USDA's Risk Management Agency (RMA) on March 1 released updated information pertaining to crop insurance for farm operators in the Missouri River valley where extensive flooding occurred last year.
The information from RMA is good news for producers in those counties in Iowa along the state's western edge, and in Nemaha County, Nebraska who were impacted by the record amount of 2011 Missouri River flooding. RMA has been in close contact with the U.S. Army Corps of Engineers and has confirmed that as of March 1, 2012, the Levees L-550 and L-575 have been restored to prior specifications.
Iowa and Nebraska levees repaired before March 15 crop insurance sales closing date
Rod Sebastian, a risk management specialist with USDA RMA's regional office in St. Paul, Minnesota, provides the following explanation. This is an important message for producers in this flooded area who are impacted by crop insurance provisions, he says.
RMA has clarified that land flooded due to a breached levee will receive the highest crop insurance premium rate classification in the county--if the levee has not been repaired to prior specifications by the latter of the sales closing date or earliest planting date. So, since these two levees have been repaired before the March 15 sales closing date, which is the deadline for farmers to sign up for crop insurance, these producers will not necessarily have to pay the highest rates to get crop insurance coverage. However, there is one other step—repairing the damaged fields--which many producers in this flood-affected area will have to take to qualify for the lower premium rates.
Thus, the first step has been completed, fixing the levees. Now these producers can focus on the second part of the insurance provision, says Sebastian. This part of the rule requires fields with flood-damaged soil to be restored to at least the same crop yield potential as prior to the flood. Producers are encouraged to talk to their crop insurance agent prior to March 15 to review their crop insurance coverage; consult Iowa State University reference information on restoring the land; and then document their land restoration efforts.
Will standard risk or high risk crop insurance premium rates apply?
Documented restoration efforts on the farmer's land will provide the basis for crop insurance companies to determine whether standard premium rates or high risk rates for insurance coverage will apply.
Options for producers who are unable to restore the land to its prior potential include signing a High Risk Land Exclusion Option and insuring the high risk rated areas under a Catastrophic Risk Protection Endorsement, which provides coverage at 50% of approved yields and 55% of expected market prices. Additional information and a Breached Levee Fact Sheet addressing the impact of the 2011 Missouri River flooding can be found on RMA's web site at: www.rma.usda.gov.
RMA supervises the largest single part of America's financial safety net for farmers and ranchers. That is, the Federal Crop Insurance program. "Our mission is to provide a broad spectrum of risk management information to help strengthen the economic stability of America's agricultural producers," says Sebastian.