As the federal crop insurance program 2016 sign-up deadline of March 15 approaches, growers of all agricultural crops now have another policy choice.
That policy is called whole farm revenue protection. It was available in 2015 as a pilot program for which 1,085 policies were sold. It is designed for growers of crops that were not covered under traditional commodity crop insurance programs and for growers who have a bad yield history with the major crops.
The particulars of the new policy were outlined at an information meeting by Aaron Gransee, an agricultural insurance agent with Investors Insurance Services, which is a subsidiary of Investors Community Bank. Headquartered in Manitowoc, the bank also has outlets in Stevens Point, Sheboygan, Fond du Lac, Eau Claire and Darlington.
Whole farm revenue protection insurance covers all commodities, including animals and animal products, in a single policy, Gransee explained. He described it as 'a step above' the optional and enterprise units that a great majority crop insurance subscribers are familiar with. One major difference is that settlements are made only after federal taxes are filed.
The amount of insured revenue is calculated from the average of the previous five years as reported for federal taxes. That number is then multiplied by 85 percent.
For obtaining a policy, growers are asked to estimate their expected acres, yields, prices and total income. As necessary, those numbers are adjusted when the planted crop report is due in July, Gransee said.
There are generous federal subsidies for WFRP policy premiums if the insured grower has at least two crops covered in each county for which a policy is obtained. For a single commodity under WFRP, the subsidy slides from 67 percent on an guarantee of 50 percent of the insured revenue to 55 percent for a 75 percent guarantee. There is no subsidy for an 80 or 85 percent guarantee.
With two or more crops, those subsidies are 80 percent across the board for 50 to 75 percent coverage of the protected revenue. If the grower insures at least three crops, which could be corn, soybeans and wheat, the subsidies would be 71 percent for coverage at 80 percent of the insured revenue and 56 percent of the premium for 85 percent coverage.
With WFRP policies, crop replant coverage is included, catastrophic loss (CAT) coverage in not available, historic revenue is adjusted for farm expansions, buy-up levels of crop insurance are also available for individual commodities and the indemnity payments paid under WFRP will count as earned revenue, Gransee pointed out.
Farms not eligible for WFRP are those with an insured revenue of more than $8.5 million, with an expected revenue of more than $1 million from animals and animals products (a disqualifier of most farms with 200 or more dairy cows) and with an expected revenue of more than $1 million from nursery or greenhouse sales.
Other situations for which WFRP cannot be obtained are the deriving of more than 50 percent of the farm revenue from commodities purchased for resale, the purchasing of CAT coverage for another commodity, seeking coverage for only one commodity if revenue protection is available for it and the growing of potatoes if the farm does not have another covered commodity.
Additional protection choices
Gransee also reviewed the basics of other protective measures offered to dairy producers. They are the milk margin protection program that became available in September of 2014 and the livestock gross margin insurance for dairy that dates to 2008.
Among the differences between them are that MPP uses average milk and feed prices, while LGM is calculated on futures prices to establish a guarantee; that MPP allows coverage of up to 90 percent of milk production, while LGM has an annual cap of 24 million pounds; and that MPP's sign-up for a full calendar year runs from July 1 to Sept. 30 at Farm Service Agency offices. LGM is available for at least two selected months only on the last business Friday of every month from insurance agents.
MPP and LGM
Although the prospects for obtaining payments on MPP might increase in nearby months, the program has provided payments during its short history only to the relatively few producers who enrolled for the maximum margin of $8 per hundred of milk sold, Gransee said. Producers wanting to make a decision on MPP can obtain informational updates, geared to their number of cows, on the www.dairymarkets.org website.
Enrollment in MPP, which would continue until 2018, would rule out participation in LGM, which has subsidies linked to the per hundred of milk deductible chosen by the producers and which is also available for production of other species of livestock.
Gransee advised not insuring more than three months of milk per LGM contract and being consistent when enrolling in order to be in line for the best potential on indemnity payments. More information on LGM is available on the http://futureaae.wisc.edu/lgm-a website.