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SURE Farm Program

SURE Farm Program. North Central Iowa Crop & Land Stewardship Clinic Iowa Falls, Iowa December 30, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911. Supplemental Revenue Assistance Payments Program (SURE). Part of the 2008 Farm Bill

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SURE Farm Program

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  1. SURE Farm Program North Central Iowa Crop & Land Stewardship Clinic Iowa Falls, Iowa December 30, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. Supplemental Revenue Assistance Payments Program (SURE) • Part of the 2008 Farm Bill • Permanent disaster assistance • Provides payments to producers in disaster counties for crop losses • Run by the Farm Service Agency, USDA • Covers the 2008-2011 crops

  3. Supplemental Revenue Assistance Payments Program (SURE) • Based on crop insurance program, non-insured crop assistance program, and disaster declarations • Whole-farm revenue protection, not commodity-specific

  4. SURE Triggers • Declared “disaster county” by Secretary of Agriculture or contiguous to one • Farm with losses exceeding 50% of normal production (value) in a calendar year • At least one crop must have a 10% (or greater) production loss

  5. All Crops Must Be Covered • But there are some exceptions • Pasture • Crops with an expected value of less than 5% of the total expected value of production on the farm • Value = Crop insurance price X yield • Crops on which the producer has received a waiver

  6. SURE Settings • Participation and revenue guarantee tied to crop insurance • Farm revenue, including some government payments, used to determine payment • Payments set as 60% of the difference between guarantee and actual revenue • Limited to $100,000 per producer • Payments not known or paid until the end of the marketing year

  7. SURE Guarantee for 2008 Farm guarantee is the sum of 120%*Crop insurance price election*Crop insurance coverage level*Planted acres* Max(APH or CCP yield), for insurable commodities 125%*NCAP price election*Planted acres* Max(NCAP or CCP yield), for non-insurable commodities For an individual crop, the guarantee can not be greater than 90% of the crop’s expected revenue Crop insurance coverage level minimum = 70%

  8. SURE Guarantee for 2009 and Beyond Farm guarantee is the sum of 115%*Crop insurance price election*Crop insurance coverage level*Planted acres* Max(APH or CCP yield), for insurable commodities 120%*NCAP price election*Planted acres* Max(NCAP or CCP yield), for non-insurable commodities For an individual crop, the guarantee can not be greater than 90% of the crop’s expected revenue

  9. SURE Expected Farm Revenues Expected farm revenue is the sum of Max(APH or CCP yield)*Planted acres*100% of the crop insurance price for insurable commodities 100% of NCAP yield*100% of NCAP price*Planted acres for non-insurable commodities

  10. SURE Increases Guarantees Adds 20% to value of crop insurance guarantee if signed up by March 2008; else 15%. Minimum for 2008 is 80.5% (equivalent of 70% guarantee x 115%) Maximum is 90%

  11. SURE Actual Farm Revenues Actual farm revenue is the sum of Harvested acres*Farm yield*National season-average price for all commodities 15% of direct payments All CCP or ACRE payments All marketing loan benefits All crop insurance or NCAP payments Net of premiums (to a minimum of $0) Any other disaster assistance payments

  12. 2008 SURE Map

  13. 2009 SURE Map

  14. SURE Payment Guarantee minus actual revenue aggregated for all crops x 60% Limit of $100,000 per year per payment limitation

  15. Example Crop insurance (RA) 75% guarantee 160 bu/acre APH yield $5.40 indemnity price $648 per acre guarantee for RA $16 per acre premium SURE guarantee 120% of $648 = $778 / acre guarantee No additional premium

  16. Example Crop insurance Actual yield was 140 bu. per acre (12% loss) Harvest crop insurance price was $3.74 Actual revenue was $524 per acre Crop insurance payment was $648 - $524 = $124 per acre

  17. Example SURE Actual yield = 140 bu/acre 2008 marketing year price = $4.06/bu Market revenue = 140*4.06 = $568.40/acre Crop insurance benefit = $124 - $16 = $108 15% of direct payment = $3 Total revenues = $679.40 Shortfall = $778 - $679.40 = $98.60/acre Payment = 60% * $98.60 = $59.16/acre

  18. Are you in an eligible county or have a 50% or greater production loss Do you have a 10% production loss on at least one crop Price declines matter Corn $5.40 to $4.06 = 24.8% Soybeans $13.36 to $9.97 = 25.4% So, even higher yields, up to 120% of the APH yield, on other crops could still result in a SURE payment. Will I get a SURE payment?

  19. Source: Dr. William Edwards, ISU

  20. SURE Payment per Acre for 2008(50% corn, 50% soybeans) Source: Dr. William Edwards, ISU

  21. What to do? Find out if you are in an eligible county for 2008 and 2009 Estimate potential payments Ag Decision Maker calculator atwww.extension.iastate.edu/agdm/ Watch for FSA announcements

  22. Yields submitted for crop insurance, for all land farmed Crop insurance payments received USDA commodity payments received RMA will turn over yield and acre data to FSA FSA will aggregate data across farms Information Needed

  23. SURE provides 15 to 20% added coverage above the crop insurance guarantee (up to 90%). All crops must be insured (except crops that are less than 5% of total crop value). All crops and all farms per producer are added together to calculate coverage and losses. Payment is 60% of loss. Summary of SURE

  24. If all crops will be insured anyway, there is no added cost for SURE. If additional crops have to be insured, there is an added cost. $300 per crop for catastrophic coverage $250 per crop for NAP coverage Standard APH or revenue insurance at a low level could be cheaper for small areas Decision Points for SURE

  25. May have to insure minor crops Higher or lower levels of crop insurance give a higher or lower SURE trigger Producers who insure at the 80% or 85% level get less additional coverage due to 90% cap How will SURE affect my crop insurance decision?

  26. SURE is for all crops and all acres together SURE pays only 60% of the revenue loss How will SURE affect my crop insurance decision?

  27. 2008 SURE Map

  28. 2009 SURE Map

  29. Sign-up for the 2008 crop year starts Jan. 4, 2010 See your local FSA office to sign-up Sign-up will likely conclude by Mar. 1 SURE Sign-up

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

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