1. COMBO: Crop Insurance for 2011
Crop Advantage Series
Jan. 2011
Farm Management Extension Staff 1 1

2. Common Crop Insurance Policy
Known as COMBO
In effect for 2011 crops
Combines major policy plans
Simplifies guarantees and payments
Clarifies enterprise and whole farm units
Clarifies replant and prevented planting

3. COMBO is available for:
Corn
Soybeans
Grain sorghum
Wheat (spring & fall)
Barley (feed & malting)
Cotton
Rice
Canola/rapeseed
Sunflowers

4. OLD NEW Actual Production History (APH) Yield Protection (YP)
Crop Revenue Coverage (CRC)
Revenue Assurance with
harvest price option (RA-HPO)
Revenue Protection (RP)
Revenue Protection with
harvest price exclusion
(RP-HPE)
Revenue Assurance (RA)
Income Protection (IP)

5. Acres Insured in 2010 Corn and Soybeans--Iowa

6. Yield Protection (YP) Same as old APH (or MPCI) policy
No change to APH yield determination
Projected price is the average closing futures price during February
(same as for revenue insurance)
Corn: December contract
Soybeans: November contract

7. Yield Protection (YP) Price Election = 55-100% of the projected price
Insured Yield = 50-85% of APH yield
Indemnity Payment =
(Insured Yield – Actual Yield)
x Price Election

8. Yield Protection (YP)
Catastrophic coverage is 55% of the projected price and 50% of your APH yield
$300 per crop per county administrative fee

9. Revenue Protection (RP)
Same as old CRC and RA-HPO
No change to APH yield determination
Projected price is the average closing futures price during February
Corn: December contract
Soybeans: November contract

10. Revenue Protection (RP)
No price election - must take 100%
Coverage levels (revenue guarantees) are between 65-85%
Harvest price is average of October futures price
Old RA corn coverage used November

11. Revenue Protection (RP)
Final guarantee is based on the higher of the February or October price
Catastrophic level is not available
Indemnity Payment =
(Coverage Level x APH Yield
x Max(Proj. Price, Harvest Price))
– Actual Yield x Harvest Price

12. Revenue Protection with Harvest Price Exclusion (RP-HPE)
Same as old RA or IP policy
Projected price is the average closing futures price during February
Corn: December contract
Soybeans: November contract
Final guarantee is based on the projected price

13. Revenue Protection with Harvest Price Exclusion (RP-HPE)
No increasing guarantee if harvest price exceeds projected price
No catastrophic coverage
Indemnity Payment =
Coverage Level x APH Yield x Proj. Price
– Actual Yield x Harvest Price

14. Corn Insurance Prices
Harvest prices have been higher 3 out of last 11 years

15. Soy Insurance Prices
Harvest prices have been higher 6 out of last 11 years

16. Group Policies Group Risk Plan: GRP Group Risk Income Protection: GRIP
Group Risk Income Protection with harvest price option: GRIP-HPO

17. Group Policies No changes made GRP uses the RMA projected price
GRIP uses the Feb. and Oct. futures prices
Expected yields based on historic trends
Actual yield is based on county averages (per planted acre)

18. Premiums Only one rating system for revenue policies
Similar to RA system
RP > RP-HPE > YP
May be higher or lower than before

19. 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 county
Whole Farm: Combine all crops in county

20. Current Subsidy Rates 60% 64% 80% 65% 59% 70% 75% 55% 77% 48% 68% 71%
Coverage level
Basic Units
Optional Units
Enterprise Units
Whole Farm Units
60%
64%
80%
not avail.
65%
59%
70%
75%
55%
77%
48%
68%
71%
85%
38%
53%
56%

22. Enterprise Units Available for YP, RP and RP-HPE
Must include at least 2 sections
CRC used acres instead of sections
At least 2 sections must have acres equal to or greater than the lesser of 20 acres or 20% of the total

23. Example 300 total acres of corn in 2 sections
Must have at least 20 acres in each section
20% rule applies if total acres is less than 100 acres

24. You Can Aggregate Acres Across Sections
Example: 300 total acres
278 acres in Section 1
12 acres in Section 2
10 acres in Section 3
Can combine acres in Sections 2 and 3

25. 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

26. Whole Farm Units Combine all insurable crops in county
Available for Revenue Protection only
Must include at least 2 crops that are each 10% or more of the total planted acres

27. Prevented Planting/Replant Payments
Based on Feb. futures price, not October
Replant payments are no longer based on actual costs
Replant Payments:
Corn: 8 bu. x Feb. price, per acre
Soybeans: 3 bu. x Feb. price, per acre

28. Looking Forward to 2011 Corn: Dec. 2011 futures $ 5.87
Soy: Nov futures $13.48
as of Jan. 21, 2011

29. Corn Insurance Prices

30. Soy Insurance Prices

31. Good Performance Refund
Recent proposal by RMA that could be in place for the 2011 crop year
Would provide a refund to producers for good crop insurance performance
Less than 2 years of losses over ten years ( )
Have paid in more than they have received
Preliminary rules are under discussion now
Total refunds in the $75 million range
Estimated average refund for qualifiers ~ $1000
Refunds will be between $25 and $25,000 per producer

32. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: