By TIM ALEXANDER
Illinois Correspondent

LINCOLN, Ill. — While most farmers and U.S. consumers may be distrustful when “new and improved” labels are affixed to the products they purchase, the USDA Risk Management Agency’s (RMA) new COMBO crop insurance plan could prove to be an example of when such a label is deserved.

The problem is, few are willing to speculate about COMBO until much more is known about the policy. After many years on the drawing board, the RMA will release its new COMBO product – which combines previous yield and revenue plans into one standardized plan – for use in insuring crops for the 2011 growing season.

“The Revenue Assurance (RA) and Crop Revenue Coverage (CRC) policies had become almost identical,” said Matt Wrage, a crop insurance specialist for Farm Credit Services (FCS) of Illinois in Lincoln. “Within the policies there was a little bit of confusion (because of) different variations of unit structure and how the harvest option worked. The COMBO policy takes these two plans and brings them together as one.”

The new program combines CRC and RA policies into a new Revenue Protection (RP) policy. Actual Production History (APH) coverage will now be known as Yield Protection (YP), and price-setting and record-keeping requirements have also changed, according to Amy Jackson, vice-president of insurance for FCS of Mid-America in Louisville.

An important thing to keep in  mind, Jackson said, is that a policy automatically converts to the like-kind policy for 2011 if no action is taken by policyholders.

“Farmers have the opportunity to make changes to their policy type and coverage levels through September 30, 2010, for fall wheat and March 15, 2011, for spring crops,” she stated.

Jackson did not describe what record-keeping changes are required under the RMA’s new insurance plan. Wrage said COMBO simplifies the insurance process for producers because “It limits the choices. COMBO works in one direction instead of having two different plans that are almost identical.”

University of Illinois College of Agricultural, Consumer and Environmental Sciences (ACES) researcher Dr. Gary Schnitkey warned that all of the details in the fine print of the COMBO plan may not be fully understood yet by farmers or sales agents.

“Developing the COMBO product was a large project, introducing and changing many actuarial documents, written crop policies and procedures. As with the release of any new product, the release of the COMBO product may have some unattended consequences. What these might be is difficult to say at this point,” wrote Schnitkey in a study examining the policy, that he released through the College of ACES’ website Aug. 30.

“One concern has been with premiums. The COMBO product introduces new procedures for determining crop insurance premiums. Whether these procedures result in lower or higher premiums will be clearer on the release of the final parameters used to calculate 2011 premiums.”

Wrage verified it would be impossible to say whether COMBO will save farmers money until all the parameters for pricing crop insurance policies are determined.

FCS’ team of crop insurance specialists will be holding seminars throughout the United States this winter to discuss how the changes may affect farm operations, though agents must finish training first.

“We’re still getting training on (COMBO),” Wrege said. “Things were just finalized at the end of August, and we’ve only had a couple of training sessions so far.”

To that end, agents are cramming to learn as much as possible about the policy in anticipation of farmers’ questions, added FCS crop insurance specialist John Klemm, also of the Illinois office.

“An early harvest this year means farmers will be making decisions about insurance for next year earlier than in the recent past,” Klemm said.

FCS has established a website examining changes coming to crop insurance coverage, at www.e-farmcredit.com – click on the “crop insurance” link on the homepage.