Ag Decision Maker

Contributed by William Edwards, extension economist

Question: If I chop my corn for silage now, can I establish a cover crop for grazing or haying this fall and next spring? Will this affect my crop insurance coverage next year?

Answer: According to program specialists at the Risk Management Agency office in St. Paul (which administers programs in Iowa), emergency forage crops, such as rye, for example, can be established, grazed and harvested yet this year. These crops would not be insurable, but neither would they affect the insurability of crops next year.

If the crop would reemerge next year, it would continue to be uninsurable, but it could be grazed. The cover crop could not be harvested mechanically, however, and it would need to be destroyed either mechanically or with herbicide before any of it reached the heading or budding stage to allow the corn or soybeans following to be insurable.

Double cropping is not an approved practice in Iowa for crop insurance purposes. The reasoning is that the first harvested crop depletes much of the soil moisture, and the practice is not wide enough used to develop sound premium rates. Hence, the forage crop and the following grain crop could not both be harvested in the same year. 

The only exception would be if the corn or soybean crop following the cover crop was insured with a group crop insurance policy such as GRIP or GRP. However, these policies require that all the producer’s acres of that crop in the same county be insured under the group plan, and guarantees and indemnities are based on county average yields rather than farm level yields.

For further questions check with your local crop insurance agent.

Ag Decision Maker (AgDM)

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Crop Insurance

Have questions regarding crop insurance, valuing corn silage, or the ACRE Program? Chad Hart, ISU extension and outreach economist has compiled answers to address many of the  questions that have come to ISU Extension and Outreach in the last several weeks concerning the 2012 drought. The PDF publication is available through the ISU Extension and Outreach Frequently Asked Questions page. More resources are also available for crops, livestock, home & yard, and financial concerns.

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Crop Insurance, Crop Outlook, Farm Bill

Contributed by Steve Johnson, Extension Farm Management Field Specialist.

As a companion piece to the information presented in the Drought webinar from ISU Extension and Outreach, ISU Extension field specialist Steve Johnson looks at the effects of drought related announcements this week and the effect on crop insurance. Steve’s second webinar is focused on farmland leases, specifically flexible leases. The agendas for the 30 minute presentations are listed below along with links to the webinars and other related resources from ISU Extension and Outreach.

Management the Financial Risks of Drought Damaged Crops

• Highlight the latest announcements from USDA regarding disaster declaration and emergency programs
• Discuss crop insurance coverage, likely claims and indemnity payments
• Pricing non-delivery of contracted grain and silage from drought-damaged corn
• Discuss farm financial management decisions
• Highlight ISU Extension web resources
• Highlight and Iowa Flex Lease Performance
• Provide ISU Extension Farmland Leasing Resources and Websites

Flexible Cash Farm Leases that Work

• Overview of the 2012 Iowa Cash Rental Rate Survey
• Summarize Iowa Cash Rent Trends and Rents as a % of Gross Crop Value
• Discuss Potential for Flexible Cash Farm Leases and Case Study Farm
• Summarize 2013 Estimated Costs of Crop Production (early estimates)

Related resources

• ISU Drought webinar
• ISU Extension Leasing Meetings (July and August 2012)
• AgDM Crop Insurance webpage
• AgDM Farmland Leasing webpage
• AgDM Current Outlook & Profitability

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Crop Insurance, Crop Outlook, Farmland Leasing

Have questions on financial concerns related to drought, crop insurance, etc.?

Leave a comment with your question and we will find the best experts to answer your questions at Iowa State University. Several commonly asked questions on crop insurance are also available here.

Other options for assistance from ISU Extension and Outreach include: Crops Watch Blog, Iowa Beef Center Blog, Hortline – Call 515-294-3108 (10 a.m. to noon and 1-4:30 p.m., Monday through Friday) or hortline@iastate.edu, Iowa Vegetables blog. Or, call the Iowa Concern Hotline at: 1-800-447-1985. By calling Iowa Concern one has access to an attorney for legal education, stress counselors, and Information and Referral services for a wide variety of topics.

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Crop Insurance, Crop Outlook, Crops, Livestock, Other

Roger McEowen, Center for Ag Law and Taxation, has written an article addressing issues that may arise from deferral of crop insurance and/or disaster payments as a result of the 2012 drought. “The Internal Revenue Code allows deferability of crop insurance proceeds if certain requirements are satisfied.” The article, available on the CALT website, focuses on deferability and payment trigger under current policy, including examples. For more information, read the full article,  The 2012 Drought and Income Tax Deferral of Crop Insurance and/ or Disaster Payments .

