This week for Farm Management Friday, Steve Johnson, Iowa State University Extension farm management specialist, has information about two important and timely topics to share with readers.
The first has to do with harvest prices for crop insurance purposes -- they are set during the month of October. Also, November 1 is an important date for those 720,000 acres in Iowa that were "prevented planting" in 2013. That's the second topic Johnson talks about at the end of the following article.
Harvest prices are determined in October for crop insurance, to figure a possible indemnity payment
Harvest prices determined in the month of October appear to be $4.39 per bushel for corn and $12.87 per bushel for soybeans. These are the average futures prices for December CME corn and November CME soybean contracts in the month of October. These final numbers are still to be verified by the USDA Risk Management Agency or RMA.
This and the farm's actual 2013 yields are the final pieces in determining the potential crop insurance indemnity claim for both corn and soybeans. Those final harvest prices suggest that crop insurance revenue policies on corn will trigger indemnity payments this year. This is especially true if the insured farmer purchased a revenue policy at higher levels of coverage (80% or 85%). Farmers experiencing yields this fall that are below their Actual Production History, or APH, should keep good production records and report these to their crop insurance agent immediately upon completion of harvest.
Soybean yield would have to be low to trigger an indemnity payment
It would take a significant drop in soybean yields to trigger such an indemnity payment. For corn, the harvest price dropped by more than 22% from the projected price of $5.65 per bushel determined in February. Since revenue protection coverage guarantees yield times price, those higher levels of coverage will trigger if the actual harvest yield falls below the insured's APH.~~~PAGE_BREAK_HERE~~~
For soybeans, the harvest price is exactly the same as the projected price, $12.87 per bushel. That's the average settlement price of the November CME soybean futures contract during February. To trigger an indemnity payment in soybeans, the actual yield will need to fall at least 15% below the APH for an 85% level of coverage. So a substantial yield loss on soybeans will have to occur before crop insurance indemnity payments would be triggered.
Keep good records and report your final production immediately at end of harvest
Since corn and soybean yields will vary across farms and many insured farmers use enterprise unit coverage, crop insurance indemnity payments will also vary.
Farmers should contact their crop insurance agent with their estimated yields to determine the potential for an indemnity claim. Keep good production records and report the final production immediately upon completion of harvest. This will help expedite an indemnity claim for 2013 and help determine the APH for 2014 crop insurance decisions.
Did you have "prevented planting" acres in 2013? Haying and grazing are permitted after November 1
November 1 is an important date for those 720,000 acres in Iowa that were prevented planting in 2013. If those acres that had cover crops on them, as of November 1 insured farmers can hay or graze the cover crops without a penalty against their prevented planting payment. Corn and soybean cover crops have the same rules as any other cover crop. Rolling up the corn or soybean cover crop for forage use would be acceptable. However, insureds cannot harvest the crop for grain. Contact your crop insurance agent if you have any questions.
For farm management information and analysis visit Ag Decision Maker at www.extension.iastate.edu/agdm; ISU farm management specialist Steve Johnson's site is at www.extension.iastate.edu/polk/farm-management.