1. Crop Insurance for Onion Producers
Ag-Analytics.org

2. Crop insurance Introduction Onion yields are volatile
Helps producers manage risk
Security for operating loans
Helps to recover after a bad planting or harvest
Most NY onion acres are now enrolled in crop insurance
This presentation considers differences between CAT and BUYUP coverage for onions in New York
CAT = $300 admin fee, payouts triggered for catastrophic yield losses only (for example, one option pays 55% of price election on yields loss below 50% of historic average)
BUYUP = for premiums, pays for losses below covered levels (50-75%)
Just making sure there is an understanding that CAT offers three methods for establishing guarantees according to the current CAT Policy:
50% of a producers approved yield indemnified at the 55% price election for the Common Crop Insurance Policy
65% of the expected county yield indemnified at 45% of the maximum protection per acre for ARPI (Area Risk Protection Insurance), OR
Comparable coverage for other policies if CAT is allowed.
Onions are insured under the Common Crop Insurance Policy. Consequently, the CAT=$300 admin. fee allows producers to insure 50% of their approved yield at 55% of price election. (ARPI crops allow for 65% of the county yield at 45% of the price.)

3. Most NY onion production is enrolled in crop insurance
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.
Note: Crop insurance acres could be higher than total acres planted due to prevented planting; Onion acres planted from NASS “Onions, dry, Summer, Storage – Acres Planted”

4. A large share of enrolled acres use CAT only
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.

5. Indemnities and Premiums for BUYUP
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.

6. CAT Indemnities much smaller than BUYUP
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.
Note: CAT enrollment only requires a $300 administrative fee (No premium)

7. CAT is popular in Orleans and Oswego counties
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.

8. BUYUP most popular in Orange County
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.

9. CAT payouts are relatively rare and small
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.

10. BUYUP indemnities larger than CAT
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.

11. CAT vs. BUYUP example: catastrophic yield decline (70% loss)
Approved (historic) yield of 285 CWT per acre, projected price of $12.20 using basic units under rare/catastrophic yield loss event
CAT
65% coverage - BUYUP
75% coverage - BUYUP
Premium* per acre -
$237 per acre
$349 per acre
Premium* for 100 acres
$300
$23,700
$34,900
Yield guarantee
143 CWT/acre
185 CWT/acre
214 CWT/acre
Actual yield
86 CWT/acre
Indemnity calculation
(143-86)*.55* $12.20*100 acres
(185-86)* $12.20*100 acres
(214-86)* $12.20*100 acres
Total indemnity
$38,247
$121,695
$156,465
Note: $12.20 is the price for Yellow Type Onions.
CAT:
$12.20 X 0.55 = $6.71
$6.71 X 57 = X 100 acres = $38,247.00
65% Buyup
285 X 0.65 = 185
185-86=99 cwt loss
99 X $12.20= $1208
1208 X 100 = 120,800
75% Buyup
285 X 0.75= 214
214-86= 128
128 X $12.20 = $1562
$1562 X 100 = $156,200
Estimated premium for Yellows (190), non-irrigated with cover crop, for Orange County, from ag-analytics.org/cropsinsurance, for educational purposes only. All numbers are rounded to nearest dollar, while indemnities are based on exact values.

12. CAT vs. BUYUP example: 40% yield decline
Approved (historic) yield of 285 CWT, projected price of $12.20 using basic units under 40% yield decline
CAT
65% coverage - BUYUP
75% coverage - BUYUP
Premium* per acre -
$237 per acre
$349 per acre
Premium* for 100 acres
$300
$23,700
$34,900
Yield guarantee
143 CWT/acre
185 CWT/acre
214 CWT/acre
Actual yield
171 CWT/acre
Indemnity calculation
( )* $12.20*100 acres
( )* $12.20*100 acres
Total indemnity
$17,385
$52,155
40% Yield Decline from 285 cwt to 171 cwt:
CAT
285 cwt X 0.50=142.5
No Loss with 171 cwt/A
65% Buyup
285 X 0.65 =
= 14 cwt/A
14 cwt X $12.20 = $183/A
$171 X 100 = $17,100
75% Buyup
285 X 0.75 = 214
= 43 cwt/A
43 cwt X $12.20 = $524.60/A
X 100 = $52,460
Estimated premium for Yellows (190), non-irrigated with cover crop, for Orange County, from ag-analytics.org/cropsinsurance, for educational purposes only. All numbers are rounded to nearest dollar, while indemnities are based on exact values.

