2014 in Review / 2015 Weather Outlook

FARMERS:  Make sure that you are ready for what Mother Nature has to throw at you next year!  Here is an amazing resource outlining what the weather looked like in 2014 and how it may have effected yields.  It also has a preview of what weather will look like in 2015.

We especially want to hear what your thoughts were regarding the 2014 weather and how that effected your crop yields.  What do you expect from next year?  What will you do differently in 2015 to prepare for certain weather.

We encourage you to share your thoughts on the 2015 weather outlook on our Facebook page or on Twitter.


Click Here: 2014 in Review / 2015 Weather Outlook

How Your Federal MCPI Revenue Policy Works For You This Fall (2014)

 

With the current average prices of $3.40 for corn and $9.40 for soybeans. The projected price for both crops were $4.62 and $11.36 respectively. Due to this, your MPCI revenue policy has a chance of paying out this year. This will only occur if you do not meet your total revenue guarantee, which is a combination of the yield you had and whatever the final average price ends up being.

So, if you had a 150 bushel guarantee on corn at the $4.62 price, your revenue coverage is $693 per acre. If you do not reach your 150 bushel guarantee you will have both a production loss and a revenue loss. However, if you produced 180 bushels you still would have a loss because your revenue (based off of the current average) is only $612. $693-$612= $81 per acre loss.

This example can be used to calculate your soybean coverage as well, you will just have to replace the bushel guarantee and dollar amounts. As always, please contact your trusted Crop Insurance Agent if you feel you will have a loss of any amount due to the decrease in price or your production falls short of the bushel guarantee.

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Farm Bill: Native Sod Guidelines

The Risk Management Agency’s (RMA) native sod guidelines are designed to inform producers about new rules that impact crop insurance benefits when native sod is tilled for annual crops in the upper Midwest. These guidelines apply to all counties in Iowa, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. As a producer, your benefits are reduced if you till native sod acreage to grow an annual crop during the first 4 crop years you are covered by Federal crop insurance for that acreage. This reduction in benefits applies only to native sod acreage and does not extend to other acreage in your operation.

Native sod acreage is acreage that has never been tilled or that you cannot prove to have been
previously tilled for crop production. These guidelines apply to acreage that is greater than five acres
per crop policy and for annual crops only. To prove that acreage was previously tilled, you must provide documentation to your approved insurance provider.

Acceptable documentation may include, but is not limited to:


• A Farm Service Agency (FSA)-578 document showing the crop that was previously planted on the requested acreage.

• A prior crop year’s FSA-578 document showing that the requested acreage is classified as 
cropland.

• A prior crop year’s Common Land Unit (CLU) Schema (RMA provides this to approved Insurance providers), presented in a map format that contains the farm number, tract number, field number, CLU classification (the cropland classification code is ‘2’), and calculated acres by field.

• Receipts and/or invoices from custom planters or harvesters identifying the fields that were 
planted or harvested.

• A Natural Resources Conservation Service (NRCS) Form CPA-026e identifying the acreage with a “No” in the Sodbust column and a “Yes” in the HEL column.

• An NRCS Form CPA-026e identifying the acreage with a “Yes” in the Sodbust column and a 
determination date on or before February 7, 2014; 

   or

• Precision agriculture planting records and/or raw data for previous crop years, provided such records meet the precision farming acreage reporting requirements. Additional guidelines exist depending on which insurance policy you have for your annual crop.



Please see your crop insurance agent for further details as the type of policy you carry will impact the reduction of your subsidized coverage.

This information was taken from the RMA Fact Sheet regarding Native Sod guidelines.

Farm Bill: Beginning Farmer/Rancher (BFR) Program

Although not in final version, the Risk Management Agency, a division of the USDA has released several new products that will be implemented starting with the 2015 crop year. The first topic that we will discuss is the Beginning Farmer/Rancher (BFR) program.

To be a Beginning Farmer/Rancher for crop insurance purposes, an individual must not have actively operated and managed a farm or ranch in any county, in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than five crop years, excluding any crop year the BFR was under the age of 18, in post-secondary studies or on active duty in the U.S military. Any insurable interest means any interest as an individual or as a substantial beneficial interest in another person who has an insurable interest in any crop or livestock, regardless of whether such crop or livestock was insured or whether the person had participated in a USDA program.



