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Estimating Crop Insurance Payments

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Now that harvest is winding down, it is time for many farmers to estimate yield losses and begin figuring out their crop insurance claims. Two of the federal crop insurance products are pegged, in part, to the price of corn and soybeans in the month of October. The CME Group’s average December futures corn price for October was $7.50 a bushel and $15.39 for the November soybean futures contract average. Those numbers can be used to pre-figure payments due from the purchase of Revenue Protection (RP) crop insurance policies, says University of Illinois Extension Farm Management Specialist Gary Schnitkey, “This year for RP is it simple to calculate your payment.” He said farmers can take their yield shortfall times $7.50 a bushel, “To get your yield shortfall take your APH yield times your coverage level, to get your guaranteed yield. Then subtract your actual yield from your guaranteed yield and you get your shortfall.” He stated that, for many growers in Illinois and Indiana, the greater the yield shortfall the larger the payments — which is just what crop insurance is supposed to do.

 

RP is designed to cover those losses at the farm level. A different federal crop insurance product — GRIP HR with the harvest price option — covers losses when they occur county-wide. Schnitkey says county yield data is not yet available but that you can get an estimate by using CRD, crop reporting district, yield data that is available.  “If a producer had a 90% coverage level and a 100% protection level, I would estimate some producers could see  substantial payment levels,” said Schnitkey.

 

Large claims will also trigger audits which will require digging through more records and may slow the process of receiving payments down. For more details, check with your crop insurance agent.

 

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