New Farm Bill includes crop insurance updates
WALDO – With the 2019 sign-up deadline arriving on March 15, refinements in federal crop insurance from the new Farm Bill were outlined for farmers at the 2019 series of update meetings sponsored by Premier Insurance Solutions LLC, which is a crop insurance service agency.
A policy change for 2019 allows insured farmers to change their elections on the Agricultural Risk Coverage (ARC) and Price Risk Coverage (PLC) indemnities for both this year and 2020 and then be able to switch between them in each following year, according to agent Justin Ladwig, who is a nephew of firm co-owner Craig Ladwig. He noted that those who choose PLC may be able to update their crop base acres and yields.
The fee for catastrophic insurance has been raised from $300 to $655 per policy but “it is not worth it,” Craig Ladwig remarked. He pointed out that any payment would cover only 50 percent of the affected acres at 55 percent of the guaranteed price for the crop.
One new provision is the offering of multi-county (they need to be adjacent) enterprise unit policies which serve to reduce the farmer premiums. Craig Ladwig explained that this policy could wipe out losses on small unit crops. “The enterprise units have not proven themselves yet,” he warned.
No industrial hemp coverage
Although the late 2018 Farm Bill classified industrial hemp as an agricultural product, enabling its commercial production, it is not one of the 130 different crops eligible for crop insurance in 2019, the Ladwigs reported.
Input costs for industrial hemp are running at up to $2,500 per acre (according to published reports from Minnesota) and four years of production history could be sought to devise insurance rates and rules, the Ladwigs observed. They noted that crop insurance would be available in 2020 at the earliest and had learned that plans are in place for construction of an industrial hemp extraction plant near Randolph, WI.
The new legislation does not make changes in the federal subsidy rates on crop insurance policies or in the adjusted gross income limits for obtaining indemnity payments. In 2018, farmers spent more than $3.6 billion on crop insurance policies that covered more than 90 percent of the land planted with insurable crops in the United States.
The trade industry's report for 2018 indicated that 334 million acres were covered by 1.1 million policies. That's up by 20 million acres from 2017. For 2018, the federal program was operated at $2 billion under the year's budget, which includes taxpayer subsidies on the premiums.
Emphasis on enforcement
A significant change, Justin Ladwig pointed out, is an increase in the scrutiny by the USDA's Risk Management Agency on compliance with rules and the validity of claims. This comes in the wake of several major violations, including one in Wisconsin.
All insured producers must comply with the federal conservation rules on all of their crop acres (owned and rented) and an AD-1026 form must be on file with the county Farm Service Agency in order to receive the federal subsidy on the premiums, Justin Ladwig stressed.
Another caution is that corn and soybeans are insurable after the removal of a cover crop such as winter rye but not after the harvest of a first cutting of hay or, with soybeans, after the harvest of green peas, Ladwig pointed out. He also noted that prevented planting cannot be claimed if the reason was the application of manure.
Prevented planting provisions
Payment rates for prevented planting have been reduced, Justin Ladwig indicated. They have been cut to 55 percent of the guarantee from the previous 60 percent for corn and to 60 percent from 70 for soybeans. An extra 5 percent in coverage can be purchased.
To sustain a prevented planting claim, the grower must prove an intent to grow the crop, Ladwig emphasized. Intent can be shown by fall tillage, the killing of a hay stand, or seed receipts, he pointed out.
On prevented planting land, the actual production history (APH) of the insured crop will not be affected if no other crop is harvested from that land before November 1, Ladwig observed. Another option is to grow a cover crop on the land for which prevented planting was claimed, he added.
Hail insurance coverage
Although it is handled by the private sector rather than through the federal program, the Ladwigs strongly endorse hail insurance because of its favorable rates, its expanse of coverage, and the absence of any deductible. What's new with hail insurance is coverage for unavoidable uninsured fire and third party damages.
Examples would be a field fire caused by a cigarette discarded by an unknown party or the application of a wrong chemical which destroys the crop. Near Beaver Dam in 2018, about 300 acres of soybeans were destroyed by an improper application of dicamba herbicide, Craig Ladwig reported. Such yield losses are also exempted from the grower's APH database.
For hail insurance, Ladwig indicated premiums of 40 to 70 cents per $100 of coverage for losses ranging from wind, hail, lodging, and green snap along vandalism, a fire linked to the farm operation, and field to storage or grain elevator transportation spillage. Options are available for fodder loss and extra harvesting costs.
With the appearance of black tar spot in corn in southern areas of Wisconsin in 2018, Ladwig noted that yield losses from the disease are covered by the multi-peril crop insurance policy. For corn lodging to be covered by hail insurance, the lodging must have been caused by wind rather than merely a black tar infestation, he explained.
New season preparations
With the somewhat disappointing outlook for commodity crop prices in 2019, the Ladwigs urge farmers to examine “the not fun questions” about their per acre production costs, to have a marketing plan, to be able to cover loan and operating costs, to have a plan to buy feed for their livestock if necessary, and to take steps to manage their risks for the cropping season.
Farmers must contact their crop insurance agent if they intend to crop any new ground in 2019, the Ladwigs stress. They explain that this is land which hasn't been planted with a row crop during at least one of the past three years or been part of a hay rotation.
Growers must also be sure to update any changes in acres or in the farm's business structure by the sign-up deadline of March 15, the Ladwigs point out. They also need to be aware of the local final planting dates for crops, the acreage and production reporting dates, and the final date on which a file a notice of crop damage.
In all cases, particularly for building a an accurate production history, the Ladwigs advise getting an appraisal on all yields in addition to the requirements to get one for silage, high-moisture corn, and any insured crop that is destroyed. They suggest an appraisal even no claim for a loss is anticipated and explain that validation of high yields adds to APH level on which revenue or yield guarantees are based.