Farmers need to do things right when handling crop insurance claims for 2012. With the drought this year that's especially important, as most farmers have and many claims are being filed. Crop insurance agents are extremely busy.
"A lot of farmers are already working with their crop insurance agents," says Steve Johnson, an Iowa State University Extension farm management specialist. "They need to keep that line of communications open. Farmers are now asking: How do I get paid? Until you submit your 2012 crop yield information, there's no way you can be paid. You have to be able to come up with the amount of corn and soybeans you produced this year."
Pull all of your yield information together, by crop and hopefully also by farm, and submit that to your agent, advises Johnson. When you are done with harvest, get the yield monitor information, grain cart or other scale tickets, tickets for any grain you delivered to the elevator or grain processor, or settlement sheets you may have and prove your 2012 yields.
Crop revenue protection was the type of policy to have in 2012
"I suggest farmers do this by farm, to keep those yields separate," says Johnson, "just in case sometime in the future you want to insure those farms separately. But the main point is, if you haven't done so already, get your 2012 yield information organized and give it to your crop insurance agent as soon as possible."
There are different types of crop insurance. Revenue Protection or RP is the most popular. In Iowa 92% of all the corn acres insured this year are insured with RP; it's 91% for soybeans.
"RP was the insurance product to have in a year like this," says Johnson. "If the crop price goes up between the projected base period, which is the month of February, and the harvest price period, which is the month of October, farmers who use revenue protection will receive the higher of the two prices."
Filing a claim -- make sure you're doing it right
On November 1 USDA's Risk Management Agency or RMA released the final harvest prices for corn and soybeans. These numbers are used to calculate the indemnity payment farmers will receive for coverage of 2012 yield loss.~~~PAGE_BREAK_HERE~~~
The harvest price for crop insurance purposes is the average December futures price for corn during the month of October. For soybeans it's the average November price for the month of October. Those figures recently released by RMA are $7.50 per bushel for corn and $15.39 per bushel for soybeans.
"This information is very important and a lot of people have been waiting for it," notes Johnson. Some insured farmers may not know yet if they will have an indemnity check coming. First they have to submit their yield information to their agent. They need to provide this to their agent as soon as possible if they haven't already.
He adds, "We're going to see thousands of claims filed by farmers across the state, an amount Iowa has never witnessed before. One of the busier people in your town is your local crop insurance agent. The industry, which includes 15 companies that underwrite crop insurance in the U.S., will be very busy for the next few months."
Farmers are asking—when will my check arrive?
Once you've provided your agent all the needed information, how long will it be before you can expect to see the indemnity check arrive in your mailbox? For those farmers who have already submitted all the necessary information, Johnson thinks they'll be in pretty good shape for receiving a check in 2012. For those who haven't submitted their yield information yet, they likely won't get their indemnity payment until 2013.
The income is taxable in the year received. You can defer a crop insurance indemnity check received in 2012 to the year 2013 but you have to provide proof that you normally don't sell more than half your crop in that year. "For a lot of farmers, they are going to get their crop insurance indemnity checks either in December or likely they will see them in January or February," says Johnson.~~~PAGE_BREAK_HERE~~~
"The main point now is to be working with your crop insurance agent," he emphasizes. "And if you have any tax questions, contact your income tax preparer."
It's time to figure what the 2102 crop indemnity payments will be
A reminder: Anyone who has over $200,000 in loss per crop per county will be subject to an APH review and that could be a review of yields all the way back to the 2009 crop, says Johnson. Again, it's very important to work with your agent. Make sure your premiums are paid for the 2012 crop. "Those were due October 31 without penalty," he says. "And now it's time to determine what the indemnity payments will be for crop insurance coverage of yield losses incurred in 2012."
With the fall harvest price for corn at $7.50 and soybeans at $15.39 as determined by USDA's Risk Management Agency, those indemnity payments for 2012 look pretty big for many farmers. The spring projected price for 2012 crop insurance purposes was $5.68 for corn and $12.55 for soybeans, and RMA uses the higher of the two pricing periods to figure indemnity payments for Revenue Protection or RP crop insurance purposes.