The benefits include:

1.      Exemption from paying the administrative fee for catastrophic and additional coverage policies.

2.     Additional 10 percentage points of premium subsidy for additional coverage policies that have premium subsidy.

3.     Use of the production history of farming operation that the BFR was previously involved in the decision making or physical activities.

4.     An increase in the substitute Yield Adjustment, which allows the BFR to replace a low yield due to an insured cause of loss, from 60 to 80 percent of the applicable transitional yield.  



  

Key information includes:

1.     The individual must not have actively operated and managed a farm or ranch in any county with a bona fide insurable interest in any crop or livestock as an owner operator, landlord, tenant or sharecropper for more than 5 years.

2.     Only an individual person can be a BFR. However, primary entitites other than individuals can receive BFR benefits as long as all individuals comprising the entity qualify and certify for BFR.

3.     An insurable interest in any crop or livestock includes substantial beneficial interst in another person who has an insurable interest in any crop or livestock.

4.     The BFR may exclude any year the BRF was under the age of 18, in post-secondary studies (limited to 5 crop years) or on active duty in the U.S. military  from the 5 crop years.

5.     Applies to any crop or livestock on a nationwide basis, not crop/county.

6.     Insured may also obtain New Producer status on a county/crop basis if applicable.

7.     Insured must request and certify BFR status by the insured’s applicable sales closing date by completing the BFR application. BFR will only be applied to those crops with a sales closing date after the certification date.

8.     Initial application will be used in subsequent years.

9.     When an insured is a BRF and plant on native sod resulting in a reduction t the premium subsidy, the additional premium subsidy for BFR is applied prior to the reduction of subsidy due to planting on native sod.

10.  BFR previously involved in a farming/ranching operation may use the production history of the previous insured’ when the BFR was previously involved in the farming/ranching operation decision making or physical activities to produce the crop or livestock.

11.  If the insured is insuring the landlord/tenant share, then both the landlord/tenant must be qualified as BFR’s and any applicable production history should also be considered.

12.  Prevented Planting does not count against BFR history when all acreage was prevented from planting.

13.  Remaining years of BFR benefits will be determined by the primary or SBI with the fewest years of eligibility.

These are just a few highlights of the BFR program. As always consult with your Crop Insurance agent for further clarification and or modifications to the program. All information was derived from RMA’s white paper discussing the BFR policy.

Crop Insurance and Replant Decisions

Recent adverse weather conditions may force some growers who have already planted to replant.

If you believe replanting may in your best interest, check the replant provision in your crop insurance policy and immediately contact your insurance agent to get the paperwork started. [Catastrophic (CAT) and Area (Revenue) protection policy do not have replant provisions.] 

The following guidelines, which come from the USDA Risk Management Agency's Loss Adjustment Standards Handbook, will give you an idea of what to expect from crop insurance for replanting.   To qualify for a replanting payment:

1.     The insured crop must be hit with an insured peril (excess moisture, frost, hail, etc.).

2.     Your approved insurance provider must determine that it is practical to replant. (This is why it's best to contact your insurance agent immediately.)

3.     Acres being replanted must have been initially planted on or after the earliest planting date.  

4.     Appraised expected yield must be below 90% of the guarantee yield on acreage intended for replant.

5.     Acreage replanted must be at least the lesser of 20 acres or 20% of the insured planted acreage for the unit.  

6.     Approved insurance provider must give consent to replant. 

7.     The replanting payment will be equal to the projected price multiplied by a maximum bushel factor.  For 2014 corn and soybean projected prices are $4.62 and $11.36, respectively. Maximum bushel factors are eight bushels per acre for corn and three bushels per acre for soybeans. 

For example, your insured corn crop was hit with excessive moisture. You planted corn on May 1, which is past the earliest planting date ofApril 10.  Appraised expected yield is now 70 bushels per acre (bpa). Actual production history (APH) is 140 bpa. You insured using a Revenue Protection policy at a 75% coverage level using the projected price of $4.62 per acre.  Your yield guarantee would be 105 bpa (140 APH yield x 75% guarantee).  Applying Rule 4 from above, 90% of your yield guarantee is 94.5 bpa (105 x 0.9).  Your expected yield of 70 bpa is less than 94.5 bpa (90% of guaranteed yield).  Consequently, you would receive a replant payment of $36.96/acre (8 bpa x $4.62, the projected price). 

