Prove your crop yields
Producers tend to spend a great deal of time in late December estimating 2010 taxable income and prepaying year-end expenses. Use the time wisely to also pull together final 2010 crop yields by individual farm. Many insureds moved to enterprise units since 2009 because of the larger premium subsidy. However, consider keeping production records for each farm to more adequately reflect the Actual Production History (APH) on that farm.
That APH yield is typically the average yield from the most recent 10 years that the crop was grown on that farm. While generally a lower yield is harvested in recent years, APH determines crop insurance premiums and the potential revenue guarantee that can be insured. The larger the yield, the larger the potential guarantee that can be insured.
Record Keeping Requirements
With the Standard Reinsurance Agreement (SRA) negotiated in 2010, new regulations put a premium on accurate recordkeeping. Any insured that has a crop insurance claim that exceeds $100,000 will have their losses reviewed. If production records don’t match what was reported to their crop insurance agent, the producer could be required to provide production records for the 2 year prior to this claim. So keep production records for crop insurance purposes for at least 3 years.
SURE and ACRE Programs
Most producers have realized since 2008 that the Farm Service Agency (FSA) is making use of crop insurance records. This includes potential payments for both the Supplemental Revenue (SURE) annual disaster program and the Average Crop Revenue Election (ACRE) program and the need to provide farm level yield information. A producer signing up for the ACRE program could have used up to 5 years of crop insurance records by individual farm to prove their farm yield.
Producers should take the extra time to pull together their crop yield information by farm and submit to their crop insurance agent. This allows their agent to calculate their updated APH yields and assist them with their 2011 crop insurance decisions. Remember, the new Common Crop Insurance Policy (CCIP) creates simpler crop insurance decisions. Both CRC and RA policies will be combined into a Revenue Protection policy and eliminate the decision as to which product to choose before the March 15th deadline for spring planted crops.