Farmers have until the end of March to select one of three crop insurance plans.

K-State Research and Extension had a meeting Wednesday afternoon to explain how these program will work, as well as factors farmers should consider when picking a program.

Art Barnaby, crop insurance expert, explained how each program will work.

The first program is called Price Loss Coverage, or PLC. This plan will help farmers if commodity prices drop.

The second and third programs are called Area Revenue Coverage, or ARC, at the county level and individual level. This plan will help farmers if they experience low yields.

Both programs use five-year national average prices for various crops to determine how much money farmers receive. This is based on USDA surveys of major crop buyers.

Barnaby said the first thing farmers should do is update their payment yields on their base acres. This represents the average yield per acre and must be done by the end of February. This cannot be changed again until the current Farm Bill expires in five years.

“I encourage everyone to update, even if you’re going into a program that won’t use it, because it goes with the farmland and will make land more valuable,” Barnaby said.

Farmers also can reallocate their base acreage. This number represents how much land, on average, a farmer has dedicated to a particular crop during the last five years.

It doesn’t necessarily represent how much land has been dedicated to a certain crop in any particular year. Farmers don’t have to plant crops in the proportions listed as their base acreage.

This reallocation also must be done by the end of February. The base acreage numbers will be used to determine how much insurance programs pay.

Under PLC, a farmer receives payment if the average commodity price for a given marketing year falls below the five-year average. The farmer is paid 85 percent of the difference in the two prices, multiplied by the farmer’s payment yield and base acreage for that particular crop.

For example, if the actual price for corn is 10 cents lower than the five-year average, and a farmer has 550 acres of corn listed in his base acreage with a payment yield of 170 bushels per acre, he or she would be paid $7,947.50.

If the actual price for a commodity in a given marketing year is equal to or higher than the five-year average, no payment is received.

Under ARC, a farmer receives payment if the crop yield is low. A benchmark revenue is determined by multiplying the average yield per acre by the average commodity price for the last five years at the county level or individual level. Farmers will not be paid more than 10 percent of this amount per acre.

Source - http://www.mcphersonsentinel.com