RISK MANAGEMENT
Review your coverage to maximize guarantee
By Shane Albertson , FCS Financial Vice President - Crop Insurance
As we prepare to turn the calendar over I am reminded that the challenges that we faced in 2017 are likely to stick around for 2018 . Another year of tight margins appears to be on the horizon and unless something changes in our grain markets , crop insurance guarantees may look very similar to 2017 . That leads me to ask a question , are you maximizing the available guarantee of your crop insurance policy ? Below are a few bullet points to review before you renew your Multi-Peril Crop Insurance ( MPCI ) coverage for the 2018 spring growing season .
• Approximately 80 percent of Missouri policyholders purchase the Revenue Protection ( RP ) product . RP provides protection for losses in production and / or revenue . Coverage levels are available from 50 percent to 85 percent . MPCI policies and levels are federally subsidized and often increasing coverage levels is the cheapest form of additional guarantees you can purchase .
• Unit structure can play an important part in the affordability of your crop insurance . Some of the lesser expensive unit structures may offer producers the opportunity to purchase higher coverage levels , thus increasing guarantees .
While this may be a possible opportunity , be aware different unit structures do have an impact for how losses are calculated .
• Beginning Farmer Rancher Policy Provisions – Producers who meet the definition of a beginning farmer or rancher may qualify for additional program benefits . These include exemptions from administrative fees , additional 10 percent premium subsidy ( for policies above a CAT level ), and increases in yield adjustment percentages .
• Yield Adjustment Option – This option works in conjunction with a yield floor to be sure you are maximizing yield replacements for years of low yields . When a producer qualifies for the yield adjustment option the yield is replaced with 60 percent of the county T-Yield for that crop . A yield floor does not let the approved yield of the database fall below specific levels based upon your years of production and the county T-Yield . A yield floor cannot be applied when a trend adjustment option is being used on the policy .
• Trend Adjustment Option – This option allows past yields in the database to be increased based upon a factor developed by the Risk Management Agency ( RMA ). To be eligible you must have one yield in the four most recent crop years by database and you must be located in a county where the option is available .
• Yield Exclusion Option – This allows producers to exclude certain years form a database when the county yield is at least 50 percent below the average for the previous 10 years for your county or an adjoining county .
• Prevent Plant Plus – This option allows producers to add 5 percent to their prevent plant coverage guarantee available on their MPCI policy . This increase allows producers the ability to further protect their investment in years they are unable to plant .
All changes to policy products , unit structure , and options will need to be completed by March 15 , 2018 .
FCS Financial has dedicated staff to assist producers with their crop insurance policies . Contact our crop insurance specialists to review your insurance coverage .
24 HEARTBEAT | WINTER 2017