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COMBO: Crop Insurance for 2011

COMBO: Crop Insurance for 2011. Crop Advantage Series Jan. 2010 Farm Management Extension Staff. Known as COMBO In effect for 2011 crops Combines major policy plans Simplifies guarantees and payments Clarifies enterprise and whole farm units Clarifies replant and prevented planting.

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COMBO: Crop Insurance for 2011

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  1. COMBO: Crop Insurance for 2011 Crop Advantage Series Jan. 2010 Farm Management Extension Staff

  2. Known as COMBO In effect for 2011 crops Combines major policy plans Simplifies guarantees and payments Clarifies enterprise and whole farm units Clarifies replant and prevented planting Common Crop Insurance Policy

  3. Corn Soybeans Grain sorghum Wheat (spring & fall) Barley (feed & malting) Cotton Rice Canola/rapeseed Sunflowers COMBO is available for:

  4. OLD NEW Actual Production History (APH) Yield Protection (YP) Crop Revenue Coverage (CRC) Revenue Assurance with harvest price option (RA-HPO) Revenue Protection (RP) Revenue Protection with harvest price exclusion (RP-HPE) Revenue Assurance (RA) Income Protection (IP)

  5. Acres Insured in 2010 Corn and Soybeans--Iowa

  6. Same as old APH (or MPCI) policy No change to APH yield determination Projected price is the average closing futures price during February (same as for revenue insurance) Corn: December contract Soybeans: November contract Yield Protection (YP)

  7. Price Election = 55-100% of the projected price Insured Yield = 50-85% of APH yield Indemnity Payment = (Insured Yield – Actual Yield) x Price Election Yield Protection (YP)

  8. Catastrophic coverage is 55% of the projected price and 50% of your APH yield $300 per crop per county administrative fee Yield Protection (YP)

  9. Same as old CRC and RA-HPO No change to APH yield determination Projected price is the average closing futures price during February Corn: December contract Soybeans: November contract Revenue Protection (RP)

  10. No price election - must take 100% Coverage levels (revenue guarantees) are between 65-85% Harvest price is average of October futures price Old RA corn coverage used November Revenue Protection (RP)

  11. Final guarantee is based on the higher of the February or October price Catastrophic level is not available Indemnity Payment = (Coverage Level x APH Yield x Max(Proj. Price, Harvest Price)) – Actual Yield x Harvest Price Revenue Protection (RP)

  12. Same as old RA or IP policy Projected price is the average closing futures price during February Corn: December contract Soybeans: November contract Final guarantee is based on the projected price Revenue Protection with Harvest Price Exclusion (RP-HPE)

  13. No increasing guarantee if harvest price exceeds projected price No catastrophic coverage Indemnity Payment = Coverage Level x APH Yield x Proj. Price – Actual Yield x Harvest Price Revenue Protection with Harvest Price Exclusion (RP-HPE)

  14. CornInsurance Prices Harvest prices have been higher 3 out of last 11 years

  15. Soy Insurance Prices Harvest prices have been higher 6 out of last 11 years

  16. Group Risk Plan: GRP Group Risk Income Protection: GRIP Group Risk Income Protection with harvest price option: GRIP-HPO Group Policies

  17. No changes made GRP uses the RMA projected price GRIP uses the Feb. and Oct. futures prices Expected yields based on historic trends Actual yield is based on county averages (per planted acre) Group Policies

  18. Only one rating system for revenue policies Similar to RA system RP > RP-HPE > YP May be higher or lower than before Premiums

  19. Optional Units: Each farm is separate Basic Units: Combine owned and cash rented acres in same county Enterprise Units: Combine all acres of the same crop in same county Whole Farm: Combine all crops in county What Units to Choose?

  20. Current Subsidy Rates

  21. Available for YP, RP and RP-HPE Must include at least 2 sections CRC used acres instead of sections At least 2 sections must have acres equal to or greater than the lesser of 20 acres or 20% of the total Enterprise Units

  22. 300 total acres of corn in 2 sections Must have at least 20 acres in each section 20% rule applies if total acres is less than 100 acres Example

  23. Example: 300 total acres 278 acres in Section 1 12 acres in Section 2 10 acres in Section 3 Can combine acres in Sections 2 and 3 You Can Aggregate Acres Across Sections

  24. Generally, the more acres you combine into one unit, the lower the cost per acre Probability of collecting a payment is lower, too But grain and dollars are commingled Enterprise Units

  25. Combine all insurable crops in county Available for Revenue Protection only Must include at least 2 crops that are each 10% or more of the total planted acres Whole Farm Units

  26. Based on Feb. futures price, not October Replant payments are no longer based on actual costs Replant Payments: Corn: 8 bu. x Feb. price, per acre Soybeans: 3 bu. x Feb. price, per acre Prevented Planting/Replant Payments

  27. Corn: Dec. 2011 futures $ 5.53 Soy: Nov. 2011 futures $12.94 as of Jan. 3, 2010 Looking Forward to 2011

  28. CornInsurance Prices

  29. Soy Insurance Prices

  30. Thank you for your time!Any questions?My web site:http://www.econ.iastate.edu/~chart/Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/Ag Decision Maker:http://www.extension.iastate.edu/agdm/

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