Farmers who grow winter wheat in any of 11 counties in Wisconsin are eligible for one of the new crop insurance policy options contained in the 2014 Farm Bill.
Enrollment in that policy, called Supplemental Coverage Option (SCO), is available from crop insurance agents only through Sept. 30 but winter wheat growers will have until Dec. 15 to decide if they're going to keep the policy and pay the premium, according to Paul Mitchell, an agricultural economist at the University of Wisconsin-Madison.
Mitchell spoke at the latest farm management update for agricultural professionals, which is sponsored twice a year by the Extension Service offices in east central Wisconsin counties. He noted that Sept. 30 is the sales closing date for any winter wheat crop insurance policy although the latest planting date to assure full coverage varies from Sept. 30 in the northern half of the state to Oct. 10 in the southern three tiers of counties.
Counties eligible for SCO
The 11 Wisconsin counties in which SCO is offered in addition to the basic crop insurance policy on winter wheat are Rock, Dane, Dodge, Fond du Lac, Sheboygan, Calumet, Winnebago, Brown, Manitowoc, Kewaunee, and Door. Mitchell noted that SCO will be available to corn and soybean growers in some Wisconsin counties next spring.
SCO is layered with the standard revenue protection, yield protection, or harvest price exclusion policy that farmers must buy in order to obtain an SCO policy, Mitchell pointed out. Farmers will pay 35 percent of the premium while a federal subsidy will cover the balance, he indicated. Premium rates are not known yet, pending futures and wheat prices along with volatility probabilities, he noted.
Calculated on a county level basis, SCO is a policy that covers a portion of the deductible in individual insurance policies, Mitchell explained. With the addition of an SCO policy, farmers could have four possibilities for obtaining a payment on cropping losses, he observed.
An SCO payment would be triggered when a county loss of at least 14 percent (up to 25 percent) is determined, Mitchell indicated. Coverage for the two individual policies would be capped at 86 percent of the expected revenue or crop yield, he added.
Timetable complications
One requirement for obtaining an SCO policy is that the insured farmer also be enrolled in the Price Loss Coverage (PLC) commodity crop support program (details of which were reported in previous Wisconsin State Farmer stories). Mitchell noted, however, that farmers could sign up for PLC on one crop and select the Agricultural Risk Coverage (ARC) commodity support program for others.
PLC is a virtual continuation of what were called counter-cyclical payments in previous Farm Bills but with higher support or "reference" prices, Mitchell stated. ARC, available either on a whole farm or county-wide basis, uses a five-year Olympic average to determine guarantees and actual revenue, he pointed out.
But there is at least a temporary complication in the timing as different agencies of the U.S. Department of Agriculture (USDA) develop and roll out the rules and procedures for the provisions of the 2014 Farm Bill, Mitchell remarked.
The program details and signup dates for PLC and ARC, which is administered by the Farm Service Agency, have not yet been announced, Mitchell noted. But the crop insurance program, including SCO, which is handled by the USDA's Risk Management Agency, is in place. He hopes that enough information will be available by Dec. 15 so farmers who have signed up for SCO can decide if they want to keep it or not (with no penalty).
Mitchell's recommendations
Because of the uncertainty on the timing, Mitchell advises wheat growers who buy a basic crop insurance policy to also sign up for SCO. That would allow them to keep their options open until Dec. 15, when their premium payment for SCO would be due, he explains.
Mitchell hopes that by then the details and dates for PLC and ARC will be available. He expects that the signups for those programs will be available by mid-January. For that enrollment, education and decision aids will be provided by Texas A&M University and the University of Illinois.
What's good for Wisconsin's farmers is that PLC will be the best choice for a great majority of them, Mitchell believes. He has learned that ARC, especially the coverage for individual farms, was inserted into the Farm Bill mainly for wheat growers in Montana.
Mitchell also pointed out that SCO is available as annual purchase decision while the choice of either PLC or ARC will apply for the lifetime of the Farm Bill (at least through the 2018 crop year). This means that wheat growers who do not buy SCO in the coming weeks can do so in subsequent years and that those who buy a policy this year are not obligated to do so again in later years, he explained.
Source - http://www.wisfarmer.com/
