Choosing Crop Insurance for 2010 William Edwards, ISU Extension Economist

Impact of the 2008 Farm Bill Both ACRE and SURE provide additional revenue risk protection. Prices, yields, timing differ from crop insurance. Probably should not influence the crop insurance decision.

Impact of SURE SURE provides 15% added coverage above the crop insurance guarantee (up to 90%). All crops must be insured except crops that are less than 5% of total crop value. Can use CAT level coverage for minor crops Can use NAP coverage for noninsurable crops. All crops and all acres per producer are added together to calculate coverage and losses. Payment is 60% of loss not paid by insurance.

Impact of ACRE ACRE protects gross revenue ACRE is by FSA farm unit. Guarantee based on 2-year average price and 5-year average yield. Both farm level and state level triggers must be met. Payment is based on state level loss. Payment limit is 25% of state trigger.

ACRE vs. Crop Insurance ACRE is similar to crop insurance. State and farm yield may not track. Market price is same for farm and state. Provides added coverage at a low price (lose 20% of USDA direct payment). Does not replace farm level insurance.

Acres Insured in 2008 Corn and Soybeans--Iowa

Acres Insured in 2009 Corn and Soybeans--Iowa

Why the big shift to CRC? Price! Compare before you buy.

February and Harvest Prices 2009

Indemnity Prices: Corn (revenue insurance)

Indemnity Prices: Soybeans (revenue insurance)

Lower Indemnity Prices in 2010? CornAPH (Yield)Revenue 2009$4.00$ $3.90? Soybeans 2009$9.90$ $9.15?

What Units to Choose? Optional Units: Each farm is separate Basic Units: Combine owned and cash rented acres in same county Enterprise Units: Combine all acres of the same crop in same co. Whole Farm: Combine corn and beans $

Subsidy rates have increased for enterprise units and whole farm units.

Coverage level Basic Unit subsidy rate New rate for Enterprise Units New rate for Whole Farm Units 60% 64% 80% not avail. 65% 59% 80% 70% 59% 80% 75% 55% 77%80% 48% 68%71% 85% 38% 53%56%

Enterprise Units Generally, the more acres you combine into one unit, the lower the cost per acre. Probability of collecting a payment is lower, too. But grain and dollars are commingled.

Example: Hardin Co., Iowa CRC policy, Corn, 2009 rates /acre Rates will vary with the number of acres & number of sections covered rates will be different. Coverage Level OptionalBasicEnterprise 65%$ 8.75$ 7.87$ %$11.94$10.75$ %$17.65$15.88$ %$27.13$24.42$ %$42.85$38.56$23.41

Example: Hardin Co., Iowa CRC policy, Soybeans, 2009 rates /acre Rates will vary with the number of acres & number of sections covered rates will be different. Coverage Level OptionalBasicEnterprise (2 sect.) 65%$ 4.95$ 4.46$ %$ 6.95$ 6.26$ %$10.59$ 9.54$ %$16.81$15.13$ %$27.34$24.60$13.24

Enterprise Unit Discounts CRC discount is based on number of planted acres for the crop. RA discount is based on number of sections, or FSA unit numbers, up to 10. Percent of discount varies by state/county/crop.

If you change to enterprise units: 1.Keep coverage level the same, reduce the premium. or 2.Pay the same premium, increase the coverage level. Many people increased their coverage in 2009.

Biotech Endorsement (BE) Available in the entire Corn Belt. Must be at least 75% of the acres in the insurance unit. Still need 20% as refuge acres (EPA). Less documentation this year. Lack of compliance penalty is loss of premium discount only.

Eligible Hybrids Monsanto YieldGard® Plus with Roundup Ready® Corn 2, YieldGard® VT Triple, and YieldGard® VT Triple PRO hybrids Pioneer and Dow AgroSciences Herculex® Xtra and Herculex® Xtra RR2® hybrids Syngenta Agrisure® CB and RW stacked and Agrisure® 3000GT

Biotech Endorsement Discount available on yield (APH) or revenue (RA, CRC) but not on group policies Estimated at 10-15% discount, overall Consider added cost of seed versus yield effects and insect or weed pressure. Do you need it?

Biotech Endorsement Discounts Hardin County, 2009 Coverage APHRARA-HPCRC 65% 33%24%19%20% 70% 29%17%14%18% 75% 26%13%10%16% 80% 22%10%8%14% 85% 19%8%7%12%

Specialty Soybean Crops Can now be insured separately. Low yields will not drag down the APH yield for conventional beans. Must be covered with an APH (yield) policy, not a revenue policy. Can use past records to create an APH yield for each type of soybeans. Indemnity price is higher of contract price or conventional APH soybean indemnity.

Large seeded food grade – Soybeans commonly used for tofu, soymilk,and miso Small seeded food grade – Soybeans commonly used for sprouts, or for natto soybeans Low linolenic acid – Soybeans used to produce soybean oil with a linolenic acid level of 3% or less Low saturated fat – Soybeans containing 50% less saturated fat than conventional soybeans High protein – Soybeans containing protein levels of 43% or greater

Key Points for SURE and ACRE do not reduce the need for crop insurance. 2.Indemnity prices will be a little lower. 3.Compare RA and CRC premiums. 4.Higher enterprise unit subsidy allows higher coverage levels. 5.Biotech endorsement expanded. 6.Specialty soybeans can be insured separately.