1. University Extension/Department of Economics COMBO: Crop Insurance for 2011 Crop Advantage Series Jan. 2010 Farm Management Extension Staff

2. University Extension/Department of Economics Common Crop Insurance Policy 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

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

4. University Extension/Department of Economics Crop Revenue Coverage (CRC) Revenue Assurance with harvest price option (RA-HPO) Revenue Protection (RP) Revenue Assurance (RA) Income Protection (IP) Revenue Protection with harvest price exclusion (RP-HPE) Actual Production History (APH) Yield Protection (YP) OLDNEW

5. University Extension/Department of Economics Acres Insured in 2010 Corn and Soybeans--Iowa

6. University Extension/Department of Economics 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

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

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

9. University Extension/Department of Economics 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

10. University Extension/Department of Economics 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

11. University Extension/Department of Economics Revenue Protection (RP) 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

12. University Extension/Department of Economics Revenue Protection with Harvest Price Exclusion (RP-HPE) 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

13. University Extension/Department of Economics Revenue Protection with Harvest Price Exclusion (RP-HPE) 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

14. University Extension/Department of Economics Corn Insurance Prices Harvest prices have been higher 3 out of last 11 years

15. University Extension/Department of Economics Soy Insurance Prices Harvest prices have been higher 6 out of last 11 years

16. University Extension/Department of Economics Group Policies Group Risk Plan: GRP Group Risk Income Protection: GRIP Group Risk Income Protection with harvest price option: GRIP-HPO

17. University Extension/Department of Economics Group Policies 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)

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

19. University Extension/Department of Economics 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

20. University Extension/Department of Economics Current Subsidy Rates Coverage level Basic Units Optional Units Enterprise Units Whole Farm Units 60% 64% 80% not avail. 65% 59% 80% 70% 59% 80% 75% 55% 77%80% 48% 68%80% 85% 38% 53%80%

21. University Extension/Department of Economics

22. 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

23. University Extension/Department of Economics Example 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

24. University Extension/Department of Economics You Can Aggregate Acres Across Sections 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

25. University Extension/Department of Economics 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

26. University Extension/Department of Economics Whole Farm Units 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

27. University Extension/Department of Economics 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

28. University Extension/Department of Economics Looking Forward to 2011 Corn: Dec. 2011 futures$ 5.53 Soy: Nov. 2011 futures$12.94 as of Jan. 3, 2010

29. University Extension/Department of Economics Corn Insurance Prices

30. University Extension/Department of Economics Soy Insurance Prices

31. University Extension/Department of Economics 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/