Considerations In The Face Of The Feb. 28 Crop Insurance Deadline


risk-management decisions they make for this year. Aside from how to allot acres, one of the first de-


U


cisions growers will make this year – by the Feb. 28 signup deadline – is about insurance for the 2012 spring-planted crops. “With increasing production costs and continu-


ing volatility in commodity prices, Arkansas row crop producers should try to remove as much yield and price risk as possible,” said Scott Stiles, ex-


JONESBORO, ARK.


ncertainties about the economy, federal farm programs, commodity prices and input costs mean farmers need to take extra care in the


tension economist for the University of Arkansas System Division of Agriculture. “Crop insurance is one tool available for that purpose and producers have some choices to consider in approaching risk management.” There are essentially four major types


With increasing production costs and continuing volatility in commodity


of crop insurance products available in Arkansas. These four types fall into two categories: policies that insure against yield losses only and policies that insure against revenue losses. The policies that insure against yield loss are Catastrophic Risk Protection Endorsement, or


prices, Arkansas row crop producers should try to remove as much yield and price risk as possible.


CAT, and Yield Protection, or YP. The CAT policies insure up to 50 percent of a


producer’s historical yield and pay 55 percent of the projected crop price determined by the USDA Risk Management Agency. RMA subsidizes 100 percent of CAT insurance premiums; however, CAT coverage does require a $300 administrative fee for each crop insured in a county. Yield Production policies insure against


yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects and diseases. The producer se- lects the amount of average yield to insure, ranging from 50 to 85 percent. The producer also selects the percent of the projected crop price to insure, ranging from 55 to 100 per- cent of the price established annually by RMA. Stiles said RMA certified the projected


prices on Feb. 15. They were $5.66 for corn; $12.20 for soybeans; 94 cents per pound for cotton; and 14.7 cents per pound for rice. If the harvested yield plus any appraised


production is less than the yield insured, the producer receives an indemnity based on the difference, he said. Revenue Protection, or RP, policies insure


A corn herbicide with the work ethic of a machine.


producers against yield losses due to natural causes as well as revenue losses resulting from a decrease in commodity prices. RMA calculates a projected price and a harvest price for use in determining changes in pro- ducer revenue. The preseason or projected price for spring-


planted crops is determined by averaging the daily Jan. 15 to Feb. 14 closing prices of fu- tures contracts from either the CME Group for grains or The Intercontinental Exchange for cotton. The harvest time price equals the average of daily closing prices in the month of October. Unless the producer elects to exclude the


harvest price, the higher of either the pro- jected price or the harvest time price is used in the revenue calculation. If the producer does not choose the high-price option, the early season price is used. The producer also selects the amount of


average yield he or she wishes to insure, ranging from 50 to 85 percent. The projected price and the harvest price are 100 percent of the amounts determined by RMA. The amount of insurance protection is


Halex® GT herbicide is Glyphosate with Residual™ that works relentlessly to control


grasses and broadleaf weeds in corn. That’s why nearly 90% of growers who try Halex GT come back to it again next season.1


And with three separate modes of


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based on the higher of the projected price or the harvest price. If the harvested yield plus any appraised production multiplied by the harvest price is less than the amount of in- surance protection, the producer receives an indemnity based on the difference. Revenue Protection with Harvest Price Ex-


clusion, or RP-HPE, policies insure produc- tion in the same manner as RP polices, except the amount of insurance protection RP-HPE provides is based on only the pro- jected price – that is, the amount of insur- ance protection does not increase if the harvest price exceeds the projected price. This option generally carries a lower pre- mium.


1 2010 AgData research


©2012 Syngenta. Important: Always read and follow all bag tag and label instructions before buying or using Syngenta products. The instructions contain important conditions of sale, including limitations of warranty and remedy. All products may not be registered for sale or use in all states or counties. Please check with your state or local extension service before buying or using Syngenta products. Halex,®


Glyphosate with Residual,™ are trademarks of a Syngenta Group Company. Syngenta Customer Center: 1-866-SYNGENT(A) (796-4368). www.FarmAssist.com


the Alliance Frame, the Purpose Icon and the Syngenta logo MW 1CRN1026-NB2 1/12


For more information on crop insurance,


visit the National Agricultural Law Center at http://www.nationalaglawcenter.org. For more information on risk management, visit the Southern Risk Management Education Center at http://srmec.uark.edu/.


∆ February 24, 2012 / MidAmerica Farmer Grower • 17


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