MOUNT VERNON, Ill. — The 2012 crop year, which was a disaster for many Illinois farmers, apparently has a silver lining when it comes to crop insurance in the future.
That is one of the realities of the 2014 farm bill. Ag economics specialists from the University of Illinois shared the intricacies of the bill with farmers at a conference here.
“One of the best impacts of the 2012 drought was the starting 2013 really high prices,” said Bruce Sherrick, a professor of agricultural and consumer economics. “We got a lot of dollars of coverage because of the short crop of 2012. In 2014, we had incredibly high yields in most of the state and we have really low prices.”
Most insurance provisions available in 2014 also will be offered to farmers in 2015. An addition is the Supplemental Coverage Option, a new, optional program that covers a portion of a farmer’s deductible in the event of a loss claim. Premiums are subsidized up to 65 percent.
Premium rate levels will be established by the Risk Management Agency, using a number of variables. They include crop reserves and operating costs.
The Agricultural Risk Coverage, County Option, offers payments of up to 10 percent of a low-price year, calculated by a complicated five-year moving Olympic average of county yields multiplied by a national average price.
Agricultural Risk Coverage, Individual Farm, also provides payments for low prices, but for a figure representing all crops on a farm.
Deadlines Approach
Regardless of what choices producers make concerning crop insurance, they must make their decisions soon. And they are binding for the life of the farm bill, which is designed to cover agricultural policy for the next five years.
“You always want to keep deadlines in mind, because they’re obviously important,” said U of I ag economist Jonathon Coppess.
The deadline for the payment yield and base acreage decisions is Feb. 27. The program election deadline is March 31.
“These decisions are one-time, irrevocable decisions. When that deadline passes the decision is locked,” Coppess said. “It will not change for the life of the farm bill. Right now that’s set for 2018. Due to recent history, that might be a little bit longer. Keep that in mind.”
The Farm Service Agency sent information to farmers last August that outlined base acres, along with payment and program options.
“Those numbers are very important in the decision process,” Coppess said. “We also recommend having on hand your crop insurance history.”
Base acres and payment yields are decisions for landowners. Farmers are responsible for making decisions on programs.
“Where this matters is the case of a cash lease,” Coppess said. “In a cash lease, the landlord is not considered the operator of the farm. The tenant will make the program choice on that farm. Even if the tenant changes in the future, the program choice doesn’t change. The tenant is making the decision for the landowner.”
Source - http://agrinews-pubs.com
