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Crop Insurance Decisions For 2010

FAQ: What are the main changes I should be aware of regarding crop insurance for 2010?

Answer: Provided by Steve Johnson, Iowa State University Extension farm management specialist.

You have until March 15 to make any changes in your coverage and to notify your crop insurance agent regarding spring planted crops. But don't wait. You need to contact your agent soon.

One of the main changes has to do with enterprise units. And adding additional hail coverage if you choose enterprise units. There are also a few changes regarding the biotech premium endorsement. And there's now a provision that gives you the ability to adjust previous APHs for specialty soybeans.

How has the biotech endorsement worked out? We think the average producer who elected the biotech endorsement last year in Iowa probably saved somewhere around 10% to 15% on their premium.

You have to be a good record-keeper to take advantage of the savings with the biotech endorsement, to capture that reduced premium. Make sure you are keeping good records for both planted seed as well as the returned seed. And you'll need to turn those records in to your crop insurance agent by June 30, which is our Iowa acreage reporting deadline.

Q: Where can I get more information on crop insurance?

A: To keep up with the latest information and analysis to help you make wise crop insurance decisions, go to www.extension.iastate.edu/polk/farmmanagement.htm. This is a new link called "Crop Insurance Update." We are currently running a helpful explanation regarding the decision of whether to use enterprise units.

Enterprise units--that's where the big savings in crop insurance premiums is likely to be this year. But you need to consider several things before moving from the basic or optional units to enterprise units for your crop coverage. The information in our article on that site will help.

Q: Why is the month of February so important for crop revenue insurance?

A: There are some advantages with crop insurance, especially if you can tie crop revenue insurance and your grain marketing together. The month of February is important as it determines what the average price is for the month, and there are 19 trading days this February.

That average spring price guarantees your revenue for Crop Revenue Coverage, Revenue Assurance and GRIP (group risk income protection) policies. It also determines your final premium or the cost of your insurance, and we won't know what those final premiums on most products are until the first week of March.

These values are extremely important right now. I think crop insurance is the most important government farm program payment going. The government subsidizes the premiums, and a lot of farmers have caught on. Not only can they get a guarantee on the revenue, but crop insurance also allows them to be more aggressive in their preharvest grain marketing strategy.

Here's a list of questions I've been discussing with farmers at crop insurance meetings this winter:

• Can your farming operation withstand a large yield loss or crop price decline?

• Should you buy enough crop insurance just to cover your input costs? Or should you buy even more coverage to allow you to do some pre-harvest selling of crops?

• Should you elect to buy the traditional multi-peril policy or should you move to revenue coverage such as Crop Revenue Coverage, Revenue Assurance or GRIP (group policy)?

• What level of coverage should you choose? Should you elect basic, optional or enterprise units?

• Should you purchase hail insurance to go along with the multi-peril or revenue coverage?

• Should you request the biotech endorsement for corn?

• What is the advantage of the new policy on specialty soybeans?

• How can I forward price a portion of my 2010 crop using various crop insurance products?

If you have specific questions or need details regarding USDA farm programs, contact your local USDA Farm Service Agency office. You can also get news and information about DCP, ACRE and other USDA programs at www.fsa.usda.gov.

Two Iowa State University Extension Web sites have farm program information and analysis. They are ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm and ISU Extension Specialist Steve Johnson's site at www.extension.iastate.edu/polk/farmmanagement.htm.

And be sure to read the regular column "Frequently Asked Questions about the Farm Program" that appears in each issue of Wallaces Farmer magazine and at www.WallacesFarmer.com