Crop Insurance Considerations

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Transcript of Crop Insurance Considerations

  • Crop Insurance Considerations

    Jason Alexander

    DTN Ag Summit

    Farm Credit Mid-America

    1

  • Thank You

    Securing the Future of Rural Communities and Agriculture

    Take the time to answer questions and tell your story; especially to the next generation

    Farm Credit Mid-America 2

  • About Farm Credit Mid-America

    Member-owned cooperative

    Part of the nation wide Farm Credit System

    Financial strength in numbers

    $22 billion in assets

    Four-state territory (IN, OH, KY, TN)

    Nearly 100,000 members

    More than 1,100 staff in 91 offices

    Loans, Leases and Crop Insurance

    Farm Credit Mid-America 3

  • Our Crop Insurance Team

    Crop Insurance at Farm Credit Mid-America

    52 crop insurance team members

    2.5 million acres insured

    Non-commissioned agents

    Team approach

    We seek to understand your operation, provide solutions to problems, and provide value to you based on your needs

    We work together to assist you in making educated decisions on all the options available

    Farm Credit Mid-America 4

  • Todays Topics

    What are some things you can look for on your crop insurance policy to make sure you are getting added value at little to no additional cost?

    Are you missing bushels/$$ on any of these?

    Yield Exclusion and Trend Adjustment

    Whats on your Schedule of Insurance

    Added Land

    Adding Irrigation

    No Longer Farming

    Private Products

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  • Trend Adjustment

    Trend Adjustment addresses yields that do not accurately reflect current yield potential due to improved genetics and practices

    A trend adjustment factor is used for each crop and county

    Will affect guarantees and premium

    TA is applied to, and could improve, each of your APH databases

    Example to come

    Farm Credit Mid-America 6

  • Yield Exclusion

    What is it and how does it help It allows you to exclude an actual yield from a crop year from

    your APH

    It can increase your approved APH

    It has to be a year when the county average was less than 50% of the 10yr. county average

    You can opt in or out by farm/unit

    If one farm had a good yield in a year when others were very bad. You need to be aware and review this.

    It must be elected on your application/renewal

    From a farmer perspective, I dont see any reason why this yield exclusion wouldnt be used. This is the biggest improvement to Crop Insurance since we added the harvest price.

    Art Barnaby, Kansas State

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  • 2015 Non-Irrigated Corn Yield Exclusion (YE)

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  • Trend Adjustment and Yield Exclusion

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  • Yield Exclusion quote

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    80% Coverage without TA & YE

    75% Coverage with TA

    70% Coverage with TA & YE

  • Yield Exclusion

    You dont want to just pay attention to coverage levels and the associated premium anymore - its the dollar guarantee that matters

    You must pay attention to the years that are eligible and how that change affects each of your units

    You can opt in and out by year by unit. This takes good communication with your Crop Insurance Specialist

    Every bushel and every dollar guaranteed matters.

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  • Schedule of Insurance Optional Units Summary

    Farm Credit Mid-America 12

  • Schedule of Insurance Enterprise Unit Summary

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  • Added Land with T-yield for Corn

    This unit was set up as added land for corn

    This producers SA yield is 163bu/acre

    You should get the higher of the SA or T-yield

    The fix added 15 bushels and $57.90 guarantee an acre to this farm

    Farm Credit Mid-America 14

  • Added land with T-yield for Soybeans

    This unit was set up as added land for soybeans

    This producers SA yield is 50 bu/acre

    You should get the higher of the SA or T-yield

    The fix added 10 bushels and $44.25 guarantee an acre to this farm

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  • No Longer Farming a Farm/Unit

    The APH database still exist unless you designate as No Longer Farming

    What does this affect? Your simple average. Remember we just discussed getting the

    higher of the two when you have added land

    By removing the NLF database, you could increase your simple average in turn finding bushels/$$

    It could also be helping you in which case you would not want to designate as NLF

    The farm in the previous example had two NLF databases removed at the same time which increased the corn SA from 159bu to 163bu

    This simple fix added $15.44 to this new farms APH for 2016

    Farm Credit Mid-America 16

  • Adding Irrigation in a County

    Have you recently or will you be adding irrigation in a county for the first time?

    Did you know your agent must complete a special request from RMA for this farm/unit to pick up the previous yield history on this farm

    If not, this farm will receive the T-Yield

    These special requests take time to complete and must meet very specific deadlines

    If this particular farm had a non-irrigated APH of 170 and the irrigated T-yield for that county is 150, you would have missed 20 bushels and $77.20 an acre

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  • Private Products

    There is an array of private products available.

    Additional price discovery periods

    Margin protection

    Unit structure options

    Hail products and price can vary. Cash discounts are available on some

    Be diligent and seek to understand what is available, and how it fits your operation

    Work with someone who can bring a team of experts to the table to analyze your situation and provide solutions based on your needs and plans

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  • Todays Topics

    Understanding your MPCI options and knowing what to look for

    High level overview of things that may add up to bring added value for little to no additional cost

    Crop insurance is your only subsidized input cost. Take full advantage of it

    Challenge Let Farm Credit help you review your policy documents

    Seek to understand what you have

    Let us know how we can help

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  • Farm Credit Mid-America 20

    Thank You

    Jason Alexander

    Vice President Crop Insurance

    Farm Credit Mid-America

    [email protected]