Carl German, Extension Crops Marketing Specialist; email@example.com
March 15, 2012 marks the sales closing/policy change date for many Delaware crops: corn, soybeans, processing beans, processing sweet corn, processing tomatoes, and grain sorghum, as well as the Adjusted Gross Revenue programs for whole farm insurance. Now is a good time for farmers to review their risk management strategies. One should consider the question, “Is my 2011 plan good enough for 2012?” Producers may want to expand coverage levels or consider different unit options in order to customize protection to fit their operation’s needs.
In 2010, the Risk Management Agency (RMA) introduced the Common Crop, or Combo, policy. This policy restructured the RMA’s crop insurance roster and streamlined and combined outdated policies into a single unit. The Combo policy features three insurance plans from which a farmer can build an insurance strategy:
Yield Protection – which protects the actual yield of the crop
Revenue Protection-which protects the revenue the crop yield provides and also insures against price volatility by taking the greater of a projected price and a harvest price to determine revenue guarantee
Revenue Protection with Harvest Price Exclusion -in which a projected price is solely used in determining revenue guarantee
Farmers have a choice between the three depending on which is best suited for their respective operations. The insurance policies are fully customizable, not only through the use of different levels of coverage and a choice of price elections, but also in the way a farm can be divided into insurance units. Each parcel of land that is insured independently of other parcels is called a unit. One operation can include multiple units or could be one whole farm unit. The choice is up to the producer, so long as certain stipulations are met. The idea behind dividing a farm into multiple units is that some disasters affect certain fields or parts of fields, while missing others. For instance, a producer can receive an indemnity on a unit of corn devastated by hail, while a nearby unit’s crop stands tall.
A Basic Unit includes all of a producer’s insurable acreage in a county by crop by share agreement (premiums are reduced for a basic unit). Optional Units can be used to divide a basic unit into separate units if it consists of two or more FSA farm serial numbers and certain record keeping requirements are met. Enterprise Units are, generally, all the insured acreage of a crop in a county (premium discounts and additional subsidy apply).
With the prime growing season on the horizon, Delaware farmers are gearing up for their busiest time of the year. Crop Insurance provides the safety net operations need in order meet each growing season with positivity and profitability.
Talk to your crop insurance agent today. If you do not have one, go to http://www.rma.usda.gov/tools/agent.html to find one or call 877-673-2767 for free information.
Information provided by Lucas Clifton, Farmers First Services.