Farm Credit I llinois Risk M anagement at a Glance M any regional offices now host vice presidents and assistant vice presidents of risk management, dedicated to providing the expertise you need. A ll policy processing is completed at the cooperative s central office, allow ing the VP and A VPs to better serve members on the farm and in the office. Dependable Approved Insurance Providers 34 full-time risk management professionals N early $1 Billion in crop insurance coverage 3,703 farm families covered in FCI s 60-county service area 1.26 million acres insured
On the agenda 2017 MPCI Updates FCI endorsements Have you questioned your coverage? What Guarantee?
2017 M PCI Updates
Reporting Production & Prorated Average (PA) Reporting production accurately per selected unit designation. *N EW M ust designate Prorated Production Actual (A) vs Prorated Actual (PA) Cause and A ffect M ust have hard or soft records to support reported production by unit. If not able to support reported production during a review, units will be given Assigned Yields 75 percent of the prior year s approved APH yield for the same unit
Reporting Production & Prorated Average (PA) Hard records: Sold production AIP or FSA bin measurement A djuster appraisals Blue tooth grain cart scale records Soft records: Weigh wagon or scale tickets identified by location Properly calibrated combine monitor records identified by location Bin markings Recorded Truck loads or hopper loads Producer must be able to originate the grain prior to going into storage.
Grain Delivered Directly to M arket When grain is delivered directly to the elevator, delivery sheets can be used to identify the production as to which unit it was harvested from. M arking each scale ticket per location is also recommended.
Grain Stored on Farm then Delivered to M arket Origin must be maintained by unit with soft records Summary sheet from elevator will NOT detail what production originated from which farm. When grain is placed in on farm storage, bin markings and/ or load records must be kept to confirm grain origination by unit.
Grain Stored On Farm then Fed On Farm We recommend having feed bin(s) measured by adjuster to verify production prior to feeding. Notify your agent for Silage appraisals and livestock feeding bin measurements OR must maintain detailed feed records.
Prorated A verage - Example Production reported part Prorated and part Actual (With no PA descriptor, if reviewed will receive assigned yield) Unit # s Total Production Acres Yield 0001-0001 12,000 60 200 PA 0001-0002 8,000 40 200 PA 0001-0003 14,800 80 185 PA 0001-0004 14,800 80 185 PA 0002-0001 22,000 100 220 A Production reported per unit **must be abl e t o pr ove as r epor t ed or r ecei ve assigned yi el ds Unit # s Total Production Acres Yield 0001-0001 13,200 60 220 A 0001-0002 8,000 40 200 A 0001-0003 14,800 80 185 A 0001-0004 13,200 80 165 A 0002-0001 22,000 100 220 A Reporting as commingled will combine these 2 optional units to 1 Basic Unit until separate production is provided.
Prevented Planting Coverage Factors First crops RM A review ed w ere corn, soybeans, w heat, grain sorghum. Crops Previous Factor Factor for 2017 Corn 60% 55% Soybeans 60% 60% Wheat 60% 60% Grain Sorghum 60% 60% **These PP coverage factors are now listed in the actuarials by state and county. Therefore, changes could occur by RM A more frequently. Corn Example 2016 130 x $3.85 = $500 x 60% = $300 2017 130 x $3.85 = $500 x 55% = $275
H igh Risk A lternative Coverage Endorsement High-Risk A lternate Coverage Endorsement (H R-A CE) - insures high-risk land on a separate additional coverage policy w ith coverage greater than CA T but less than the coverage on the base policy. *N EW Enterprise unit option added to H R-ACE In order to have an EU on the HR-A CE, insureds must also elect and qualify for EUs under the base policy. All other HR-A CE opt i on el ect i ons must be t he same as t he Base poli cy.
Replant RMA revised definition for Practical to replant It will be considered to be practical to replant within or prior to the late planting period, or on or prior to the final planting date if no late planting period is applicable, unless we determine it is physically impossible to replant the acreage or there is no chance of seed germination, emergence, and formation of a healthy plant. What does this mean? If a replant claim is submitted, the policyholder will be expected to replant the same crop through the late plant period for that crop.
Organic Organic databases *N ew for 2017 T-Yields will apply for both practices as they are introduced to the policy. What does this mean? Transitional Organic database yields no longer transfer to Certified Organic database yields.
Crop H ail
Crop H ail Hail Fire Lightning Vandalism Transit (while being hauled) Stored Grain in Bin *Excludes Flooding Catastrophic Loss Auto-H ail: Tied to your Multi-Peril Policy. Coverage must be elected by M arch 15 th. Automatically renews unless cancelled by insured. Stand Alone Policy: Written only on crops and fields you want coverage on. June 1 st Renewal; previous crop year s coverage expires.
Crop Hail Replant Endorsement: Up to $50/ac of additional replant benefit. Add-On Coverage: Green Snap / Wind Extra Harvest Expense Replant / Preventive Planting for ARPI policies Bundled Products Added Risk Management for minimal additional cost.
Private Products
2017 Optional Endorsements Many different additional pricing options available: A dded Price Option, Enterprise Plus, Price Flex, Revenue N et Make sure you know the pros and cons of each BUY-UP your Multiple Peril Coverage 1 st! It is almost always better to buy a subsidized product before an unsubsidized one Talk to your Farm Credit Agent to see what will possibly w ork for your operation.
