Economic challenges cited for crop insurance enrollment

Ray Mueller

Plymouth — With agricultural lenders reporting that only 30 percent of the operating loans that they made in 2016 were repaid by the end of the year, it's more important than ever for farmers to have protection such as crop insurance on the crops they grow and sell, Craig Ladwig of Premier Insurance Solutions LLC told clients at an annual update meeting.

A likely offshoot of that situation is the fact that Ladwig has already gotten “more calls than ever” from farmer clients who have decided to drop rented land that they had been operating. He explained that this is happening because they were not able to cover their production costs.

Basic questions

On that point, Ladwig asks Premier's clients and other farmers if they know their per acre input costs, if they have created a marketing plan, if they know how they'll able to pay operating loans on time, how they intend to manage their cropping risks and what they would do if they would need to buy feed for their animals.

Portions of concerns on those points can be covered by crop insurance for the popular commodity crops and most of the specialty crops that farmers grow, Ladwig suggested. For crops being planted this spring, he reminded farmers that March 15 is the deadline for making any changes in one's policy or becoming a new crop insurance enrollee.

Changes for 2017

There are only a few changes in the national crop insurance program for 2017, Ladwig pointed out. The one that would affect individual farmers the most is a failure to have conservation compliance practices in place on even one acre of land owned or rented for the first time in 2017 because that would result in forfeiture of all of the federal premium subsidy that the grower would otherwise be entitled to, he explained.

A minor change for 2017 is the reduction of the prevented planting coverage for corn to 55 percent of the insured loss from the previous 60 percent, but buy-up options of 5 or 10 percent are still available, Ladwig reported.

With some winter wheat growers worried about the ice or standing water covering portions of their fields in mid-January, Ladwig reminded those who have policies on that crop that they could take a 100 percent payment on a failed crop or a 35 percent payment and then pay a premium for coverage on a replacement crop.

In the wake of their typically high corn yields in 2016, Ladwig reminded growers that their actual production history (APH) numbers for setting guarantees from crop insurance are enjoying a double bump. He noted that a low yield year is being dropped from the formula and that the county trend adjustment is also tacked onto the new APH number.

What has not changed for 2017 is that farmers still need to certify and sign documents for their crop acres with both the Farm Service Agency and their insurance agent, Ladwig remarked. He said the “one stop reporting” plan has proven to be impractical but a way to avoid the duplicated process might still be found.

Price projection plus

The traditional price protections through federal multiple peril crop insurance use the higher of the projected prices taken in February for November soybean futures and for December corn futures and the harvest season futures prices for those months taken from the average of the daily October futures.

For an extra premium, growers can add more months to that comparison through the “price flex” product offered by Great American insurance or the “multiple price discovery” add-on offered by NAU, Ladwig indicated.

Other carriers for which Premier's 14 agents write policies are RCIS, Farmers Mutual Hail, ADM and Rain and Hail. Each of them also has several enhancement options beyond the basic federal crop insurance for which the same rules apply to all policies.

Ladwig said one of the most attractive policies offered by all of those companies is the very low rate hail insurance which covers a multitude of physical losses of standing or harvested crops. He also reminded sponsors of events whose attendance and income might be affected by rain (not heat or cold) can obtain insurance from the Rain and Hail company to protect against revenue loss.

For their standard crop insurance policy, Ladwig noted a great majority of insured farmers choose the revenue guarantee rather than the yield guarantee coverage. He reminds them that the price at which they sell a crop is not considered for any claim for payments on the policy.

Specialty crops

Crop insurance is also available for numerous specialty crops, including brown mid-rib corn, which must be insured as silage and is measured by tonnage rather than bushels of grain, Ladwig pointed out. Because of that, no revenue coverage is available, he noted.

Among food grade soybeans, for which growers have several choices, a separate APH data base is required and the March 15 sign-up also applies, Ladwig pointed out. This coverage also offers a contract price addendum, for which there are price limiting factors ranging from multiples of 1.15 to 1.5.

Prevent plant protocol

Farmers who face prevented planting situations “should not put pride in front of profit,” Ladwig advised. By that, he meant that they should take the payment offered under the prevented planting coverage and then grow a cover crop, especially if it's on marginal land and even though no crop can legally be harvested from it until Nov. 1.

In the case of delayed planting, Ladwig reminded growers that there is a 1 percent penalty per day on guarantees for planting after the deadline date set for the crop and the location. Yet, it is possible to insure corn planted after the end of the ordinary late planting period — a provision that Ladwig calls “a stupid rule.”

Ladwig applies the same judgment to the rule differences on obtaining insurance after taking an early season harvest of a forage, depending on what the early harvested crop is. He pointed out that insurance is available if the crop taken early in the season is winter rye or a cover crop but not if it was hay.

For any replanting, be sure to call the insurance agent in order to verify a claim for payment, Ladwig stressed. He also noted that many seed companies provide free or greatly reduced cost seed for replanting.

Record requirements

In all cases, growers need to create acceptable records on their harvests, including printable scale tickets from weigh wagons or yield monitors, Ladwig emphasized. Field appraisals are also essential before destroying any insured crop, when damage has occurred to crops and when harvesting silage, high moisture shelled corn or crops that are directly fed.

Appraisals are needed to verify records for the APHs, to report yields to the FSA and to justify any claims for at least $200,000, Ladwig pointed out. “Even in a good year, high yields still need an appraisal. If you don't agree with the appraisal, don't sign it.”

As a sales pitch for crop insurance, Ladwig observed that, among all the categories of input costs for crops, it accounts for only about 3 percent and is the only one with a guarantee. “That's worth it for the peace of mind it brings,” he said.

Headquartered at rural Cascade in Sheboygan County, Premier has offices at 10 locations in Wisconsin, publishes newsletters that give clients free advertising space, and awards five $1,000 scholarships per year. More information is available at or by calling 866-528-8336.