Crop Insurance

Am I required to go to the FSA office and certify my crop to be eligible to sign up for Crop Insurance?

For the 2015 crop year, a farmer is still not required to certify at the FSA office to be eligible for crop insurance. However, it might be in your best interest to contact your FSA office to check on a couple of things:

1. Conservation Requirements: It is required that every farmer must comply with the highly erodible land and wetland conservation requirements of the Food Security Act of 1985 (form 1026A). Farmers who do not sign and file a form stating their compliance will not receive any subsidy for their crop insurance premium. The deadline for submitting form 1026A to be in compliance with FSA is June 1st prior to the sales closing date. The first deadline to be enforced by will be June 1st of 2015 for the 2016 crop year. Once your form is filed at the FSA office, it will not be necessary to submit a form every year.

2. Supplemental Coverage Option Unavailable with some FSA programs: If you are seriously considering signing up for SCO, please consider the programs that you wish to sign up for at FSA, as they have a direct connection on your eligibility to sign up for SCO, specifically the ARC program. If a producer elects to sign up for ARC, he will not be eligible to sign up for SCO at the same time. This is the first time that a program at FSA has had a direct impact on any component of Crop Insurance. However, we expect this trend will continue as the connection between FSA and the Federal Crop Insurance Program furthers. Please refer to the included FSA Changes flyer for more information on the available programs at FSA.

 


What are the new programs at the FSA and how do they affect my crop insurance?

Price Loss Coverage: Price Loss Coverage (PLC) will make payments to farmers if a covered commodity’s national average marketing year price is below the reference price (for corn it is $3.70, for soybeans it is $8.40, and for wheat it is $5.50).  Payments made on up to 85% of a farmer’s base acres, and farmers will get a one time opportunity to update their payment yields for the program as opposed to keeping their CCP yields.

It is important to remember that if a farmer does not inform FSA of their program election by the deadline, which right now is December 15th, 2014, he will be in no program for 2014 and will be automatically enrolled in PLC from 2015-2018.

 

Individual Area Risk Coverage (ARC): Individual ARC pays out when the actual revenue from all covered commodities on the farm is less than the Individual ARC guarantee, which is based on the 86% of the farm’s actual yields and the higher of the national marketing year price or the reference price for the commodity (included in the 2014 Farm Bill. Reference prices are $3.70 for corn, $8.40 for beans, and $5.50 for wheat). Individual ARC pays you on 65% of the farm’s base acres.

 

County Area Risk Coverage (ARC): County ARC pays out when the county actual revenue is less than the County ARC guarantee, which is based the 5 year olympic average of the county yields and the marketing year average price. County ARC pays you on 85% of the farm’s base acres.

 

Comparing the 3 FSA Programs:

PLC

ARC Individual

ARC County

Payout Acres 85% of Base Acres 65% of Base Acres 85% of Base Acres
Price Coverage Yes – As set by Farm Bill Yes – Rolling 5-year Olympic  Average Yes – Rolling 5-year Olympic  Average
Yield Coverage No Yes – Individual Farm Yield with all covered crops combine (whole farm unit) Yes – County Yield
Individual Farm Coverage No Yes No
Payment Cap No Yes – 10% of the Benchmark Guarantee Yes – 10% of the Benchmark Guarantee
Affect on Crop Insurance Programs None No SCO available No SCO available
Can Mix and Match Coverage Yes – program is by crop and producers/land owners elect which base acres are enrolled No – all crops and base acres are enrolled if chosen Yes – program is by crop and producers/land owners elect which base acres are enrolled

 

Electing a program: All producers and owners with a share of production on a farm must make a one-time, unanimous program election. This program election is not enrollment. As a reminder, if a unanimous decision is not made, the farm will not be enrolled in any program for 2014 and will automatically default to PLC for the 2015-2018 crop years. Once an election is made, PLC, County ARC, and Individual ARC is in effect for the 2014-2018 crop years.

Restrictions on Eligibility: If the sum of the base acres is 10 acres or less, a payment will not be made

Payment Dates: Payments will be made after the end of the respective crop year, not before October 1st of that year.

Based on the current information available through FSA, it is our understanding that the County ARC program will have the highest payment amounts of any of the programs. However, any farm that elects to participate in Individual or County ARC will not be eligible to enroll in the SCO coverage. If you are interested in learning more, please contact our office and we can help.


What is the Whole Farm Revenue Pilot Program included in the 2014 Farm Bill?

Whole Farm Revenue Pilot Program (WFRP) is a whole farm insurance product that provides producers with revenue protection over all of their commodities on the farm, including animals and animal products. It insures against loss of revenue due to unavoidable natural causes that occur during the insurance period. Coverage is based on a farmer’s average revenue and expenses using the five most recent consecutive tax years, the commodities the farmer expects to earn revenue from during the current insurance period, and the chosen coverage level. Losses are based on whether the revenue of commodities produced during the insurance year falls below the insurance guarantee. WFRP could be a good opportunity for farmers that produce uninsurable commodities or specialty crops, such as hay or fruits and vegetables, to cover their revenue. The WFRP is not available yet but is expected to be released during the 2015 crop year.


