Crop insurance may affect tax planning decisions

Corn and soybean yields have been better than expected for many farmers in Iowa for 2023, but for many farmers who were caught in the drought areas, reduced yields plus the reduced Fall harvest insurance price for both corn and soybeans may trigger crop insurance payments.

A farmer who uses the cash accounting method may elect to postpone reporting insurance proceeds on damaged crops from the year of damage to the following year if 50% or more of the crop is normally sold the year following production. This is determined on a crop-by-crop basis.

Read the full article from Charles Brown, extension farm management specialist, in this month’s Ag Decision Maker newsletter,

Ag Decision Maker

An agricultural economics and business website.

Ag Market Outlook, November 13, 2023 with Chad Hart

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For 2023 corn, USDA raised its yield estimate by 1.9 bushels per acre (to 174.9 bushels per acre; Iowa’s estimate came in at 200, up a bushel). The yield change pushed production up by 170 million bushels.  Feed usage was increased by 50 million bushels, as were exports, along with a 25 million bushel bump for ethanol. Thus, 2023-24 ending stocks increased by only 45 million bushels. Given the larger stocks, USDA decreased its 2023-24 season average price to $4.85 per bushel (down 10 cents).

For 2023 soybeans, USDA raised its yield estimate by 0.3 bushels per acre (to 49.9 bushels per acre; Iowa’s estimate remains at 58). The soybean production estimate rose by 25 million bushels. Seed and residual usage was decreased by less than 1 million bushels. There were no other changes to soy usage. So 2023-24 ending stocks increased by 25 million bushels to 245 million. USDA maintained its 2023-24 season average price at $12.90 per bushel.

For the 2024 crops, USDA has lower corn planting, higher soy planting, continuing struggles to boost usage leading to higher ending stocks, and lower prices across the board.

Ag Decision Maker

An agricultural economics and business website.

Rainfall Index (RI) Pasture, Rangeland, Forage (PRF) Insurance for 2024

Cows on pasture, photo by Lisa Scarbrough

The Rainfall Index – Pasture, Rangeland, Forage (PRF) Insurance policy is an area-based insurance plan that covers perennial pasture, rangeland, or forage used to feed livestock. It provides producers a risk management tool to cover forage losses due to lack of the precipitation needed to produce forage for their operation. The coverage is based on precipitation expected during specific intervals and is not design to insure against ongoing or severe drought. This policy is available for all counties in Iowa.

RMA Frequently Asked Questions

Decision Support Tool

Table 1. Policy Dates for 2024 Coverage in Iowa

Sales Closing DateDecember 1, 2023
Cancellation DateDecember 1, 2023
Acreage Reporting DateDecember 1, 2023
Premium Billing DateSeptember 1, 2024
End of Insurance DateDecember 31, 2024
Termination DateDecember 1, 2024
Contract Change DateAugust 31, 2024

Figure 1. Acres covered by Pasture, Rangeland, Forage insurance in Iowa, 2016-2023

2016 through 2023 acres covered by PRF insurance in Iowa
Source: USDA Risk Management Agency, Summary of Business

The video presentation below provides an example of how RI-PRF policy coverage can work. NOTE: policy deadlines mentioned at the end are not applicable for current policies. Refer to Table 1 for current deadlines. Additional revisions released in 2021 can be found on the RMA website.

Additional Resources

Rainfall Index Common Policy – Basic Provisions – 2024

Rainfall Index – Pasture, Rangeland, Forage (PRF) Crop Provisions – 2024

Rainfall Index Insurance Standards Handbook

United States Department of Agriculture Risk Management Agency (RMA) offers seven livestock plans and an annual forage insurance plan. Talk to your crop insurance agent to help you decide the option that is right for your operation, or use the Agent Locator to find one near you.

Ag Decision Maker

An agricultural economics and business website.

Planning for end-of-life costs and expenses

A common misconception in farm estate and succession planning is that an estate plan is only used after an individual passes away, when in fact, a comprehensive estate plan considers long-term care needs, health care directives, and more. The October Ag Decision Maker article and replay of our recent Women Managing Farmland webinar provides further insight on End-of-Life Taxes and Expenses, both provided by by Kitt Tovar Jensen, staff attorney for the Center for Agricultural Law and Taxation and Beginning Farmer Center coordinator.

Women Managing Farmland – Webinar Series

This bi-monthly webinar series addresses several topics where women farmland owners have indicated an interest. The series is presented over the noon hour and is free and open to everyone. Register here for one or more of the CARE Women Landownership Series webinars.  Additional details can be found on the ISU Women in Ag website.

February 8 | Importance of Using a Written Lease | Melissa O’Rourke
April 12 | Building Your Professional Team | Kitt Tovar Jensen
June 14 | Keeping the Ground Covered | Catherine DeLong
August 9 | Landowner-Tenant Communications | Ann Johanns
October 11 | End-of-Life Taxes and Expenses | Kitt Tovar Jensen
December 13 | Slowing Water Down | Catherine DeLong

Ag Decision Maker (AgDM)

An agricultural economics and business website.

October 2023 Ag Decision Maker Updates

October 2023 Newsletter

Ag Decision Maker (AgDM)

Answers and resources on Iowa farm management and outlook for making well informed ag decisions.

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