Unharvested crop means more hoops for insuranceMINOT, N.D. — There are a number of evolving issues in crop insurance these days, especially as farmers deal with prevent-plant cropping situations that involve the unplanted acreage from the previous year.
By: Mikkel Pates, Agweek
MINOT, N.D. — There are a number of evolving issues in crop insurance these days, especially as farmers deal with prevent-plant cropping situations that involve the unplanted acreage from the previous year.
A crop insurance expert from Minot, N.D.-based Farm Credit Services of North Dakota offers several areas of interest for farmers who are concerned about how those changes might affect their insurance compliance heading into 2010. Becky Braaten, vice president of insurance services for FCS of ND, was a speaker at the recent KMOT Ag Show in Minot.
Here are a few highlights:
A 72-hour notification is required if a farmer doesn’t intend to plant the insured crop during the late planting period, or if a late-planted period is not applicable. Notice may be made by phone or in person to the agent, but it must be confirmed in writing within 15 days.
“You already have, within your policy, a 60 percent guarantee for prevent-plant coverage,” Braaten says. “You can buy an additional 5 percent, or 10 percent, which gives you 70 percent of your guarantee.
“The catch here, and we’re going to hear more and more about this, if there is a known cause of loss, you cannot buy up prevent-plant,” Braaten says. “There was a lot of noise and tension out there last year on how some companies handled it. Some came back later and said we have to take that buy-up off. Some were appealed and it was put back on. I will guarantee this year it will be looked at a lot closer on prevent-plant buy-ups. If you know that there’s a ‘known cause’ of loss — standing crop, anything — talk to your agent.”
Braaten went over the Risk Management Agency rules on what is not eligible for prevent plant coverage.
“Companies have been told by RMA that it’s a case-by-case basis and they’re going to look closely at that,” Braaten says. “What’s a normal weather pattern? Is it normally wet through the ‘final’ and ‘late’ planting period? Again, ‘normal’ kind of turns everything a little gray. But I can tell you they’re going to be looking at prevent-plant closer in more detail.”
Company trainers are spending more time on prevent-plant issues, Braaten says.
Braaten also talked about the impact of unharvested crop on prevent-plant.
“You need documented proof of why that acreage remained unharvested. Was there a window of opportunity to harvest? Was it taken? If you didn’t take it when you had that opportunity, then it’s not going to be prevent-plant. It depends on whether the prevent-plant conditions are general to the area and other policy criteria are met.
“Again, it’s about as gray as it gets and this is where it’s going to be on an individual, case-by-case basis. But they are looking at it a lot closer.”
They’re going to look at the window of opportunity — weather, from extension agents, the weather stations.
“If the elevator was full . . . that’s not your excuse not to harvest. ‘Elevator full’ is not a cause of loss for standing crop.”
The companies are using “data mining” to find things that increase average yields, such as planting small acreages.
RMA’s purpose with the “inconsistent yield adjustment” is to prevent use of artificially high yields, created from small acreage, to be applied to large acreages where such yields don’t reflect the true yield potential. The agency is “data-mining” and identifying inconsistent yields.
“It’s unbelievable that they can mine from the data-mine,” she says.
Farmers may be a need to provide documentation to prove yields. Production records are a must. Documentation should be done by section, by optional unit and by practice and type. Retain production records for three crop years, plus the current year, she advises.
A “specialty barley” provision is available in Minnesota, North Dakota and South Dakota. It requires farmers to separate their databases for barley types — similar to how wheat and durum were separated in 2004. Producers must decide by March 15 (the sales closing date) which type of coverage (plan/price/level)
they want for new specialty types. The production reporting date is April 29.
If specialty types are insured under an APH plan, then they can be insured based on the contract price up to the maximum price limitation.
Malting barley probably will be the most common “new type,” along with the hull-less, the waxy hulled, waxy hull-less and all others. In the past, when barley was insured, it was as feed barley with a feed barley price.
If a farmer has a malt contract, he or she can insure their malt barley at that contract price instead of the feed barley price without taking the malt barley endorsement.
“The catch on that is there is no quality coverage under the specialty type by doing it that way. You will still need to take the malt barley endorsement to get any quality (payments). You would still need a production loss to qualify for a payment.”
If producers have RA, but want to insure the specialty types using the contract price, they can elect to exclude the specialty type or types under RA and to insure it under the APH plan.
“If there is any feed barley within that malting barley variety, then they have to separate it out and there are different procedures for this,” she says.
This is added in Minnesota and North Dakota. If specialty soybean types are insured under RA or CRC, then the insured is unable to use the contract price and is insured using the same price as regular commercial soybeans. New types include high-protein, low-saturated fat, small-seeded, food grade and large-seeded food grade. Agents are waiting for specific details on both specialty barley and soybean provisions.
Personal ‘T’ Yield
The Personal Transitional Yield pilot program was approved in North Dakota for the 2007 crop year and may be continued or expanded elsewhere, pending the outcome of an agency survey and study. It was approved in North Dakota as a three-year pilot program to more accurately reflect a producer’s actual production history, or APH.
It’s calculated by combining all basic and optional unit acreage and production history for an individual farmer’s crop/policy/county or map area. The PTY is figured by combining all basic and optional unit acreage and production history for a crop/policy/county or map area.
“It’s your average of all the crop that you’ve grown in the county — by crop, by practice,” Braaten says. “So, for your summer fallow wheat, you have a PTY, and for continuous crop wheat, durum, barley or oats. It replaces the ‘non-actual years’ where we plug in a county T yield.”
Crops available in North Dakota include dry peas, potatoes and sugar beets.
“You can use the PTY up until the time you have a four-year dry pea history” for example, and “then we can look at a Master Yield,” Braaten says. “The difference on a Master Yield is that yield is the same in every one of your databases, as opposed to a PTY, where they’re different.
“If you have shareholders, you may have different Master Yield also. We have one individual with three different Master Yields,” she says.
The Master Yield is established on an operator/tenant basis. The Master Yield for the operator/tenant applies to the landlord. It doesn’t apply to CAT policies. Requests for Master Yield must be received the company within 20 days of the production reporting date.
Nothing has changed except the definition of “enterprise.” An enterprise is all of the insurable acreage of the insured crop in the county in which you have a share on the date coverage begins for the crop year.
“I think they added that little bit because of new subsidy level,” Braaten says.
The “basic unit” is determined first by crop, then by the insured’s share in the crop. The “optional unit” is further division of basic units down to section number. “Whole farm” units where all crops are “thrown in the bucket,”
Enterprise units offer increased subsidy levels.
“I’m assuming with an 80 percent subsidy, that’s why you guys all looked at it — a big premium savings,” she said, displaying a chart that showed that an 80 percent subsidy under the program still offers a 50 percent to 70 percent coverage level.
For 2010, the government added the so-called “20/20 rule.” That means that for at least two of the sections (or section equivalents) the farmer must have farm service numbers, or FSNs, or units established by written agreements making up the basic optional units. They must each have planted acreage that constitutes the lesser of 20 acres or 20 percent of the insured crop acreage in the enterprise unit.
“You can’t go in there and just plant an acre, for example — and the rest of it’s seeded on the other section. They’re eliminating that,” Braaten says. “You can do so, but it may not qualify and you won’t get that increased subsidy. The more sections and places you seed.”
Crop Revenue Coverage also requires that the enterprise unit contains 50 or more acres. Enterprise units are available on some crops and requirements vary by plans of insurance.