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Crop Insurance, Legal & Taxes

Contributed by William Edwards, extension economist

Nearly 90 percent of the corn and soybean acres in Iowa are covered by multiple peril crop insurance. Drought damage is an insurable loss under these policies. Producers should consult with their crop insurance agents before harvesting or destroying any drought-damaged crops, however.

The agent will notify a certified crop adjustor to appraise the insured crops. Keep in mind that when damage is widespread, adjustors cannot be everywhere at once. The adjustor may declare the crop a complete loss. If it has significant yield potential, it can be left and harvested in the fall. If the producer elects to harvest it early, as silage, check strips can be left to verify the actual yield achieved. In any case, the acres must be released by the insurance company before the crop can be harvested early or destroyed.

Any insurance indemnity payments will be settled based on actual harvested production over the entire insurance unit. Fields declared a complete loss will be combined with any harvested acres in the same insurance unit to calculate the final yield. Yield losses are equal to the farm’s historical yield times the level of guarantee purchased, minus the actual yield.

Ninety percent of the insured acres in Iowa are covered by Revenue Protection insurance policies in 2012. Yield losses will be paid at a rate equal to the average CME futures price during the month of October, if it exceeds the average February price of $5.68 for corn (December contract) or $12.55 for soybeans (November contract).

Following harvest, the usual evidence of actual production should be collected and submitted to the crop insurance agent as soon as possible if it appears that a payment is likely, but not later than 15 days after the end of the insurance period, which is Dec. 10 for corn and soybeans in Iowa. If a producer has a history of selling more than half the crop in the tax year following harvest, reporting of crop insurance proceeds can be deferred to the next tax year.

More information about crop insurance policies and procedures can be found on the Ag Decision Maker website.

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Crop Insurance, Crops

Contributed by Steve Johnson, Extension Farm Management Field Specialist.

Everyone who plants an insurable crop should be keeping track of what date you plant each field and how many acres were planted to that crop. That information has to be reported to your local Farm Service Agency (FSA) office on FSA Form 578; the acreage report.

 Some 2012 acreage certification and crop insurance changes to keep in mind:

•  July 15 is the deadline for acreage certification for spring planted crops
• Crop insurance billing date of August 15 – a penalty will attach for late payment of premiums not received by October 1
• In certifying acres, the farm operator needs to report crops planted, practice (irrigated vs. non-irrigated), number of acres and planting date
• FSA Form 578 needs to include the farm serial number, tract number and field number
• FSA assigns each field a unique identifier called a Common Land Unit (CLU).

Across the Corn Belt, hundreds of thousands of farmers are finding that acreage reporting just got easier. However, many farmers can now report this data while viewing a map of each field boundary. CLU data is contained in the USDA’s Comprehensive Information Management System.

Approved Insurance Providers represent the crop insurance industry and they have access to this data and are already using it to assist clients. Some early findings indicate the crop insurance agents working with clients may be able to speed up the process of acreage certification and provide more accuracy.

Advantages of CLU Information

The initial intent of CLU reporting was for USDA agencies like the FSA and the Risk Management Agency (RMA) to have consistent information. Heading into the third year of this nationwide effort, producers are beginning to see some real benefits:

1. Easier and likely more accurate, tracking of data using maps versus using just alpha numeric data.
2. Map-based information can be compiled immediately following planting in advance of acreage certification with FSA and filing FSA Form 578
3. It is easier for crop insurance adjusters to verify policies, adjust claims and make indemnity payments when viewing map-based information.
4. CLU information integrates well with precision technologies and the use of planter and yield monitor data for reporting

Conclusion

Since the crop insurance billing date has been moved up to August 15, providing a copy of that acreage report well in advance of the July 15 deadline will assure timelier crop insurance data entry and receipt of your premium notice. The 2012 crop insurance premium is due in September. Anything received after October 1 incurs a penalty.

Consider working with your crop insurance agent in advance of acreage certification. This might provide an opportunity to use CLU information and move to map-based reporting. A farmer that has added additional land for 2012, or perhaps their FSA office has not assigned CLU identification to each field, may see additional time during acreage certification.

Contact your local FSA office regarding acreage certification and completion of FSA Form 578. Contact your crop insurance agent should you have particular questions or concerns regarding your coverage or potential access to CLU information and map-based reporting opportunities.

Source: USDA Risk Management Agency-Informational Memo IS-12-002 & Iowa Crop Insurance Providers, April 2012.

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Crop Insurance

Contributed by William Edwards, extension economist

Unusually warm and dry weather has allowed crop producers to start spring field work earlier than can be remembered by most people.  Getting an early start on tillage and planting reduces the risk of getting behind schedule later if an extended period of rainy weather occurs, but it also has its risks.  The Risk Management Agency (USDA) has some specific rules about early planted crops with regard to crop insurance coverage.  For each insurable crop RMA has set an “early planting date.”  The earliest planting dates allowed for counties in the state of Iowa are April 11 for corn and April 21 for soybeans.  Dates will vary in other states, and by county within a state.

