By Matt Reese
There are a number of things to remember with regard to crop insurance that, due to the magnitude of the problem and higher crop prices this year, may impact more farmers than in past.
“Claim audit thresholds will affect a lot of you that maybe haven’t been affected in past. If you have a $200,000 claim or higher, there is a required automatic three-year Actual Production History (APH) review. That is not something that has
to be done before harvest, but you have to prove yield for last three years,” said Ryan Fennig, a crop insurance agent with Fennig-Homan Agribusiness in Celina. “More and more farmers are holding grain over from one year to the next and these three-year APH reviews can be tough.”
In the case of revenue coverage that bases income guarantees on both spring and fall prices, some initial payments may be made early based upon the spring prices. With current strong prices, the fall prices will likely result in additional payments that may end up putting farmers over that $200,000 limit.
“Say we pay someone $175,000 early based on the spring prices, and we pay you more later based on the fall prices and low yields and your claim exceeds $200,000, we will have to go back and do the three-year APH review before we pay you the rest,” Fennig said. “If your claim is over $500,000 we are required to notify the Risk Management Agency (RMA) before we start working the claim process and they let us know if they want to be involved. It doesn’t change anything, but there may be another person involved in the process.”
Revenue plans are based on $5.68 corn and $12.55 soybeans for spring and the fall price will be based on Dec. futures in October for corn and the Nov. futures in October for soybeans. The price guarantees cannot go higher than two times he spring price.
“If you don’t think you will make that $200,000 level, you need to look at these guarantees if you have this revenue coverage,” Fennig said.
There are other considerations for farmers who still may have 2011 grain in their bins.
“If you are comingling 2011 harvested grain with 2012 grain, an adjuster must measure the 2011 production in the bin before the 2012 harvest so there won’t be questions later,” Fennig said. “For harvest claims, you may also need a production elevator settlement summary or delivery sheets and/or bin measurements. If you put grain in the bin, the adjuster will need access to measure bins and take samples.”
With the potential mountain of claims this year from Ohio and around the country, the USDA’s RMA will be closely monitoring the situation moving forward. Fennig advises farmers to double-check on any questions they may have. When in doubt, keep records.
“With the challenges this year, more information is better to avoid questions later,” Fennig said. “This will be a busy year, please help us help you.”