June 17, 2004
Crop insurance keeps farmers' heads above high water
WEST LAFAYETTE, Ind. - Floods are washing away a near ideal crop season for many Indiana farmers, but the waters can't carry off all a producer's hard work if crops are insured, said George Patrick, a Purdue University agricultural economist.
Producers with crop insurance must decide soon whether to replant lost corn and soybeans, leave the crops as they are in the field or abandon attempts to seed unplanted acres. Choosing the best strategy will depend in part on a farmer's insurance coverage, Patrick said.
"Actual Production History, Crop Revenue Coverage, Revenue Assurance and Income Protections plans generally provide prevented planting and replant options," Patrick said. "The county-based Group Risk Plan and Group Risk Income Plan do not provide prevented planting and replant coverage."
Most Hoosier corn and soybean crops are insured. In 2003, about 65 percent of the state's corn and 60 percent of the soybean acres were covered by crop insurance.
Actual Production History (APH) covers most physical losses in crop production. APH also pays out when field conditions are so poor a farmer is unable to plant or the farmer must replant because of weather or other factors. Crop Revenue Coverage and Revenue Assurance protect farmers from drops in commodity prices, as well as physical losses. The Group Risk Plan (GRP) provides coverage and indemnities based on expected and actual average county yield levels, while the Group Risk Income Protection is a revenue-based version of GRP.
Farmers with flood-damaged crops should carefully think through their management options, Patrick said.
"First, the crop can be left as is and the insurance company notified to make the loss determination," he said. "Second, if it is not expected that the crop will produce 90 percent of the yield guarantee level and it is practical to replant, a replant payment may be made. That would be the smaller of 20 percent of the yield guarantee level, or the equivalent of 8 bushels of corn and 3 bushels of soybeans. Acreage replanted must also be at least 20 acres, or 20 percent of the insured planted acres of the crop for the insurance unit.
"Third, a producer may prefer to plant a different crop. This shift must be approved by the insurance carrier. If the second crop is not insured, the producer will receive 100 percent of the indemnity payment based on the first crop's estimated yield loss. If the second crop is insured, the producer will first receive 35 percent of the indemnity on the first crop."
If there is no loss on the second crop, a farmer will receive the remaining 65 percent indemnity after harvest, Patrick said. "If there is a loss on the second crop, the producer can choose to take the larger of the second crop indemnity payment or the remaining 65 percent of the first crop payment."
Farmers with crop insurance have until Sunday (6/20) to plant soybeans and still qualify for full insurance coverage. If soybean planting extends beyond the full coverage deadline, yield guarantees fall 1 percent per day for 25 days.
"For example, if a producer had a yield guarantee level of 30 bushels of soybeans and planting was delayed until June 30, the yield guarantee level would be reduced by 10 percent, to 27 bushels per acre," Patrick said. "Producers who were unable to plant corn by the June 5 full-coverage deadline can take a lower corn yield guarantee level or generally shift to soybeans without penalty."
As of Monday (6/14), 95 percent of Indiana's intended soybean acres had been planted, according to the Purdue-based Indiana Agricultural Statistics Service (IASS). Southern Indiana counties are the furthest behind in soybean planting, with 83 percent of the crop in the ground. Ninety percent of planted soybean acres have emerged, with 71 percent rated in good to excellent condition.
The Indiana corn crop is rated 75 percent good to excellent, with many early-planted fields waist-high, the IASS reported.
Hoosier farmers were expected to have planted about 5.6 million acres of corn and 5.45 million acres of soybeans this spring.
Writer: Steve Leer, (765) 494-8415, firstname.lastname@example.org
Source: George Patrick, (765) 494-4241, email@example.com
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