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March 15 crop insurance deadline has new options
Illinois Correspondent

OSCO, Ill. — Farmers, many affected by last year’s devastating drought, are approaching the March 15 deadline for purchasing federal crop insurance coverage through licensed agents approved by the USDA’s Risk Management Agency (RMA).

With the addition of new insurance options available to Midwest producers – and considering the weather hazards most faced last year – the time is right for them to opt for federal coverage, according to a longtime crop insurance agent with Strategic Farm Marketing (SFM).

“We started this year extremely dry with stocks quite small, so if we have any problems there will be a lot of risk out there, as far as production. Farmers need to have good coverage for yield protection,” said Gary Asay, a 10-year SFM agent and pork producer who resides in Henry County, Ill.

Many producers may have worried premiums would increase this year as a result of high losses in 2012, but information from last year cannot influence rates until 2014, according to Gary Schnitkey of the University of Illinois Department of Agricultural and Consumer Sciences.

In addition, some farmers unnecessarily feared paying higher prices for federal crop insurance because of Congress’ inability to pass a new five-year farm bill. Neither factor comes into play, according to Asay. “The crop insurance program was set in place (with the last farm bill) and is not affected,” he said. “It could be a factor in 2014.”

Some farmers are actually enjoying reduced premiums because of changes in the government’s rating methodology, the County Star of Champaign-Urbana reported. The reductions are coming courtesy of the RMA’s expansion of the Trend-Adjusted Actual Production History option to the entire state, allowing producers to base their actual production history on recent county yield trends, as opposed to regional.

Farmers are also attracted to federal crop insurance by new options such as the High Risk Alternative Coverage Endorsement, which offers the option to reduce premiums on grounds classified as high risk within a county.

“Those high-risk grounds can be excluded from the rest of your coverage at a lower (premium) level. You could have coverage in place that does you some actual good in the long run,” said Asay.

“Another product out there is Enterprise Plus, which enables you to buy enterprise units and section out 10 plots at a lower level if you have (land parcels) that do not yield as well as others.”
For most Illinois grain producers, Asay – who is also a board member of the National Pork Producers Council – usually recommends the federal Revenue Protection policy as providing the most comprehensive crop coverage.

“The revenue policy is the most expensive, but offers the best protection. It provides coverage for yield loss and/or price,” he said.
“The Revenue Protection with Harvest Price Exclusion policy does not work well for a forward seller because there is no guarantee. 
The Yield Protection policy offers yield-only protection that pays you at the spring price.”

Overall, crop insurance premiums will be lower in many Illinois counties if the projected prices and volatilities are at 2012 levels, suggesting changes in premiums will have little influence on crop insurance choices in 2013, Schnitkey posted on the farmdocdaily website in January.

However, premiums “could be higher if either the projected price or volatility is higher in 2013. For example, the 85 percent RP premium in Sangamon County would be $29.34 if the projected price is $6,” according to Schnitkey.

“This premium would be almost the same as the 2012 premium of $29.86. If the 2013 volatility is 0.25 rather than 0.22 (holding the projected price at $5.68), the 2013 premium would be $31.83. Higher projected prices and volatilities are possible in 2013.”
Current crop insurance premiums can be generated with the U of I’s 2013 Crop Insurance Decision Tool, a Microsoft Excel spreadsheet available for download from the “FAST” and “Crop Insurance” sections of