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Insure to conserve

Crop farmers worried about trying new environmental practices may now purchase coverage from one of four new insurance programs being unveiled this winter. The programs cover losses from problems such as corn rootworm damage, nitrogen deficiency and cold soil in the spring.

The new insurance policies are designed to encourage farmers to adopt proper environmental practices, mainly best management practices (BMP).

Until now, a crop farmer had no coverage should a good environmental practice go bad because of weather or other unforeseen circumstances. As a result, some farmers have resisted adopting BMP developed by conservation experts.A nonprofit group, the Agricultural Conservation Innovation Center (ACIC), is behind the development of these new insurance programs. ACIC contracted with Tom Buman of Agren Inc. to study and develop crop insurance options. Buman then enlisted the help of crop insurance companies to offer the policies.

"[Agren and ACIC] are not out to sell insurance," Buman explains. "But since insurance is a tool to get some farmers to adopt best management practices, that's why we're involved."

Buman and ACIC discovered that farmers believe that BMP will work but worry about the risk of implementation. So instead they use inputs such as fertilizer or chemicals as their insurance. For example, if a farmer doesn't know how much nitrogen to apply, he'll put on a little extra, Buman says.

"We're looking at ways where farmers can be more efficient by reducing inputs, without increasing their risk," he adds. "We're trying to substitute a financial insurance policy for product insurance."

Cold spring. Buman and his group wanted to find an insurance policy that would encourage no-till planting. Although farmers believe no-till is a good practice, some are concerned about occasional cold soil conditions in the spring. American Agrisurance has developed the first cold-spring policy, according to Steve Hamilton, assistant manager of research and development. The policy pays growers if the normal heat units do not occur in the spring around the optimum planting dates. Coverage includes the week before and two weeks after the optimum planting date listed for corn in the grower's area.

Heat units are determined by subtracting 40 from the average of the high and low temperatures of each day in the three-week period. (Example: Average of 80 degrees F high and 50 degrees F low is 65 - 40 = 25 heat units.) The heat units are then compared to the normal heat units for the grower's location.

The grower purchases insurance coverage to kick in when a certain percentage of heat units is not achieved in that three-week window. Hamilton says that most growers will probably look at 75 to 85% of the average heat-unit coverage.In addition, growers may buy insurance for up to 100% of the liability and add deductible options. Hamilton estimates that most growers will look at coverage for $35/acre with the maximum coverage set at $50/acre. Cost for the insurance will run $2 to $10/acre, depending on location and options.

Because this is the first year for the policy, Agrisurance will not offer the policy across the entire Corn Belt. The policy must be purchased by the end of February.

Rainfall. Another new Agri-surance policy insures against an untimely rainfall that prevents a sidedress application of nitrogen.

"We have found that some people who would like to split apply their nitrogen are worried about getting rained out of the field when they need to sidedress," Buman says. "So then they put on extra nitrogen, all preplant."

The Agrisurance policy will indemnify a grower if sidedressing should be done and doesn't get done because of rain. Growers can choose their amount of coverage up to $100/acre and deductibles up to 20%, Hamilton explains. He expects the policies to cost between $2 and $10/acre.

This policy also will be offered in a limited area. Growers interested in the cold spring or untimely rainfall policies should contact American Agrisurance, Dept. FIN, 335 W. Broadway, Council Bluffs, IA 51502, 800/999-7475.

Corn rootworm. Growers may purchase a new insurance policy designed to encourage less insecticide use for corn rootworm control. IGF Insurance plans to offer the policy to continuous corn growers this year.

IGF is still working out policy details, according to Mark Nauman, IGF agronomist. But the basics include insuring growers who use a third-party crop consultant to perform beetle scouting. The policy insures growers who take their crop consultant's advice and eliminate at-planting insecticides based on low beetle counts from the year before. If corn rootworm damage occurs, the grower will be covered by the insurance policy.

The Iowa State University root ratings system determines the extent of corn rootworm damage.

Nauman says cost of the insurance policy depends on each field's yield history and corn prices. But he expects that the policy will be one-third the cost of applying a soil insecticide. The policy must be purchased by May. Because beetle scouting occurs in the summer, only growers who had beetle scouting completed in July 1998 may apply for the insurance this year.

"For continuous corn, corn rootworm is one of the most economically damaging problems along with corn borer," Nauman says. "We're here to insure against damage."

Nitrogen. Supplying nitrogen needs with manure can be tricky, according to Buman. Nitrogen in manure is more variable and affected by soil type, yields and weather conditions. In addition, the amount of nitrogen carryover changes from year to year.

Buman is working with IGF Insurance on a policy that covers crop losses incurred even with correctly applied manure. This policy is in the development stage and will be offered to a limited number of growers this first year.

The goal of the insurance policy is to encourage correct manure application rates and discourage overapplication as a way to ensure top yields.

Tentative details about the policy require the grower to follow university recommendations for manure application. To determine crop losses, a test strip treated with commercial fertilizer must be planted next to the manure-applied field. This will indicate potential loss (or gain) from manure. Costs for this policy have not been determined.

For more information, contact IGF Insurance, 6000 Grand Ave., Des Moines, IA 50312, 515/633-1000.

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