From the example we can see that qualifying for a replanting payment hinges on the producer's yield guarantee.  Selection of a lower coverage level implies a lower yield guarantee and a smaller chance of qualifying for a replant payment.  However, when extreme events occur it is likely everyone will qualify for a replant payment.  If you are unsure whether you may qualify for a replant payment, your first step is to contact your crop insurance agent.

Cory Walters
UNL Extension Crop Economist

Additional Resources

• Evaluating Hail Damage to Corn

• Evaluating Hail Damage to Soy

• Delayed & Prevented Planting Provisions

Cumulative Precipitation Forecasts 5 Day Total

Crop Insurance and Replant Decisions

Recent adverse weather conditions may force some growers who have already planted to replant.

If you believe replanting may in your best interest, check the replant provision in your crop insurance policy and immediately contact your insurance agent to get the paperwork started. [Catastrophic (CAT) and Area (Revenue) protection policy do not have replant provisions.] 

The following guidelines, which come from the USDA Risk Management Agency's Loss Adjustment Standards Handbook, will give you an idea of what to expect from crop insurance for replanting.   To qualify for a replanting payment:

1.     The insured crop must be hit with an insured peril (excess moisture, frost, hail, etc.).

2.     Your approved insurance provider must determine that it is practical to replant. (This is why it's best to contact your insurance agent immediately.)

3.     Acres being replanted must have been initially planted on or after the earliest planting date.  

4.     Appraised expected yield must be below 90% of the guarantee yield on acreage intended for replant.

5.     Acreage replanted must be at least the lesser of 20 acres or 20% of the insured planted acreage for the unit.  

6.     Approved insurance provider must give consent to replant. 

7.     The replanting payment will be equal to the projected price multiplied by a maximum bushel factor.  For 

2014 corn and soybean projected prices are $4.62 and $11.36, respectively. Maximum bushel factors are eight bushels per acre for corn and three bushels per acre for soybeans. 

For example, your insured corn crop was hit with excessive moisture. You planted corn on May 1, which is past the earliest planting date ofApril 10.  Appraised expected yield is now 70 bushels per acre (bpa). Actual production history (APH) is 140 bpa. You insured using a Revenue Protection policy at a 75% coverage level using the projected price of $4.62 per acre.  Your yield guarantee would be 105 bpa (140 APH yield x 75% guarantee).  Applying Rule 4 from above, 90% of your yield guarantee is 94.5 bpa (105 x 0.9).  Your expected yield of 70 bpa is less than 94.5 bpa (90% of guaranteed yield).  Consequently, you would receive a replant payment of $36.96/acre (8 bpa x $4.62, the projected price). 

From the example we can see that qualifying for a replanting payment hinges on the producer's yield guarantee.  Selection of a lower coverage level implies a lower yield guarantee and a smaller chance of qualifying for a replant payment.  However, when extreme events occur it is likely everyone will qualify for a replant payment.  If you are unsure whether you may qualify for a replant payment, your first step is to contact your crop insurance agent.

Cory Walters
UNL Extension Crop Economist

Cumulative Precipitation Forecasts 5 Day Total

Manage Your Cash Transactions In One Place

Now that you know how to add your crops to your Growers Edge account and find the best prices for these crops, you need a place to track your profit and loss.  Growers Edge makes it easy to input your cash transactions, identify which ones have been the most profitable, and measure your results against the goals you set.  Best of all, this can all be accomplished in one place: Profit Manager. 

It’s easy.  We will show you how in 4 simple steps:

1) Sign into your Grower Edge account and click on Profit Manager tab.  Here you will see your production summary table showing your crops and the best prices for these crops.  (We talked about this in our previous blog).

2) Click on the Cash Transaction tab at the top of the screen.  This will take you to the Cash Transactions menu.

3) Create a Cash Transaction.  Click on Add New Cash Transaction.   Here you can select your crop you previously entered, the number of bushels you sold, the price you sold them for, as well as when and where you sold them.  Finally, click submit.

4) Read Your Profit/Loss Statement.  To view your Profit/Loss statement click on the Profit/Loss tab in the top left of the screen.

Within your Profit/Loss statement, you can see all of the production and input details of your selected crop (left column).  You can also see the value of your sold bushels including average price per bushel and revenue per acre.  You can see your profit margin and how it compares to your target price per bushel.  This is a great resource for measuring your actual results against the goals you set at the beginning of the season.

Finally, you can also see your best cash prices for your remaining unsold bushels (bottom right).  Growers Edge shows you your best price and your local price for these unsold bushels, enabling you to get the most profit out of your remaining bushels.