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Corn+Soybean Digest

Built-in Risk Reduction

What happens when modern seed technology meets a never-before-used provision in the Federal Crop Insurance Act? The potential for reduced crop insurance premiums.

The Biotech Yield Endorsement (BYE) program was approved as a pilot crop-insurance program by USDA's Risk Management Agency (RMA). It is available this year for corn producers in four states who plant hybrids with Monsanto's triple stack genetics. Triple-stack genetics protect against aboveground lepidopteran pests (i.e., moths and their larvae), belowground corn rootworm damage and weeds via spraying of glyphosate.

According to Monsanto, which submitted the proposal with its partner Western Agricultural Insurance Company, BYE has the potential to reduce crop insurance premiums for corn growers by up to 24%. This fact alone has gotten the attention of representatives in the crop-insurance industry and agribusiness. Perhaps even more intriguing, however, is the potential for similar type crop insurance proposals in the future.

THE IDEA FOR BYE grew out of Monsanto grower meetings a couple years ago. “If I'm planting seeds that protect against adverse conditions and protect my yields, shouldn't that be reflected in my crop insurance premiums?” asked producers.

The idea was taken seriously by Monsanto — a company not exactly known for its crop insurance expertise — and eventually a proposal was put together for submission to the RMA.

Though some insurance industry representatives worry that BYE may be opening a can of worms, the idea of offering a reduced rate for built-in, risk-reducing features isn't unique to crop insurance. For example, an automobile with airbags, anti-lock brakes and a security system typically is eligible for auto insurance rate discounts.

Tim Witt, RMA deputy administrator for project management, says a key point in why this proposal was approved is that the traits are built into the seed. Many crop-production risk-reducing measures are based on management techniques, which can vary in effectiveness on how they are implemented from farm to farm. Triple-stack genetics, on the other hand, are consistent from seed to seed and a degree of probability can be applied to the seed's performance.

The data clearly demonstrates this fact, says Tim Hennessy, new business development manager for Monsanto. After hearing from growers, “We looked into it to see if there was a tie (between triple-stack genetics and reduced yield risk). As we dove into the data, we saw there clearly was a reduction in the variance of yield and an increase in yield probability.”

An actuarially sound case was built by Monsanto and Western Agricultural Insurance to back up its submission to RMA, says Hennessy. “We looked at three or four years of data, which included thousands of data points and comparisons across wide geographies.” There was no doubt that the seed itself was delivering reduced yield variance.

THERE ARE A NUMBER of detailed requirements for BYE (the full list can be found on the RMA's Web site,, but some of the highlights include:

  • Producers will be required to purchase an individual yield or revenue insurance plan (APH, RA or CRC), and plant at least 75% of corn acres to a hybrid containing Monsanto triple-stack genetics.

  • BYE will initially be available for non-irrigated corn in Illinois, Indiana, Iowa and Minnesota.

  • Though the submission came in part from Western Agricultural Insurance Company, the discounted premium rate will be available from any approved crop insurance provider in the four states.

  • The average premium discount will be around 20% for the yield component of an insurance plan. For revenue policies, the average discount will be around 13% because yield risk accounts for only a portion of the total risk and premium rate.

  • Producers who meet the eligibility criteria for BYE will automatically qualify for the premium rate reduction.

RMA points out that any approved insurance provider can provide, or partner with a private entity to provide, a submission for a premium rate reduction under section 523(d) of the Crop Insurance Act.

Given the competitive nature of the agriculture industry, this opens the door to a wide variety of possible submissions. As a result this was the first such proposal made under this section of the act, says Curt Sindergard, a corn and soybean producer from Rolfe, IA, who serves on the Federal Crop Insurance Corporation's board of directors. “I would not be surprised to see additional submissions come in under Section 523.”

Monsanto's Hennessy adds, “We're looking at other opportunities, as well, and we're evaluating those on behalf of the growers. It (BYE) has opened the door for future opportunities, and we think the opportunities are endless.”


American Soybean Association (ASA) board member and current Iowa Soybean Association President Curt Sindergard, Rolfe, IA, is a recent appointee to the Federal Crop Insurance Corporation's (FCIC) Board of Directors, which is responsible for the management of the Federal Crop Insurance program. One of four producer representatives on the FCIC board, Sindergard is the only one who raises corn and soybeans as his primary crops, and he recently took time to share his thoughts about his duties on this influential board:

  • What do you see as your role on the board?

    I have a number of roles on the board including the approval, denial and occasionally discontinuance of insurance pilot plans. We also approve expansion of existing programs. In addition, my role is to offer guidance and direction to staff of the Risk Management Agency (RMA), to serve as a representative of all agricultural producers in addressing the risk management needs for America's farmers and ranchers and to see to a responsible use of the taxpayers' money.

  • How well do you think the current crop insurance system serves farmers?

    The system seems to be serving farmers as we have seen a growth of the program in acres insured, liability covered and total premiums. As of last December, there have been 271,298,000 acres covered, $67,256,047,000 of liability and $6,552,357,000 of premiums. This is over the whole profile of crops that are insured, and does not include any livestock-related products. The crop insurance system offers farmers many different options for protection, such as APH, revenue insurance, group risk products and so on.

  • What are some of the biggest developments you've seen in corn and soybean crop insurance in recent years?

    The growth in available types of revenue insurance policies. Having many choices, such as RA, CRC, GRP and GRIP, has helped the farmer to find the best product to fit his risk management needs.

  • What promising changes or developments for corn and soybean crop insurance maybe on the horizon?

    Well, we have already seen that advances in technology will play a role, and what the future holds will certainly be interesting. Funding for the program will also remain an issue, especially in a tight budget environment.

  • Are there any other crop insurance topics right now that you think Corn & Soybean Digest readers should be watching?

    Certainly anything in the farm bill that affects the crop insurance program will be of interest. The crop insurance provisions can be found under Title X: Miscellaneous,in the farm bill.

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