FAQ: Do I need to buy crop insurance to qualify for SURE?

Deadline is fast approaching for crop insurance.

FAQ: Crop insurance deadline is March 16

Answer: Provided by Kevin McClure, program specialist with USDA Farm Service Agency state office in Des Moines.


You must buy crop insurance if you want to be eligible for USDA's new disaster program called SURE—which stands for Supplemental Revenue coverage. Created by the 2008 Farm Bill, SURE replaces the previous approach of getting Congress to pass ad hoc disaster programs when a drought or calamity hits.


Discuss your crop insurance needs with your agent as soon as possible, to decide what product and level of coverage is best for your farming operation in 2009. There are a number of changes in crop insurance rules and the products being offered this year. That highlights the need for farmers to look into crop insurance before the March 16 deadline to sign up. Don't wait. Make an appointment with your crop insurance agent today.


March 16 is deadline to sign up


USDA has a published deadline of March 15 for farmers to sign up for crop insurance for spring planted crops, which falls on a Sunday in 2009. Thus, the deadline is extended to the next business day - Monday, March 16.


With input costs climbing and volatile commodity prices, risk management has become a critical part of nearly every farmer's business plan. The rules for crop insurance – a key part of risk management – have changed for 2009.


For SURE you must buy crop insurance


To qualify for SURE, you must insure all your crops that you can purchase insurance on. If a crop contributes to at least 5% of your gross farm income, you have to insure that crop. USDA's Risk Management Agency issued that rule last fall. What about pasture? You don't need to insure pasture.


Farmers are asking - What are some of the changes for crop insurance in 2009?


There are some RMA subsidy changes for 2009 for the Enterprise Unit discount and Group Risk products, says William Edwards, Iowa State University Extension farm economist. The EU change is significant. You can insure all your corn fields as one unit and all your bean fields as one unit. So you can put all your corn together that's in a particular county. This change has created an increase in the subsidy for 2009 compared to 2008.


By choosing an enterprise unit you can get a lot of coverage but you are grouping units together so you give up something, too. For example, an 80 acre field wouldn't stand on its own anymore if you have, say 1,000 acres of corn in total. All 1,000 acres would be put together as one unit. So you give something up but in return could go up in level of coverage to increase your amount of protection.

What about the group risk insurance products? The RMA subsidy on them went down, so products such as GRIP and GRP will cost farmers more to buy.


CAT policy fee has increased for 2009


The Catastrophic Risk policy fee has been revised to $300 per crop per county. It used to be $100. Now it costs you $300 to insure each crop you have in each county where you are growing it.


A consideration in connection with the SURE program is that the calculations work off of your crop insurance. The coverage level you select for insurance has a direct effect on your SURE payment. You get 15% higher than your crop insurance level - up to a cap of 90%.


Thus, if you have a CAT level of coverage, it changes your sure payment and it essentially gives you very little SURE payment—if you have a disaster and there is a SURE payment.


Be aware of price cap change for CRC


Also worth noting is the change in price caps on revenue products. Crop Revenue Coverage, or CRC, has changed significantly, which is good news for farmers. In the past, the cap for CRC and GRIP products was $1.50 for corn and $3.00 for soybeans. RA had no caps.


This year the dollar limit has been replaced with a 200% price change limit between the spring price and the harvest price for all revenue products. And there will no longer be any downward price limits for any of the plans. Leaving the downside open is a huge advantage. This year, the downside limit cost the farmer with CRC or GRIP soybean coverage $1.14 a bushel.


With the change in price limitations this year, the only real difference between RA and CRC comes down to the cost, he points out. The difference in cost may be especially significant if you plan to use the Enterprise Unit Discount this year. RA uses the number of sections to determine the amount of discount. CRC uses total acreage in the calculation.

If you have a question you'd like answered regarding the new USDA farm program, please send it to [email protected]. We will pass it on to the ISU Extension specialists or to the program specialists at USDA's Farm Service Agency office in Des Moines and they will send you the answer.


For more information and analysis of the new farm program, see ISU's Ag Decision Maker site www.extension.iastate.edu/agdm. For clarification on farm program details contact your local FSA office.

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