Acres planted before these dates are no longer eligible for replant coverage payments should it be necessary to replant them.  The maximum replant payments each year are equal to 8 bushels of corn and 3 bushels of soybeans, times the RMA projected price for that year, which is the price used to establish the value of the insurance guarantees that the producer  purchases.  For 2012 the projected prices are $5.68 per bushel for corn and $12.55 for soybeans, so the maximum replant payments are $45.44 and $37.65 per acre, respectively.

Any acres that are planted  before the earliest planting dates lose replant coverage, even if the entire farm or insurance unit has not been planted.  However, early planting does not affect a producer’s normal yield or revenue insurance guarantee.  That guarantee is still in effect, and any indemnity payments will depend on the final harvested yield.  Normal good management practices must still be followed, included replanting of crops if the potential yield increase is enough to offset the costs of replanting.

Records should be kept of when all acres are planted.  Check with your local crop insurance agent for questions.

Ag Decision Maker (AgDM)

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Crop Insurance

Contributed by Steve Johnson, Extension Farm Management Field Specialist.

Corn and soybean producers who don’t already have their 2012 crop insurance decisions in place should become knowledgeable of the changes in coverage, ratings and the new Trend-Adjusted APH Yield Endorsement. The deadline to make any changes to Multi-Peril coverage for spring planted crops is March 15th. 

This year’s changes are making coverage more affordable for farm-level products such as Revenue Protection and Yield Protection. Two things are important to remember for 2012. First, insurance premiums for most coverage levels for corn and soybeans in the Corn Belt will be lower than premiums paid for comparable coverage in 2011. Lower premiums are the result of adjustments that the Risk Management Agency (RMA) made based on updated crop insurance actuarial data. Crop insurance premiums for 2012 are expected to drop by an average 13% for corn and 9% for soybeans in Iowa, respectively. This rerating of premiums does vary by state, so check with your crop insurance representative.

Second, the new Trend-Adjusted (TA) Actual Production History (APH) Yield Endorsement or simply TA Yield Option will likely be very popular. This option allows producers with qualifying APH databases in eligible counties to choose to adjust their actual APH yield, based on their county’s historical yield trend.

In combination with RMA’s rerating of premiums, the use of the TA Yield Option allows many producers to buy more protection than they had last year, and in most cases, for less money than they paid in 2011. This is despite the fact that the Projected Prices (December corn futures and November soybean futures daily average price closes for the month of February) will be slightly less for both corn and soybeans.

Many Iowa producers are finding that the option is bumping up their corn APH yield by 2.3 to 2.5 bushels per acre per year. Calculated over a 10-year period means the trend-adjusted yield can increase by 13 to 20 bushels per acre above their actual APH. With an every other year rotation, for example, some producers are seeing even larger adjusted APH yields

Most crop insurance agents in Iowa are reporting that clients are finding the TA Yield Option quite attractive for 2012. It is likely the cheapest way to buy additional coverage but requires that a decision be made on or before the March 15^th.

Please contact your crop insurance representative for additional questions regarding changes in 2012 crop insurance coverage and the approaching deadline. Both revenue guarantees and premiums for these products will be determined a few days after February 29^th. That’s the last day used to determine the Projected Prices as well as the Price Volatility Factors.

Ag Decision Maker (AgDM)

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Crop Insurance

As farmers’ costs of production increase, risk management tools — including crop insurance and marketing decisions — are vital to the success of their operations. Iowa State University Extension and Outreach will partner with the Iowa Farm Bureau Federation (IFBF) to address these topics via a webinar offered Wednesday, Feb. 8, from 1-2 p.m. at www.iowafarmbureau.com.

“In these volatile times, risk management is more important than ever,” said Ed Kordick, IFBF commodity services manager. “Farmers need to understand their options as they look forward to marketing and protecting that next crop.”

The free, live webinar is part of the IFBF Margin Management webinar series, and features Kordick and William Edwards, an economist with Iowa State University Extension and Outreach.

“The webinar will address the changes for 2012 in crop insurance, including the chance to adjust proven insurance yields to reflect upward trends, and the new lower premium rates,” Edwards said.

Participants can pre-register and access the webinar at www.iowafarmbureau.com. For more information, contact Kordick at ekordick@ifbf.org or 515-225-5433. The seminar will be recorded; the recording will be available to Farm Bureau members from the IFBF website, www.iowafarmbureau.com, beginning Feb. 9.

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Crop Insurance, Meetings and Events