Crop Insurance in 2011 AgriGold Seeds Meeting Ames, Iowa July 22, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911 1 1

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)

Acres Insured in 2010 Corn and Soybeans--Iowa

Acres Insured in 2011 Corn and Soybeans--Iowa

Yield Protection (YP) 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

Revenue Protection (RP) 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) 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

Corn Insurance Prices Harvest prices have been higher 3 out of last 11 years

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

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

What Units to Choose? 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

Current Subsidy Rates 60% 64% 80% 65% 59% 70% 75% 55% 77% 48% 68% 71% Coverage level Basic Units Optional Units Enterprise Units Whole Farm Units 60% 64% 80% not avail. 65% 59% 70% 75% 55% 77% 48% 68% 71% 85% 38% 53% 56%

Coverage Level Choice

Enterprise Units 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 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

Prevented Planting/Replant Payments 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

Causes of Loss for Iowa Corn, 1948-2010

Causes of Loss for Iowa Soy, 1955-2010

Premium Differences 2011 Story County, Iowa Corn 180 bushel APH 2 100-acre optional units Revenue Protection

Thank you for your time. Any questions. My web site: http://www. econ 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/