Farmers continue to face high crop inputs costs for the 2010 crop year. One choice farmers have is to make some changes in their federal crop insurance choices. Utilizing enterprise units can result in reduced crop insurance premiums for both Crop Revenue Coverage and Revenue Assurance, or it can allow you to buy higher levels of protection.
Farmers, who elect enterprise units and farm more than 550 acres, can see an estimated premium reduction for CRC of 61 percent for corn at 80% coverage level and 57% for soybeans at the 85% coverage level. For RA, those percent reductions are estimated to be from 38% to 49% for farmers planting crops in two different sections. For RA, the percent premium reduction increases as the number of sections the farmer plants increases. However, to qualify for enterprise units, the farmer must also qualify for the new 20/20 rule for 2010. The explanation below assumes the farmer has at least two optional units in two sections with CRC. RA is slightly different.
To qualify for enterprise units, at least two of the sections/units farmed must each have planted acreage that constitutes at least the lesser of 20 acres or 20% of the acres in the enterprise unit. The request for enterprise units must be made by 3/15. However, if after planting the farmer does not meet the 20/20 rule, the insurance coverage on the affected crop reverts to basic units, not optional units.
While enterprise units can offer farmers a way to reduce input costs, care has to be taken to insure all the rules are followed, including the rule changes for the 2010 crop year. Increased subsidies and discounts for enterprise units are also helping many operations buy higher levels of coverage for less cost. See your crop insurance agent for details specific to your situation.
- By Gary Hachfeld, University of Minnesota agricultural business management educator, and Greg Wheelock, Crop Insurance Services in Mankato