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Time Running Out To Insure Crops

Time Running Out To Insure Crops

Farmers are reminded to sign up for 2011 crop insurance before March 15 for spring-planted crops, if they haven't already. Also, check with local FSA office to see if you need to sign up for NAP.

Farmers need to sign up for crop insurance before March 15 for spring-planted crops. That's also the deadline to make any changes to existing crop insurance policies for 2011. "If you haven't done this yet, or if you have questions about your current policy, you need to call your crop insurance agent today," says Steve Johnson, Iowa State University Extension farm management specialist in central Iowa.  

There are many different crop insurance plans on the market with different levels of coverage available. The most important thing is for farmers to insure themselves so they are eligible for USDA's disaster assistance program, known as SURE. Supplemental Revenue Assistance or SURE is the government's crop disaster program designed to help cover financial losses due to events that private crop insurance doesn't fully cover. For example, a severe drought or flooding that affects your yield.

Farmers may also need to sign up for NAP coverage

Farmers also may need to sign up for USDA's Noninsured Crop Disaster Assistance Program or NAP coverage by March 15, says Johnson. You sign up for NAP at your local USDA Farm Service Agency office for spring planted crops that cannot be insured. An example of a possible noninsured crop is alfalfa hay; private insurance for this crop may not be available in your county or not available because of age of the crop.

To be eligible for any USDA disaster plans, you must insure all eligible crops on all farms and purchase NAP coverage for uninsured crops. If you aren't insured and there is a severe weather event such as a drought or flood that hurts your yield, FSA may not be able to help you. For everyone else who is insured, if there is a weather event that cripples their yields, they would be able to apply for disaster assistance through their local FSA office.

Premiums for 2011 based on $6.01 corn, $13.49 beans

It will cost farmers more to insure crops this year because market prices are higher and corn and soybeans are worth more, says Johnson. Projected prices for crop insurance purposes are an average of the daily futures closing levels for new crop corn and soybeans during February. For corn this year that average is $6.01 and for soybeans it is $13.49 per bushel. Obviously, these are the highest projected prices in history. 

Wallaces Farmer is hearing from the countryside that some insurance agents are advocating farmers not take the "harvest price option" on the crop revenue insurance policies farmers are buying. These agents figure with such high spring prices for corn and soybeans in 2011, by not buying the harvest price option, that would save money for the farmer on the cost of insuring the crop.

Don't skip harvest price option, use enterprise units  

"True, skipping the harvest price option would save some money. However, we wholeheartedly warn farmers against doing that," says Kurt Koester of AgriSource, a crop insurance and market advisory service in Des Moines. "A better way to cut costs on crop insurance is to look at insuring your crop as an enterprise unit, instead of section-by-section or optional unit coverage."

Your cost of insuring your crop can be cut by roughly 50%, just by using the enterprise unit approach, says Koester. Make sure your agent is explaining all the options you have for crop insurance and that you understand what you are signing up for. Koester has more information on crop insurance at

Make crop insurance part of your grain marketing plan

"Crop insurance is one of the risk management tools you need," says Joe Sinclair of Quality Ag Service at Albia, Iowa. "You can use it as part of your grain marketing plan." His firm offers grain marketing services and also sells crop insurance. 

The corn price premium for crop insurance this year is based on $6.01 per bushel for corn, and $13.49 for beans, Sinclair notes. Thus, you can lock in a profit, including covering the cash rent, with these lofty corn and bean prices. The premiums or cost that farmers will pay for crop insurance this year have just been established as the month of February came to a close.

There have been a lot of changes in the crop insurance program and in levels of coverage being offered for 2011. "You need to talk to someone who can help you sort it out, a specialist in crop insurance," says Sinclair. 

Costing $600 to $800 per acre to grow corn in 2011

Managing your risk of rising input prices is just as important as managing the production risk and price risk on your output, he adds. "We have several customers who this year are going ahead and committing to buy fertilizer for next year's crop, applying the P and K this spring, and forward pricing their 2012 crop and it's penciling out to be a profitable situation for them." 

However, everyone's financial situation is different, and everyone's tolerance for risk is different. "That's why you need to have a one-on-one meeting with your crop insurance specialist," says Sinclair. "That's very important for longevity in the farming business."

He adds, "We're talking a lot of dollars if you're looking at a $600 to $800 an acre expense to put a corn crop into the ground this spring. You want to make sure you're getting a good reward on your investment in producing your crop. You want to bring back $1,100 or $1,200 or $1,300 per acre." Sinclair offers more crop insurance information at

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