Crop insurance decision
The first impression I get looking at this year's crop insurance decision is that not much has changed. There are still the same policies, CAT, MPCI, RA/HPO, CRC and GRIP.
The decisions still have to be made by March 16 in most states. CRC has greatly expanded limits, making it more competitive with RA/HPO. Premium rates will be lower on all policies because of the base prices being much below last years levels.
The place where big changes were made is in the government subsidy of premiums. The level of subsidy on the enterprise option in the CRC and RA/HPO has been greatly increased. With the enterprise option all of a farmer's corn in one county and all of the soybeans in one county are put together for purposes of determining a loss.
Most farmers' first impression is that they do not like the idea of enterprise units because the loss on a single farm may not trigger a payment. However, if the discount is enough, they are able to increase the total coverage without increasing the premium. In the examples I looked at, the premium discount was substantial. The more farms and the more acres you farm, the greater the discount is. For someone who farms small as I do, it only takes two farms with 50 acres or more total of each crop to get the first level of subsidy.
The other side of the premium issue is that the subsidy on GRIP has been reduced. That makes the CRC and RA/HPO even more competitive for those who may have used the group plans in previous years. Considering that GRIP utilizes county yields and does not give individual farm coverage, some farmers who have used this product in previous years may want to switch.
Another twist is that crop insurance coverage and the new government program will be linked. The way this will be structured and details of the program have yet to be released by USDA. Whatever the final version is, it will be complicated. Extension educators I work with are advising farmers to sing up for the DCP program as soon as possible with the idea of making changes after the new regulations are released.
I have not tried to give examples of how these changes work because premiums are different in each county. In some cases the premium rates do not seem to follow a logical pattern. There are so many possible combinations of coverage levels, subsidies and other features it is impossible to draw general conclusions as to what is best. You need to look at your individual situation and make a decision accordingly.
Whatever your crop insurance program has been in the past, you need to spend some quality time with your agent before the March 16 deadline. With cheaper premiums in some policies and the relatively high base prices, the crop insurance decision may be more important to your bottom line than ever before. Crop insurance is a great tool for pre-harvest marketing. The decision on which program fits your situation best needs to be made soon.