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PLYMOUTH – With the probable continuation of low prices for the major crops in 2018, farmers need crop insurance as much or more than ever to protect their financial bottom line, Premier Insurance Solutions LLC co-owner Craig Ladwig told the attendees at winter information meetings.

As they plan their new year for corn, soybeans, forages, small grains, and other crops eligible for crop insurance in Wisconsin, Ladwig urged growers to ask themselves questions about their per acre production costs, whether they have a sales plan for their commodities, whether they will be able to pay operating loan and crop input costs, and how they will be managing the accompanying risks. Livestock producers need to consider what they would do if they have to buy feed for their animals, he added.

Corn cost crunch

With sales prices for corn likely to remain in the $3s per bushel for 2018, Ladwig reminded growers how their per acre revenue at such prices compares with the plus $6 per bushel prices that they enjoyed earlier in this decade. Similarly, soybean prices are down more than $5 per bushel from their peak in 2012.

Ladwig cited 2018 corn input cost estimates of $568 per acre, including $175 per acre for rented land. From the company's clients in Illinois, he was aware of rents running from $200 to as much as $500 per acre.

Based on a per acre cost of $15, a crop revenue insurance policy for corn would account for only 3 percent of a $568 per acre input cost, Ladwig pointed out. “Provide yourself with some guarantee.”

Compliance procedures

Ladwig reminded growers of the March 15th sales closing date for any new enrollment or policy changes for the spring planted crops. Any changes in the business entity, including the addition of land or of a new person in the ownership, must also be reported by March 15, he noted.

Regarding crop planting dates, Ladwig pointed out that the earliest and latest permissible dates without risking full crop insurance eligibility for coverage vary by geography in Wisconsin. He emphasized that the federal Farm Service Agency (FSA) has access to satellite images taken at least every seven days for use as evidence in disputes about compliance with those dates. Another FSA requirement is the filing of the AD-1026 form (conservation compliance).

At harvesting, it is crucial to obtain yield and perhaps quality appraisals even if no claim of loss on the policy's yield guarantee or per acre revenue is anticipated, Ladwig advised. Appraisals are also important for creating a record to determining one's actual production history, he explained.

From a time perspective, Ladwig acknowledged that it's becoming more difficult for appraisers because of the rapid pace of crop harvesting on many fields today. In all cases, he indicated that the farmer can accompany the appraiser in the field and has the right to reject the appraisal and then contact the crop insurance agent to ask for a different appraiser.

Minor changes for 2018

Relatively minor changes, affecting only a few policyholders in most cases, have been made for 2018 in the federal program, Ladwig stated. He noted that the provisions apply to everyone, regardless of the local agent that a farmer chooses or the insurance company that the agent is affiliated with.

One change for 2018 is described as “unavoidable uninsured fire” and “third party damage.” Examples included a tossed cigaret which sets field on fire and the application of the wrong chemical on a crop. In those cases, the loss of the crop is exempted – not recorded as a zero – in the grower actual production history database, Ladwig pointed out.

For the replanting of corn or soybeans, a change for 2018 requires a replanting within the first 10 days of the designated late planting period for the county. What's been taken away is the 10 percent prevented planting option, which is likely to reduce payments by $25 to $40 per acre, Ladwig indicated.

Special coverages

Ladwig believes not enough farmers are taking advantage of spring seeded forage crop insurance, which he describes as “a great policy.” Although either only a nurse crop such as oats or the alfalfa seeding can be insured, he emphasized that a major loss on the alfalfa seeding can return $207 per acre for the $11 per acre insurance cost.

Hail insurance, which also covers losses during transportation and from vandalism and fire along with options for green snap, fodder loss, and lodging, is another “cheap” form of coverage that Ladwig advocates. He points out that it is offered by the individual insurance companies and is not supported by a federal subsidy.

Ladwig is a strong advocate of special event rain insurance, for which he is noticing a rapid increase in sales. For as little as $400, sponsors of outdoor events such as dairy breakfasts, county fairs, tractor pulls, and antique farm equipment shows can obtain compensation of up to $10,000 on revenue losses due to rain during the event, he observed.

Array of add-on products

In recent years, the six major multi-peril crop insurance companies with which Premier Insurance Solutions writes policies have begun to offer “a ton of add-on products,” Ladwig remarked. Other than trying to understand new terminology, Wisconsin farmers ought to be cautious in evaluating those offerings because promotions for them tend to cite rates for Illinois, which are lower than those for Wisconsin, he warned.

Among the add-ons are the choice of months other than February/October for corn and February/November for soybeans in the price discovery which is used in the formula for determining revenue guarantees for those crops, Ladwig said. He pointed out that this would have been beneficial in 2017 because July proved to be the month with the highest prices on the Chicago Board of Trade.

In general, Ladwig advises farmers to evaluate the array of add-ons in light of their own cropping situations.

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