During the next few weeks, many farm operators will be finalizing their crop insurance decisions for the 2015 crop year. March 15 is the deadline to purchase crop insurance for the 2015 crop year. Profit margins for crop production this year are the tightest that they have been for several years, which makes the 2015 crop insurance decisions even more critical. Producers have several crop insurance policy options to choose from, including yield protection (YP) policies and revenue protection (RP and RPE) policies, as well as several other group insurance policy options. There are also several new crop insurance options for 2015, associated with implementation of the new farm bill.

Beginning with the 2015 crop year, producers in some areas will be eligible for the APH Yield Exclusion (YE) option. The YE option allows specific years with low production to be dropped from crop insurance APH yield guarantee calculations. YE eligibility is determined by the USDA Risk Management Agency (RMA) on a county-by-county basis, and is based on production losses in specific years. To be eligible for YE, a county and contiguous counties, must have had an annual average yield for a crop in a given year that is 50% or more below the average county yield for the previous 10-years. Use of the YE exclusion will likely increase the crop APH on a farm unit for crop insurance; however, there will likely be a higher premium with the YE exclusion. Years in which the YE exclusion is utilized are not eligible for the trend-adjusted (TA) APH yield option for that year.

Counties in several states are eligible for YE for corn and soybeans for the drought year of 2012, in addition to other years in some locations. Most counties in southern and western Minnesota, south of Interstate 94, are not eligible for the YE exclusion in 2015 for corn and soybeans; however, most other central and northern Minnesota counties will be eligible. A selected few counties in Iowa are also eligible for the YE exclusion for either corn or soybeans in 2015. To find out which counties, crops, and years are eligible for YE, go the RMA website.

Beginning with the 2016 crop year, producers must be in compliance with USDA provisions for Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) in order to receive federal subsidies for crop insurance premiums. This requirement is similar the HELC and WC requirements to receive benefits from Farm Service Agency (FSA) farm programs, USDA disaster programs, and NRCS conservation programs.

Most producers that regularly participate in FSA farm programs are already in compliance with HELC and WC requirements, and have a Form AD-1026 on file at FSA offices. Other producers need to file a Form-AD-1026 at FSA offices by June 1, 2015 in order to be eligible for crop insurance subsidies for the 2016 crop year. Insurance premiums for corn and soybeans without the federal subsidy would likely be 50-60% higher for most crop insurance options in many counties.

The Supplemental Coverage Option (SCO) is a new insurance option that is available in 2015 for corn, soybeans, and spring wheat in most major producing States. SCO is only available to producers that choose the Price Loss Coverage (PLC) option of the new farm program for 2014-2015 by March 31, 2015, at county FSA offices. Producers that choose Ag Risk Coverage (ARC-CO or ARC-IC) options of the new farm program are not eligible for SCO coverage. SCO is an insurance endorsement that will correspond to the underlying individual crop insurance policy (YP, RP, RPE, etc.) Producers will pay premiums for SCO coverage; however, the SCO premiums are 65% federally subsidized.   

The maximum insurance coverage with the SCO endorsement is 86% of the expected value for a given crop for 2015 (yield x base price). If an eligible producer normally purchases 75% individual insurance coverage, they would have the option to purchase an additional 11% SCO insurance coverage on that crop. If they purchased 85% individual coverage, they would only be able to purchase an additional 1% of SCO coverage. The coverage with SCO is based on county-wide yield and revenue losses, similar to Area Risk Protection (ARP) crop insurance policies.

A reputable crop insurance agent is the best source of information to find out more details of the various coverage plans, including the YE, TA-APH, and SCO options, or to get premium quotes for 2015 crop insurance options. Kent Thiesse has written an information sheet, 2015 Crop Insurance Decisions. To receive a free copy of the information sheet, e-mail [email protected] or call (507) 726-2137.

Following are some very good websites with crop insurance information: