Risk management is important to the profitability and sustainability of farm operations. As you continue to prepare for the 2018 crop year, corn insurance should be included in your plans as a way of protecting your crop.
New Hampshire corn silage producers may purchase yield protection, which insures a producer’s average yields against adverse weather conditions (hail, frost, freeze, wind, drought and excess precipitation), wildlife, insect damages, fire and failure of irrigation water supply. Grain producers may also purchase revenue protection which insures a producer’s corn against loss of revenue due to production loss, price decline or increase, or a combination of both.
The insurance period starts on the date your application is accepted or when the crop is planted, whichever is later. It ends with earliest occurrence of 1) total destruction of the crop; 2) harvest; 3) final adjustment of a loss; or 4) abandonment of the crop.
The coverage levels starts with 50% Catastrophic Risk Protection (CAT) with 55% price elections. For buy-up coverage the coverage levels go up in 5% increments to 85% coverage level with 100% price election. At the CAT level, which is the minimal protection, the premium is subsidized by 67%, and declines to 38% at the 85% coverage level. The cost for the CAT coverage is an administrative fee of $300.
A producer can choose between basic, optional and enterprise units. Insuring all acres as basic units entitles producers up to a 10 percent discount on their premiums. Basic units may often be divided into optional units when a crop is being grown under distinctly different production practices. Optional units may also be established by FSA farm serial number (FSN). Separate average production history (APH) records must be reported for each optional unit, and production records must be maintained. Using enterprise units is another way to receive additional premium discounts – increased premium subsidy up to 80%. Enterprise units combine all of the acres of a particular crop within a county in which you have a financial interest into a single unit, regardless of whether they are owned or rented. Enterprise units are larger than basic or optional units, yields tend to be less variable and it is less likely that average yield would be low enough to trigger a loss payment in a given year.
Similarly to last year, producers use an actual yield per acre to calculate APH. However, in the event that a producer does not have a minimum number of years of records for field crops he or she can use the 60% T-yield option (County Transition yield). The T-yield for corn silage in New Hampshire is 17.6 tons per acre and the 60% T-yield option is a yield of 10.56 tons per acre and it can be used to replace the actual yield if it falls below this level. This option is available for all coverage levels including the CAT level. An 80% T-yield plug applies for new and beginning farmers.
When a crop in a county suffers over a 50 percent yield loss, producers in that county and adjacent counties may omit their yield for that year’s production. For this provision, the Federal Crop Insurance Corporation may make a separate determination for irrigated and non-irrigated acreage.
There are some changes between the 2017 and 2018 crop insurance decision environments with potential impact. The 2018 projected prices will be slightly lower than 2017 prices. The projected maximum price for corn was $3.96/bushel in 2017 and appears to be unchanged for 2018.
For corn silage, the price declined from $35/ton in 2017 to $34.50/ton in 2018. The catastrophic level corn silage price for 2018 is $18.98, about $0.27/ton lower than in 2017. This decrease in prices could lower guarantees but should not influence coverage level choices.
Important dates for 2018:
- Last date to purchase or change coverage: 3/15/18
- Production report due: 4/29/18
- Earliest planting: 4/16/28
- Final planting: 6/15/18
- Acreage report date: 7/15/18
- Premium billing date: 8/15/18
- End of insurance: 12/10/18
All multi-peril crop insurance, including CAT policies, are available from private insurance agents. A list of crop insurance agents is available at all USDA service centers and on the RMA website.