We are now in the period when the premiums for crop insurance are being established. Corn and soybean prices through the month of February are an important base that helps determine the premiums farmers will pay for crop insurance. "Come March 1 we'll have the corn and bean price and we'll know what crop insurance premiums are looking like for 2011," says Doug Burns, vice president for crop insurance at Farm Credit Services of America.
Farm Credit Services of America sells crop insurance to a large customer base, and Burns is located in the company's office at Perry, Iowa. He was working the firm's booth at the Iowa Power Farming Show in Des Moines this past week, discussing crop insurance needs with a number of farmers.
Grain prices this winter have climbed to lofty levels and have stayed there into February, so the premiums are going to be more expensive for crop insurance this year. However, those same high grain futures prices are used to set the spring price guarantee for revenue insurance products. Farmers will have very high amounts of crop insurance coverage available for 2011. "So this is good," says Burns. "You'll have higher amounts of coverage on a more valuable crop."
Tie insurance to financial need and desired level of coverage
Farmers are showing a lot of interest in buying crop insurance this year, judging by the number of farmers who stopped by to talk to Burns at the three-day show. "At Farm Credit Services of America we like to couple our farmers' financial needs along with crop insurance," he says. "So we put those two needs together according to each farmer's situation, and we can then understand what the farmer wants in terms of the type of crop insurance policy and the level of coverage that best fits their farming operation."
The rise in commodity prices has some university Extension economists looking at a 60% to 70% range as far as an increase in premiums to insure this year's crop compared to last year's crop. It looks like we're going to see a significant bump up in premiums for crop insurance. "Yes, but we also know that with fluctuating grain prices and the increased input costs farmers have today, it's very important to have a good level of crop insurance coverage," says Burns.
Crop production input costs are rising, so buy enough coverage
"Make sure you are purchasing enough insurance to cover your input costs," he advises. "And consider your marketing plan. Take those things into consideration when you decide what kind of policy and the level of crop insurance coverage to buy this year. It's not a year to try to scrimp by and purchase less insurance. Even in times of high crop prices you need a strong crop insurance policy that works for your farming operation."
For more information, you can contact a Farm Credit Services of America crop insurance specialist by calling 800-884-FARM or going online to www.cropinsurancespecialists.com. "You can come in to one of our 19 retail offices in the state of Iowa and we'd love to sit down and visit with you about your own particular farming operation and help you choose a crop insurance policy that fits your needs for 2011," says Burns.
Deadline to sign up for crop insurance for 2011 is March 15
There are a number of changes in crop insurance products available this year, as a result of new rules by USDA's Risk Management Agency. One of the more significant is that the old Crop Revenue Coverage and Revenue Assurance policies have been combined for a Revenue Protection policy. Also, what was Actual Production History, or APH, coverage is now called the Yield Protection policy. For most crop, the method for setting prices has changed, too.
"We are advising farmers to consult with their crop insurance agent as soon as possible," says Burns. "The deadline to sign up for crop insurance for 2011 is March 15. There are a number of changes and things to consider this year."