877-333-6135.