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Crop insurance policies, plans and protection: Whole-farm coverage option to be available in 2015

By Melisa Morgan
Crop insurance is an important risk-management tool for the modern-day farmer and it is key to a farm’s success.
Congress authorized the first crop insurance program in the 1930s along with other initiatives to help the industry recover from the Great Depression and the Dust Bowl.
The Federal Crop Insurance Corporation was created in 1938 to oversee this program, which started as an experiment. It was limited to major producing areas and included only major crops in an effort to stimulate growth.
This “experiment” continued to be a government program until 1980 when the Federal Crop Insurance Act was passed, expanding crop insurance to more crops and regions. This expansion replaced the free disaster coverage that had previously been offered under other farm bills in the 1960s and 1970s.
Today, the federal government’s job in crop insurance is to regulate and establish policy provisions, rules and regulations. The government still subsidizes the producer’s premium by 38-67 percent depending on the amount of coverage as well as provide reimbursement for administrative and operating cost to the insurance companies. This allows for approved insurance providers to have the ability to reinsure producers.
One of the greatest feats for an agent is staying up to date with crop insurance products, guidelines and their producer’s needs, all of which can change frequently.

Types of insurance
There are options for more than 100 commodities. It is important to understand the many options offered to producers today and tailor these to meet your operation’s needs.
n Multi-Peril Crop Insurance provides coverage to producers for a loss of their production. These products have evolved over the years to accommodate the changing climate of agriculture today. While exact products may differ, here is a list and brief overview of the more common plans.
Individual plans are based on the insured’s production and/or revenue. These policies include:
n Actual Production History, this product is strictly a production-based policy in which a loss occurs when the production count falls below the guaranteed production due to insurable causes. In our area the primary use for this product is tobacco.
n Yield Protection policy takes the producers average and multiplies by the level of coverage chosen to establish a guarantee. The price is then determined by averaging the daily price on a commodity exchange during a designated period of time by which the indemnity is calculated. This policy is used to insure producers of corn, soybeans, wheat and canola.
n Revenue Protection policy began in 2011 and consolidated several revenue plans that were previously available. This policy provides a yield guarantee and a revenue component. A loss with this policy occurs when the production or revenue count falls below the guarantee.
This plan also has a discovery period near the time of harvest. The average price established during this time is called the harvest price. If the harvest price is greater than the projected price, the revenue guarantee is increased. If the harvest price is lower, then the policy guarantee is then the projected price. Losses are paid using the harvest price.
n Revenue Protection with Harvest Price Exclusion, is the same as the RP policy, except the guarantee is not adjusted up by the harvest price. This plan is based on a projected price. Both RP and RP-HPE are regionally used for corn, soybeans and wheat.

Other plans
Actual Revenue History uses the insured’s revenue history for crops and calculates loss when the revenue for the current year falls below their guaranteed revenue.
Dollar Plans of Insurance are only available for certain commodities and insure a dollar per acre. The maximum dollar amount per acre or other measurement is established and published by the Risk Management Agency. The insured chooses a percentage of the maximum to establish their guarantee. A loss for this policy is when the dollar per acre falls below the dollar amount of insurance.
Group plans are available and include Group Risk Protection and Group Risk Income Protection. These policies are based on a countywide average loss of production.
The premise behind this type of policy is when the county as a whole has a loss so does the insured. This loss data is the set by the National Agricultural Statistical Service and actual county yields.  On the flip side if the insured has a low yield and countywide is higher no loss payment will be issued.
A new option for crop insurance was presented in the 2014 Farm Bill called Whole-Farm Revenue Protection.
Whole-Farm insurance allows farmers to insure all crops on their farm (including fruits and veggies) at once, rather than insuring commodity by commodity.
The policy paves the way for the Risk Management Agency (RMA) to make it available to specialty crop, organic and diversified
growers.
The Federal Crop Insurance Corp. board of directors approved the Whole-Farm Revenue Protection pilot policy for RMA to offer it through the federal crop insurance program in 2015.
The program will be implemented in counties across the country and will expand in availability over the next several years.

Deadlines
There are important deadlines when dealing with crop insurance and terms associated with your policy and insurance company. Sales closing date is the last day to apply for coverage. The final plant date is the last day to plant unless you are insured for late planting. Acreage reporting date is the last day to report acreage planted otherwise the crop will not be insured. Production date is the last day to report production for your APH, ARH, Revenue Protection and Revenue Protection with Harvest Price Exclusion policies.
Crop losses are to be reported within a timely manner and these times differ based on the type of loss. Crops that are planted and have damage or anticipate a loss of production, for instance, must be reported within 72 hours of initial discovery but no later than 15 days after the end of the insurance period even if the crop has not been harvested.
If a loss in revenue occurs without damage a notice must be given no later than 45 days after the latest harvest price is released. In a prevented plant situation notice must be given within a 72-hour window after final planting.
End of Insurance is the latest date of insurance coverage. Payment date is the last day to pay the premium without being charged interest. Cancellation date as it states is the last day to request a cancellation of policy for the next year. Debt termination date is the date the approved insurance provider will terminate your policy due to nonpayment.
Crop insurance like everything else does require some research to find the best company to serve your needs. There is a basic framework in place, thanks to the FCIC, that each insurance company offers. The deciding factor comes in the customization of the company to meet your needs. For more information, refer to your local insurance provider or visit the USDA website for more information about risk management and crop insurance guidelines.

More info
The USDA Risk Management Agency
operates and manages the Federal Crop
Insurance Corporation.
Visit www.rma.usda.gov for summaries of insurance sales, information on pilot programs, crop policies, and online tools, such as the Agent Locator, the Premium Calculator and the Summary of Business.

Area crop insurance providers

  • Western Kentucky Crop Insurance, Pembroke

270-475-9550
www.wkycropins.com

  • B R Knuckles Insurance, Elkton

270-265-9811
www.knucklesinsurance.com

  • Rusty Wallace, Crop Insurance Agent

RLT & Associates, LLC
270-839-7421

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