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2/2/2009 - 2/8/2009

Crop Insurance Has Some Changes for 2009

By William Edwards, Departments of Economics

Crop insurance indemnity prices, guarantees and premiums were all at record levels for corn and soybeans in 2008.  Current market conditions make it unlikely that those levels will be reached again in 2009, but they will still be attractive. The Risk Management Agency has announced indemnity prices of $4 per bushel for corn and $9.90 per bushel for soybeans for APH (yield) insurance guarantees for 2009, the second highest prices ever offered.  Prices for revenue insurance policies will not be known until the end of February. 

Producers should carefully calculate their insurance coverage needs before meeting with their crop insurance agent this year. Higher input costs and lower indemnity prices mean farmers will have to choose a higher percentage level of coverage to protect their costs of production.

Payments in 2008
Loss payouts in Iowa for 2008 crops were substantial. Yield losses from flooding and wet weather were significant, but the biggest factor was the large decrease in market prices from February to harvest time. As of late January, insurance companies had paid out an average of $20.47 per acre for corn losses and $24.52 per acre for soybeans losses. Payments amounted to 90 percent of the premiums paid by Iowa farmers for corn, and 139 percent of the premiums paid for soybeans.

Payments for Revenue Assurance (RA) policies were larger than for Crop Revenue Coverage (CRC) policies. This was because CRC insurance had price movement limits from February to harvest of $1.50 and $3.00 per bushel for corn and soybeans, respectively. The downward limits have been removed for 2009, and an upward limit equal to twice the February price has been established for both CRC and RA insurance.

Biotech Endorsement
A premium discount for planting certain biotech corn hybrids was made available to corn growers in Iowa, Illinois, Indiana and Minnesota last year. The Biotech Endorsement (BE) option has been extended to the remaining Corn Belt states. Hybrids containing YieldGuard, Herculex or Agrisure genetics may be eligible. Farmers must plant at least 75 percent of the corn acres in an insurance unit to an approved hybrid.  Discounts averaged about 13 percent last year, or a little over $3 per acre.  The discounts are not available for the group risk insurance policies, GRP and GRIP, however.

Enterprise and Whole Farm Units
RMA has changed the subsidy rates for policies in which insured acres are grouped into enterprise or whole farm units. Enterprise units include all acres of one crop grown in the same county by one producer on a single policy. Whole farm units combine all crops into a single policy. Since the likelihood of a large indemnity payment is smaller as more acres are combined, these units have always had lower premiums than basic or optional units. Before this year, these units received the same percent premium subsidy from RMA as basic units did. Now they will receive the same dollar value of subsidy, which will be a higher percent. At the 75 percent coverage level, for example, basic units receive a 55 percent premium subsidy while enterprise units will receive a 77 percent subsidy and whole farm units will receive an 80 percent subsidy (see table). Producers with multiple farming units who want to lower their crop insurance premiums may want to consider applying for enterprise or whole farm units this year.

crop insurance coverage table

More information about managing risk with crop insurance can be found in a series of fact sheets available from Iowa State University Extension, from the Ag Decision Maker web site at www.extension.iastate.edu/agdm/ or the Extension online store at www.extension.iastate.edu/store/ .

The recently revised crop insurance publications are: Managing Risk with Crop Insurance - FM 1854/ AgDM File A1-48; Important Crop Insurance Dates - FM 1858/ AgDM File A1-50; Actual Production History Crop Insurance - FM 1826/ AgDM File A1-52; Crop Revenue Insurance - FM 1853/ AgDM File A1-54; Proven Yields and Insurance Units for Crop Insurance - FM 1860/ AgDM File A1-55; Group Risk Plan (GRP) & Group Risk Income Production (GRIP) - FM 1850/ AgDM File A1-58.

 

William Edwards is a professor of economics with extension responsibilities in farm business management.

Time to Check and Make Decisions About 2008 Corn

Charles R. Hurburgh, Jr., Department of Agricultural and Biosystems Engineering

Last fall there were several Integrated Crop Management articles about the quality and handling of the 2008 corn crop. This type of corn has roughly half the storage life of normal corn under the same moisture and temperature conditions.

At that time the corn was coming out of the field very wet, with soft texture, low test weight, and low protein content. These were consequences of the cool wet growing season; much of Iowa corn did not ever reach full maturity. Elevators and producers alike filled bins with wetter-than-normal corn, up to 24 percent moisture in some cases. There were also cases of emergency piles of 18-22 percent corn, that did not get picked up until January.

Corn in bins that were aerated and monitored to stay below 30F, and that had the center cores removed are generally in good condition, while unaerated bins and piles have gone already to 75-100 percent damaged kernels.

Iowa is not alone in this problem. Below is some good advice from Dr. Ken Hellevang, North Dakota State University.

The estimated allowable storage time, AST, decreases rapidly at warmer grain temperatures.  For 26 percent moisture corn, the AST for normal corn is about 90 days at 30 degrees, 35 days at 40 degrees and only 12 days at 50 degrees. For 22 percent moisture corn, the AST is about 190 days at 30 degrees, 60 days at 40 degrees and only 30 days at 50 degrees. For 20 percent moisture corn, the AST is very long at 30 degrees, is about 90 days at 40 degrees, and 50 days at 50 degrees. Immature, cracked and broken corn kernels are more prone to deterioration than good quality corn, so corn this year may be more prone to storage problems.
 
Warming of the grain will normally be limited to a couple feet near the bin wall and a few feet at the top of the bin. Monitor grain temperature in these locations to determine when to operate the aeration fan. Bin temperature cables help monitor grain temperature, but only detect the temperature of the grain next to the cable. Grain has an insulation value of about R1 per inch, so grain insulates the cable from hot spots just a few feet from the cable.
 
Cover aeration fans when they are not operating to prevent wind from warming the corn. Wind blowing into an uncovered aeration fan or duct will aerate the corn warming it to temperatures near the daily maximum. This occurs because there tends to be more wind during daylight hours than at night. 


The active period for grain spoilage begins in mid to late February. Use every opportunity to keep the grain cold. Take some grain out of every bin in the near future; this will indicate if there are problems starting. Wetter corn can bridge over the unloading slide; it is better to know and solve this now rather than in warm weather when grain may be heating rapidly.

Once the grain temperature cannot be maintained below 30F, wet corn (anything over 17 percent) will have to be dried or sold. Spoilage will happen rapidly. Natural air will work if the bin has 0.5 cfm/bu or more of airflow and the moisture is less than 20 percent. Otherwise, use heated air.

Ethanol plants are sensitive to mold damage; damage interferes with enzymes and fermentation. Livestock feeders should consult nutritionists or veterinarians to screen damaged or blended corn for mycotoxins. Mycotoxins are not normally associated with storage but the combination of corn properties, high moisture, and less drying could create these issues in highly damaged corn.

Expect careful grading of corn for the rest of this marketing year. There is already considerable damaged corn in commercial elevators, from temporary piles that were not covered or aerated.  This will leave much less flexibility for blending of off-grade corn from farm bins. All users are going to be on the lookout for poor quality grain this year. If you have very high moisture corn still in storage, above 22 percent moisture, plan to sell or dry it before the end of February.

Bottom line – Act now to check, move or dry 2008 crop corn. This corn will be difficult to manage for the rest of the year. Damaged corn will be hard to market and will get worse quickly.

 

Charles Hurburgh is a professor of Agricultural and Biosystems.



This article was published originally on 2/9/2009 The information contained within the article may or may not be up to date depending on when you are accessing the information.


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