The 2011 growing season saw extreme weather conditions that will result in yield variability across Iowa and the Corn Belt, even within a field. A large number of farmers in Iowa have already filed loss claims with their crop insurance agents and are expecting to receive indemnity payments following this fall's harvest.
Information from the USDA's Risk Management Agency (RMA) indicates that about 90% of all Iowa's corn and soybean acres were insured with Revenue Protection (RP). Revenue Protection replaced the Crop Revenue Coverage (CRC) and Revenue Assurance (RA) products beginning in 2011.
"This type of farm-level coverage bodes well for Iowa farmers receiving loss payments since RP guarantees both yield and price," says Steve Johnson, Iowa State University Extension farm management specialist in central Iowa. "It uses the higher the projected price versus the harvest price to determine a potential loss payment."
Here's how final crop loss payments will be determined
Harvest prices will be determined in the month of October by using the average futures price closes for December corn and November soybeans, he explains. These prices will be compared to the projected price determined in the month of February, and the higher of the 2 prices used to calculate loss payments. This price multiplied times the actual production history (APH) times the level of coverage elected determines the revenue guarantee. The actual revenue will then be subtracted from the revenue guarantee to determine the final loss payment.
"You need to give special attention to detail prior to and during harvest in order to maximize your future crop insurance coverage and obtain potential loss payments for 2011," says Johnson.
Consider these 7 harvest-time crop insurance reminders:
Notify your crop insurance agent before destroying or chopping corn for silage.
Contact your agent within 72 hours after discovering damage to a crop.
Keep crop production records so that yields for each unit can be separated (including yield monitor data).
Mark crop production records and scale tickets by unit, farm name or specific reference.
Keep track of feed records from your 2011 crop production.
Report your actual production history (APH) for each unit to your crop insurance agent immediately following harvest.
Crop insurance loss payments are reportable income in the year received, but can be deferred. Check with your income tax preparer regarding deferring these payments.
"Always practice good communication with your crop insurance agent. Be sure you talk to them," advises Johnson. "Notify them of any questions you might have."
For farm management information and analysis, go to ISU's Ag Decision Maker site www.extension.iastate.edu/agdm and ISU Extension farm management specialist Steve Johnson's site www.extension.iastate.edu/polk/farmmanagement.htm.