Farmers are getting new options to cover differences in farming practices and crops, and many growers will be able for the first time this year to buy an endorsement to cover a portion of their deductibles.
Starting in 2020, farmers that double-crop some, but not all, of their soybeans can buy separate policies depending on how their crops are grown. The separate practices are classified as “following another crop” — for soybeans and sorghum that are planted in the same crop year as another crop — and “not following another crop.”
For 2021, USDA’s Risk Management Agency is making a similar modification for wheat growers and is moving to make additional changes for producers of dry beans, says outgoing RMA Administrator Martin Barbre.
“One of the things that’s really important that we’ve done is make policies more flexible,” Barbre told Agri-Pulse in an interview as he was preparing to vacate his office. His term ends Wednesday.
"That's probably the biggest thing that I've been able to do," Barbre, a past president of the National Corn Growers Association, said of the increased coverage flexibility. "I always felt like it was important that I bring a farmer's perspective to this role."
Wheat growers appealed to RMA to allow spring and winter wheat as separate crops. The National Association of Wheat Growers argued USDA should “recognize the different risks associated with different cropping practices and allow producers to tailor the tools available to their respective risks."
Also new for this year for many crops is a policy endorsement, called Enhanced Coverage Option, which will provide growers additional area-based coverage should they want to pay for it.
With ECO, which comes with a higher premium, policies can pay out when county yield or revenue falls below 90% or 95% of the expected level, depending on which trigger level producers choose. Coverage is normally limited to 85% of the expected yield or premium.
ECO will be available for 31 crops, including corn, soybeans, cotton, wheat, sorghum and peanuts.
Starting Wednesday, USDA also is implementing some improvements to Livestock Risk Protection (LRP) insurance. The changes include increasing the limits on the number of cattle and hogs that can be covered.
For feeder and fed cattle, the new limits are 6,000 head per endorsement and 12,000 head annually. The old limits have been 2,000 head per endorsement and 4,000 head per year.
For hogs, the new limits are 40,000 head per endorsement and 150,000 head a year. The old limits were 10,000 hogs per endorsement and 32,000 per year. The endorsement length for swine also is being extended to 52 weeks.
Also this year, hemp growers in more areas of the country will be allowed by buy multi-peril crop insurance (MPCI). The policies will be available for the first time in Arizona, Arkansas, Nevada and Texas and also in 13 counties in states with existing coverage.
The insurance also will allow for broker contracts for hemp grain. Acreage reporting dates are being adjusted based on regional final planting dates, and premium billing dates for all states have been changed to Aug. 15.
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Looking ahead, USDA is working on possible changes that could take effect in 2022 for the Pasture, Rangeland, Forage (PRF) Rainfall Index Crop Insurance Program. The department is looking for ways to reduce the frequency of claims being made on PRF policies, which provide coverage for perennial forage that is used for grazing or harvested for hay.
Some 70% to 90% of policies had a claim during the first 13 years of the program, although the loss ratio exceeded 1.0 only three times during that period, according to a report completed last year for RMA by a consulting firm. A loss ratio of 1.0 means losses were the same as the premiums that were paid.
“It seems reasonable for RMA to explore program modifications that reduce frequency, possibly with offsetting increases in benefits for remaining claims, to better meet the needs of growers,” the report said.
RMA is currently evaluating public comments submitted before the Dec. 21 deadline.
Barbre said there will likely be “some tweaks to the policy” so that “when you have a bigger loss, you get a bigger payment, but when you have a really shallow loss you won’t get so much.”
The changes will make PRF look more like “crop insurance rather than income insurance,” he said.
RMA also is considering policies for aquaculture and oysters, but those won’t be ready before 2022 or 2023, Barbre said.
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