Home / Farm Management / Crop Insurance / USDA Programs / COMBO merges revenue products

COMBO merges revenue products

DANIEL LOOKER 02/14/2011 @ 1:49pm Business Editor

After long anticipation, USDA’s Risk Management Agency last summer unveiled its common crop insurance policy, or COMBO. Since then, experts have pored over it, finding few surprises, at least in the Corn Belt. “I really don’t think the changes are going to be that big,” says Steve Johnson, an Iowa State University farm management specialist. “All policies automatically convert.” If you do nothing, you’ll have essentially the same policy as in 2010. Just the names have changed.

Key Differences

The biggest real change is that crop revenue coverage (CRC) and Revenue Assurance with the Harvest Price Option (RA+HPO) are replaced by one product, Revenue Protection. Gone is the chance to shave premiums by cherry-picking one or the other. These similar products did have price differences in some states.

Another difference shows up if basic insurable units are consolidated into enterprise units (growing more popular due to a larger premium subsidy). CRC and RA+HPO calculated premiums on enterprise units differently, says Iowa State economist William Edwards. Adds economist Art Barnaby of Kansas State University, “RMA has a new complicated method for calculating the enterprise discount based on practice, type, acres and liability.” For most commercial farmers enterprise units still make  sense, but you should check with your agent soon, he says.

Another change is that the value of spring-planted crops for the new Yield Protection product is based on futures contracts in February. “Under the new system, everything is going to get set by the February average,” says Barnaby. The old APH policies used values set by USDA, not the futures. And USDA tended to put a lower value on crops than February futures. The new Yield Protection will likely have a better guarantee, but it will also have higher premiums, he says.

Sticker Shock

Even though COMBO is supposed to be essentially the same coverage, it does have a slight rate increase at the crop level in some cases, according to an internal analysis by Rain and Hail, LLC.

“RMA-developed rates for 2011 spring crops vary widely from county to county and the overall impact is estimated to be up or down by 5%,” says Scott Arnold, vice president.

CancelPost Comment

A Budget Dream Deferred? By: 03/17/2015 @ 4:50pm Agriculture appears to have dodged a big spending cut in the 2016 federal spending goals released…

Will Ag Go Under Budget Ax? By: 03/16/2015 @ 7:06pm What do the American Federation of Teachers, Camp Ronald McDonald at Eagle Lake, Ducks Unlimited…

Des Moines Water Works Will Go to Court By: 03/10/2015 @ 8:58pm Two months ago, the Des Moines Water Works gave 60 days' notice to 10 drainage districts in…

This container should display a .swf file. If not, you may need to upgrade your Flash player.
Planter tips: Seeds