If you want to sign-up or make any changes in multiperil crop insurance coverage for 2013, keep in mind the deadline is March 15. If you haven't already done so, you need to meet with your crop insurance agent as soon as possible for help and provide information to make the right decisions. Be sure you have the coverage that best fits your farming situation.
That reminder comes from Iowa State University Extension farm management specialist Steve Johnson. He's fielding a lot of questions this winter from farmers concerning crop insurance decisions for 2013. He's also addressing the topic in his presentations at meetings across the state. Following are Johnson's answers to some of the questions he's received recently.
QUESTION #1: Based on your charts and your comments, it looks like a "no brainer" decision regarding use of Enterprise units rather than Optional units to save on the amount of premium a farmer pays.
ANSWER: The Corn Coverage Comparison #1 (see chart accompanying this article) shows the subsidy reflecting Optional vs. Enterprise unit coverage. Optional keeps each crop separate for each section. Enterprise units combine the crop (corn) together for all cornfields in the county. If you have a lot of variable ground, such as bottom ground and rolling land, you might not want to use Enterprise units, despite the premium savings.
QUESTION #2: In the Corn Comparison Coverage #2 chart, it shows you get more coverage ($932 per acre vs. $895) for the same premium, even though you are insuring 80% versus 85%. Do I understand that correctly?
ANSWER: That is correct. And both of the examples are for Optional units of coverage. If you take the TA Option, you can go to a lower level of coverage (80% vs. 85%) and still create a larger guarantee (about $37 per acre) for about the same premium. Thus, the interaction of both the TA Option and the level of coverage you choose will make a difference.
QUESTION #3: In your chart titled Corn Coverage Comparison #3, you are guaranteeing $932 per acre with the TA Option for $18.78 per acre as the premium vs. $895 for $22.28 with the enterprise units. Is there any reason why anyone would want to choose enterprise units instead of the TA Option?
ANSWER: Watch what you are comparing. It is not Enterprise units vs. the TA Option. You need to decide on the product, level of coverage, TA Option vs. Actual APH and compare the premium you'd pay. If you take the TA Option, you might consider going to a lower level of coverage and saving a little premium. However, the issue of using Enterprise units stands alone from the issue of using the TA Option. Using Enterprise units exposes farms to a peril like hail or wind that can hit some farms in the county and reduce the odds of collecting an indemnity payment unless the disaster is widespread.
QUESTION #4: How long has the TA Option been in existence? Are there more changes in it for 2013?
ANSWER: The TA Option was first introduced for the 2012 crop, but the county yield factors change annually. More counties in the Corn Belt will have TA Option available in 2013.
QUESTION #5: What was the percentage of farmers who took the TA Option for their 2012 crop?
ANSWER: Iowa led the nation for eligible insured acres taking the TA Option -- it was 78% of the state's corn acres and 74% of the soybean acres in 2012. If you want to find the numbers for other states or nationally, visit the RMA website.
QUESTION #6: I keep hearing about the shallow loss program. What is that? Will there be a shallow loss program in 2013 as part of the USDA farm program?
ANSWER: This is a proposal that may be included in the new farm bill that is currently being debated in Congress. Whether a shallow loss program comes into play for the 2013 crop depends on whether a new farm bill is passed soon. The likelihood is we will probably not see a shallow loss program and no disaster program (no Supplemental Revenue, or SURE, program) for 2013. I would expect that the new ARC program (Agriculture Risk Coverage) providing shallow loss coverage might likely be in place for 2014. But keep in mind this would be a new USDA program replacing the direct payments, not to be confused with crop insurance decisions made annually.
For farm management information and analysis, go to ISU's Ag Decision Maker site www.extension.iastate.edu/agdm and Extension farm management specialist Steve Johnson's site www.extension.iastate.edu/polk/farm-management.