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Farmers in the United States use crop insurance as a risk management tool. In Iowa, 93% of soybean and corn planted area got insured in 2014; this participation rate hasn't been constant. Regardless of the reduction in subsidy rates between 1998 and 2000 due to coverage in selected coverage levels, the number of planted acres engaging in crop insurance has moved upwards since 1997 for soybeans and corn.

Over time, the menu of crop insurance policies expanded tremendously by incorporating revenue and area-based products and more coverage levels. For a better understanding of participation decisions, it is best to examine the classification of crop insurance into these categories: Farm catastrophic plans, farm yield buy-up plans, farm revenue buy-up plans, and county plans.

Farm Catastrophic plans (CAT) include the Catastrophic options of Actual Production History (APH) and Yield Protection. (YP) Farm yield buy-up include fully subsidized catastrophic coverage available to farmers from APH to YP.

Farm revenue buy-up plans include Crop Revenue Coverage, Income Protection, Revenue Protection, Revenue Assurance, and Revenue Protection with Harvest Price Inclusion.

County plans comprise both catastrophic and buy-up plans for yield and revenue coverage plans based on county data. Examples are Group risk income protection with Harvest revenue option, Area Risk Protection, Group Risk Plan, Area Risk Protection with Harvest price exclusion, and Area Yield Protection.

The changes in the four insurance categories between 1989 and 2014for corn and soybeans in Iowa have common overall trends.

• Farm yield buy-up insurance became replaced by farm revenue buy-up Insurance.
• Farm CAT insurance accounted for a significant share of the planted area while it could be for federal benefits, but declined over time for less than one percent of the planted area for both crops since 2011
• Participation in county plans increased in 2006 at about 78 percent off the planted area and declined to about one percent of planted area in 2012

Legislations on crop insurance

The federal government enacted The Federal Crop Insurance Act of 1980 that offered subsidies that covered up to 30 percent of the total premium. Although the effective subsidy rate between 1989 and 1993 averaged 22.7 percent for corn and 22.6 percent for soybeans. The Federal Crop Insurance Reform Act of 1994 increased subsidies and introduced the highly subsidized Catastrophic Risk Protection Endorsement, Farm revenue buy-up plans, and county plans. Again, the Agricultural Risk Protection Act (ARPA) of 2000 increased effective subsidies though the ranking of effective Subsidies using broad categories remained the same till 2008.

Crop insurance plans

Crop insurance aims at helping you to cushion the effect of multiple natural perils and market movements on your farming operation. These are enhanced coverage options that help increase your revenue guarantee. If you are new to crop insurance, it will increase your profit. The team of crop insurance experts at Midwest Land Management will guide you on the program that best suits your operation. The Enhanced Coverage Option (ECO) is new for the crop year 2021. These are 95 percent subsidy coverage options that you can use to your advantage. They are county-based crop insurance plans that let you increase your crop insurance coverage by up to 90 or 95 percent. It uses the same spring and fall prices and expected and final county yields as SCO. However, it does not require you to have elected Price Loss Coverage (PLC) through the Farm Service Agency (FSA) office to qualify.

Depending on the county you farm in, we can tell that most ECO provides opportunities for farmers to get excellent coverage. Also, the coverage provided is on the Actual Production History (APH) of your operation and revenue guarantee. Although the policy lays a claim based on the county, It allows you to get rewards for having high APH and consistent yields while still being a part of county-level revenue and yield fluctuations. ECO employs the same time of policy coverage as a producer’s underlying multiperil coverage. For instance, if a farmer decides to take a 75% revenue protection, the ECO policy will also provide revenue protection for you, the farmer. The current subsidy rate for an ECO revenue protection plan is 44%, while an ECO yield protection plan is 51%.

Other types of insurance

While these forms of insurance may not directly be related to crop insurance, they can be helpful to you and other employees on your farm. At Midwest Land Management, we emphasize insurance because it is one way of safeguarding the future of your Agribusiness.

Disability Insurance

Disability insurance provides benefits if you become disabled and are unable to work. It can be available as short-term disability and long-term disability. You can get an individual disability policy through licensed insurance agents who can determine the best options for you, your family, and your employees.

Flood insurance

Flooding can cause thousands of dollars in damage that homeowners insurance cannot cover. The National Flood Insurance Program provides flood maps of communities to help you know if you are in a high-risk area, a moderate to low risk area or an undetermined area. The NATIONAL Flood Insurance Program allows business owners to purchase flood insurance.

Workers Compensation Insurance

You and the workers on your farm can benefit from worker's compensation. The Iowa Workforce Development Division of Workers Compensation can determine your eligibility. If the worker's benefit is approved, the insurance company will pay policy benefits.

Surplus lines insurance

Sometimes the nature of what needs to be insured makes it impossible to get insurance through conventional means. It usually happens because the insurance company is unable to take the risk. In this case, a licensed Insurance agent that has the authority to sell surplus lines insurance can help provide coverage. However, the Iowa Insurance Division doesn't review rates and policy language, so Iowa's Insurance laws may not apply. For more information, you may want to contact the Iowa Insurance Division.

Contact us at Midwest Land Management and Real Estate, where we can offer you one-on-one advice on matters relating to crop insurance. It is available to you if you operate in our territory.