Crop insurance deadline looms

WEST LAFAYETTE, Ind. — Crop insurance decisions need to be made by March 15.

There are some new choices to consider this year, including the Enhanced Coverage Option.

“The vast majority of people throughout the Corn Belt are choosing a revenue protection product,” said James Mintert, director of the Center for Commercial Agriculture at Purdue University.

“Probably the big challenge for this year is going to be the jump in premiums, which is triggered by two things. One is the fact that the crop prices used to compute the revenue coverage have gone up substantially, and secondly there is more volatility.

“It’s going to be a bit of sticker shock when you look at those premiums. But remember you are buying substantially more coverage than you were buying a year ago.”

Summary of crop insurance products:

• Revenue Protection — This establishes a minimum revenue guarantee based on projected price and farm yield. If harvest price is higher than projected price, the revenue guarantee increases.

• Supplemental Coverage Option — It can be purchased on acres on which PLC was chosen. It provides coverage from 86% to the coverage level of the underlying revenue protection or yield protection policy, but coverage is based on county yields rather than farm yields.

• Enhanced Coverage Option — This 90% or 95% option extends county level coverage from the selected level down to 86%, the point where SCO begins coverage. Premiums are relatively high, particularly for the 95% coverage level, because indemnity payments will be triggered more frequently.

“If you think the SCO option program is attractive, remember you need to sign up for the PLC program for the 2021 crop year to be eligible,” Mintert said.

The new kid on the block, ECO, is potentially interesting, he said.

“It’s most attractive to farms that are in a situation where they can’t afford any significant downside revenue risk from current levels,” he said. “In that context, it might make some sense.

“The limitation is the fact that, although the coverage levels are very high at 90% and 95% down to 86%, it’s tied to county level yields.”

The limiting factor is the dollars you have to spend to get it.

A crop insurance tool is available at: www.farmdoc.illinois.edu/crop-insurance.