I’ve had a few bad crop years. How will my production and guarantees be affected?

For crop insurance purposes, a record of all of your yields are kept on each farm for the most recent 10 years the crop is planted if you have individual coverage (RP, RP HPE, YP). The average of those years is then used to help establish your crop insurance guarantee for the next crop year. The 2014 Farm Bill has included language in it that allows an insured to exclude any recorded or appraised yield for any crop year in which the yield per acre on a farm in the county is at least 50% below the simple average for the crop in the county for the previous 10 consecutive crop years. This new provision will help to protect a farmer from having unusually low yields in their database, so as to not affect future crop insurance guarantees. It also allows farmers in any county contiguous to a county in which the farmer is eligible to exclude a recorded or appraised yield to also elect a similar adjustment.  This provision is very preliminary at this time, and will not be implemented until RMA has had time to evaluate the impact of these changes on the crop insurance program. They have released a statement that indicates it will be available by the spring of 2015.


What is a Beginning Farmer and Rancher, and how do I know if I qualify?

As part of the 2014 Farm Bill, a new category of farmer has been established for crop insurance. A Beginning Farmer and Rancher (BRF) is an individual who has not actively operated and managed a farm or ranch in any county, in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than 5 crop years, excluding an crop year that the BRF was under the age of 18, in post-secondary studies, or on active military duty. Any individual who qualifies as a BRF is eligible to receive an extra 10% subsidy on their crop insurance premium in addition to having their administrative fees waived. Please note that a BRF status is different than a New Producer status, which is established on a by crop, by county basis.


What is the Supplemental Coverage Option?

The Supplemental Coverage Option (SCO) is designed to supplement a crop insurance policy by covering the deductible portion of an MPCI policy, up to 86%, with area-based coverage. SCO was included in the 2014 Farm Bill, and it is available through all crop insurance companies by county for wheat, corn, and soybeans for 2015. It is only available for individual policies (YP, RP, RPHPE).

SCO is an optional endorsement that must be added to a policy at an additional cost by the sales closing date for the crop (9/30 for wheat and 3/15 for corn and soybeans). Here is how it works:

Joe Farmer carries 70% RP coverage on 100 acres of wheat. He is in a county with SCO available and elects to add the coverage to cover his deductible. This will give him an extra 16% coverage on his 100 acres (86% – 70% = 16%). At claim time, Joe Farmer ends up with a loss on his 70% MPCI policy. Since SCO is area-based, Joe must wait until both the county yield and the final price are established by RMA before he knows if his 16% SCO endorsement is payable.

SCO may be beneficial to a farming operation by offering extra coverage at a nominal cost. However, if a farmer decides to enroll in ARC at the FSA office (see the attached FSA Changes Flyer for more information), he is ineligible to elect SCO coverage.


I have a county policy. Do I still have to submit production?

Starting in 2014, It is required that all county policies (ARP, ARP HPE, and AYP) submit production records. It is not necessary to go back and collect any production information for previous years as long as the policyholder remains in a county policy.

The production that is submitted will not be used to calculate a claim. County policies will still be based on the county yield for the insured crop as determined by RMA.

If a policyholders is unable to submit their production by the deadline (8/31 for wheat and 2/15 for corn and soybeans), their Policy Protection Factor will automatically be reduced.

 


How do I keep track of my production for crop insurance?

The production that you send to our office is used in the 10 year average for your farm, and it is what helps establish your insurance guarantee. You are required to keep the evidence for this production for 3 years plus the current crop year. There are a few acceptable ways to keep track:
1. Load records
2. Weight tickets from the elevator
3. Storage structure (bin) markings
4. Printed records from a combine monitor
5. Precision farming records

There are specification for each of these methods, and if you are unsure of how to best keep track of your production, talk to your agent or call our office at 888.481.1342


What are the Early Plant Dates and how do they affect my coverage?

The early plant dates were changed for the 2013 crop year and are now determined by geographical area. Farmers who plant before the earliest planting date for their county will not see a change in their insurance guarantee, but will not qualify for replant coverage.

Early Planting Date Maps for Corn and Soybeans


What if I have a failed crop and I want to plant another crop on the same ground?

If you have a failed crop claim and you wish to plant that ground to another crop, you have a couple of options to consider.

Option 1 following a failed crop – You choose to insure the 1st crop only: You are paid 100% of the 1st crop loss and pay 100% of the 1st crop premium.

Option 2 following a failed crop – You choose to insure both crops: You are paid 35% of the 1st crop loss and pay 35% of the 1st crop premium. You pay 100% of the second crop premium. If the 2nd crop has no loss, you may go back and pay the other 65% of the 1st crop premium and collect the other 65% of the 1st crop loss. If you have a loss on the 2nd crop, you may collect whichever claim gives you the greater benefit.