13. CAT vs. BUYUP example: 30% yield decline
Approved (historic) yield of 285 CWT, projected price of $12.20 using basic units under 30% yield decline
CAT
65% coverage - BUYUP
75% coverage - BUYUP
Premium* per acre -
$237 per acre
$349 per acre
Premium* for 100 acres
$300
$23,700
$34,900
Yield guarantee
143 CWT/acre
185 CWT/acre
214 CWT/acre
Actual yield
200 CWT/acre
Indemnity calculation
( )* $12.20*100 acres
Total indemnity
$17,385
30% Yield Decline from 285 cwt to 200 cwt:
CAT
285 cwt X 0.50=142.5
No Loss with 200 cwt/A
65% Buyup
285 X 0.65 =
= 0
75% Buyup
285 X 0.75 = 214
= 14 cwt/A
14 cwt X $12.20 = $170.80/A
X 100 = $17,080
Estimated premium for Yellows (190), non-irrigated with cover crop, for Orange County, from ag-analytics.org/cropsinsurance, for educational purposes only. All numbers are rounded to nearest dollar, while indemnities are based on exact values.

14. Premium Calculator How much does it cost?
Estimate your annual premium costs using the Crop Insurance Premium Calculator tool at Ag-Analytics.org/CropInsurance

15. How much does it cost?
Fill out your location and yield information using your Schedule F

16. How much does it cost?
Then the tool will show you premium estimates for different levels of coverage…
As a graph

17. How much does it cost?
Then the tool will show you premium estimates for different levels of coverage…
And a chart

18. CAT vs BUYUP CAT BUYUP Advantage: Low cost ($300 for entire farm)
Advantage: Modest payouts in years with severe yield declines (decline > 50%)
Disadvantage: Does not pay out as often
Disadvantage: Indemnities may not cover production costs
BUYUP
Advantage: Will pay out more often and at higher amounts
Advantage: Level of coverage can be selected to meet your farms’s (i.e. repay loans, next year’s planting costs)
Disadvantage: More coverage = more premiums

19. Supplemental Coverage Option (SCO)
SCO is an option now available to onion growers that provides additional coverage for a portion of your underlying crop insurance deductible.
It must be purchased as an “endorsement” to yield or revenue policies
The Federal Government pays 65 percent of the premium cost for SCO.
SCO increases the level of coverage to 86% of Producer’s APH Yield
Payments begin if “area yield” is less than 86% of historic levels, so farm yield relative to county yields should be taken into account in purchase decision
SCO results in additional premium and an additional administrative fee
SCO increases the level of coverage to 86% of the Producer’s APH yield. The additional premium is subsidized at 65%. The amount of protection and cost is based upon the underlying policy coverage. The lower the underlying coverage, the greater the SCO coverage. The higher the underlying coverage, SCO coverage is lower. There is no overlap between individual and SCO coverage. All planted acres of the crop is covered.

20. For more information Talk to an agent
Find a crop insurance agent at
Crop insurance information, testimonials and decision tools

21. Cornell University delivers crop insurance education in New York State in partnership with the USDA Risk Management Agency.
Diversity and Inclusion are a part of Cornell University's heritage. We are an employer and educator recognized for valuing AA/EEO, Protected Veterans, and Individuals with Disabilities.

22. Jennifer Ifft