In the new 2018 Farm Bill, crop insurance is funded for the next five years. The government subsidy provides an incentive for basic multiperil insurance to be offered. Companies can also offer supplemental private policies to help farmers manage risk, such as wind, hail or other enhanced coverage options.

March 15 is the deadline to sign up for crop insurance coverage for 2019. Ag lenders and others are advising farmers to contact their crop insurance agent now for an appointment to decide what kind of plan they need.

“Even if you don’t anticipate making any changes in coverage from last year, it’s good to visit your agent and review your plan. See your agent early; don’t wait until March 15,” says Kelvin Leibold, an Iowa State University Extension farm management specialist. The agents are tracking projected crop prices and market volatility, so they have a good idea of what various crop insurance plans will cost for 2019.

Choose best plan for you
“The majority of producers continue to buy the Revenue Protection policy,” says Doug Burns, vice president of related services for Farm Credit Services of America. Located at FCSAmerica’s office at Perry in central Iowa, Burns says the majority of farmers buy the 80% and 85% coverage level.

The unit structure offers you a choice of Optional units and Enterprise units, he explains. Optional units allow you to insure your cropland by section. Enterprise units allow you to take a broader approach to covering your acreage. For example, an Enterprise unit covers all your corn in a county together in one unit.

“Many producers use the Enterprise unit option. It’s heavily subsidized, offering attractive coverage and is less expensive than Optional units,” says Burns.

Crop revenue protection
USDA’s Risk Management Agency, which administers the federal crop insurance program and oversees policies offered by private insurers, tracks the February average for December corn futures prices. “Come March 1, we’ll know the projected crop insurance price for corn for the Revenue Protection policies,” notes Burns. “For soybeans we use the February average for the November soybean futures contract.”

As with corn, the soybean price used for RP crop insurance coverage will be determined as of March 1. That’s the spring projected price for beans. “We also track volatility factors,” Burns says. “Those two components — the projected crop prices and volatility factors — help determine what the insurance premium will cost producers for their 2019 crops.”

Currently, the cost per acre for crop insurance this year looks similar to last year. But it won’t be known for sure until the projected prices and volatility factors are set.

New feature this year
One of the major changes being offered is called the Multi-County Enterprise Unit. It can be used by a producer who farms in at least two counties that touch each other. One county qualifies for Enterprise units and one county would have perhaps only one farm in it, where it doesn’t qualify for Enterprise unit coverage.

With the MCEU option, you can combine the coverage in two counties together. You plug the coverage into one enterprise. This gives producers an opportunity to choose which county and save money on the cost of their premium. “Keep in mind the requirements to do this,” Burns says. “The counties have to touch each other, and the primary county has to qualify for Enterprise units, and the second county would not qualify for Enterprise unit coverage on its own.”

Yields can vary a lot between counties. For example, someone who farms in Clinton County may pick up a piece of ground in Jackson County. Is it beneficial for the farmer to take Enterprise units in both counties? Or is it better to leave the Jackson County field separate, and take the yield there? That field might be a little lower yielding than the farmer’s Clinton County ground. “We would want to analyze this situation for the producer and help determine the best path for him or her to take,” Burns says.

Other considerations for 2019
When making crop insurance choices, “we like to have producers look first at which plan will work best for them,” Burns says. “Should they buy the Revenue Protection plan or the Yield Coverage option? When they make that decision, then they choose their level of coverage and then the unit structure.”

Those are the three most important choices when signing up for crop insurance, he adds. Start with your plan — most producers buy Revenue Protection, but there is also the yield option. Second step is to choose your level of coverage, anywhere from 50% to 85%. Then choose your unit structure (Enterprise or Optional units).

“Crop insurance is not a one size fits all,” Burns says. “It’s tailored to each individual farmer. Know your cost of producing your crop, figure your cost of coverage, compare the plans and make your decision on the coverage level you need. Be sure you insure at a level to cover your production cost. Also, keep in mind that crop insurance is the only input that guarantees revenue. It’s one of the most important management decisions a farmer makes each year.”

Help available on crop insurance options

The Center for Rural Affairs has a new helpline available for farmers. Farmers need to manage risk, whether from weather, markets or other forces. Crop insurance can be used to manage some of their risk.

“There can be several reasons why some farmers don’t buy crop insurance,” says Anna Johnson, policy manager for the center. “Maybe they haven’t found an option that covers their farm operation. Maybe they don’t know how to find a crop insurance agent to work with, or don’t know what questions to ask when they meet with an agent.”

The helpline staff can address questions on available crop insurance options, how crop insurance works, and how to decide which option is right for your farm operation. Call the Center’s crop insurance helpline at 402-687-2100, ext. 1027 or 1012.

In January, the Center hosted a three-part webinar series, covering crop insurance for beginners, an introduction to Whole Farm Revenue Protection, and livestock insurance options. Questions on these topics are also welcome on the crop insurance helpline. Recordings of the webinars can be accessed at cfra.org/crop-insurance-resources. This project is funded in partnership by the USDA Risk Management Agency.

Also helpful is a tool on Iowa State University’s Ag Decision Maker website. This Crop Insurance Comparison calculator can help you compare different crop insurance strategies for corn and soybeans.