Have you Questioned your Coverage? There is no one size fits all in crop insurance.
Have you Questioned your Coverage? Possible options to put your mind at ease, get the most from your policy and bang for your buck! A s you start to review your crop insurance coverage for 2017, w e know that this is not only a vital part of your operations risk management plan to protect against insured production and revenue losses but also a significant investment on the expense side. H ere are a few things to consider w ith your FCI agent to make sure that YOUR POLICY is meeting YOUR FA RM S needs:
Have you Questioned your Coverage? Do you qualify for Beginning Farmer Rancher (BFR)? If you have not ow ned/ operated a farm anywhere for more than 5 years, qualifying for BFR will allow you additional benefits. Additional premium subsidy Administration fees waived Increased substitute yields Easier to share history Are you in a county that qualifies for Yield Exclusion (YE)? If you farm in a Primary or Contiguous county that qualifies for YE, this option should be explored for increased A PH opportunity. (There is premium consequence also.)
Have you Questioned your Coverage? Do you have the Trend Adjustment (TA) on your policy? The TA adjusts yields based on a county factor. N umber of actual yields and crop year are important to receiving the most benefit. (Talk to your FCI agent about how adding TA can help maximize your federal subsidy.) Did you know that Irrigated and N on-irrigated units can have separate coverage levels? This was a significant change for producers with these practice types. This allows producers to better align coverage based on managed risk. Do both your Irrigated and Non-Irrigated units meet the Enterprise Unit requirements? You can insure Enterprise Unit by Practice (EP) then. This is another opportunity for the producer to enhance their coverage and manage premium. (Both practices M UST meet the EU requirements to qualify for EP.)
Have you Questioned your Coverage? Do you have High-Risk land in your operation? There are many options for insuring HR ground per crop per county. HR-ACE policy High Risk Land Exclusion High Risk Land Exclusion with CAT policy Insure at H igh Risk rates or additive rates from a Written A greement offer. H ave you considered Prevent Plant buy up? This is advantageous to the producer by increasing that PP payment by 5% or 10%. With the corn PP factor being low ered to 55% in 2017, this is the w ay to move the coverage back to at least 60%. In most Illinois counties, the additional premium cost is minimal.
Have you Questioned your Coverage? Whole Farm Revenue Product (WFRP) Whole-Farm Revenue Protection (WFRP) provides a risk management safety net for all commodities on the farm under one insurance policy. 3 or more qualifying commodities can be eligible for 80% or 85% coverage level. Can still purchase individual Federal crop insurance Ex. Revenue Protection (RP)
Have you Questioned your Coverage? Annually reviewing your policy with your FCI agent is very important to maximize your crop insurance policy. Any changes to your entity? Added land? Added county? Coverage level change? Which product fits your operation?
What Guarantee? There is no guarantee that a farm will collect money on a Crop Insurance policy But an Individual Revenue policy is the ONLY risk management tool that a farm can purchase that will guarantee revenue.
What Guarantee? Revenue Protection (RP) policies guard against a loss of revenue caused by low prices, low yields, or a combination of both. Three key variables: 1. Yield History (Proven Farm production) 2. Base Price(Feb avg. of Dec or N ov CBOT futures) 3. Harvest Price (Oct avg. of Dec or Nov CBOT futures)
What Guarantee? 200 A PH x 85% coverage level = 170 bu/ ac guarantee 170 x $3.86 (Dec 16 avg.) = $656/ ac coverage Bushel guar on policy = Guar. Bu x Acres 170 x 1000= 170,000 bu. Total Liability on policy = Bu. guar x base price 170,000 bu. x $3.86 = $656,200
From a M arketing Standpoint 170,000 bu. is based on the $3.86 base price If Harvest price drops in 2017, this bushel guarantee will increase. $656.00 / $3.49 = 188 bu. In a low er market situation, you can produce more bushels and be under your dollar guarantee. (Ex. 2016 crop year)
From a M arketing Standpoint If H arvest price is higher than Base, the dollar guarantee is refigured using the higher harvest price. (Ex. 2012 crop year) 170 bu x $4.50 H arvest price = $765/ ac coverage (This maintains the 170 bu guarantee on a Revenue Protection (RP) policy.) ***Does not work with Harvest Price Exclusion*** N ote: If an upward fall market is due to low yields, a situation that could leave the insured bushels short to fill delivery obligations, the Harvest Price Option can be used as a replacement value. If an insured sold his guaranteed bushels and doesn t have the bushels to fill the contract, the adjusted liability will at the least offer a replacement value for the production shortage.
2016 Corn Example Corn Revenue Protection Trigger Chart $4.80 Spring Price 85% RP Trigger 80% RP Trigger December 2016 Futures $4.60 $4.40 Highest daily close on June 17th: $4.49 CZ6 $4.20 $4.19 $4.00 $3.85 $3.86 $3.97 DECEMBER FUTURES $3.80 $3.60 $3.40 $3.20 $3.00 $3.83 $3.84 $3.52 $3.31 $3.34 $3.49 $3.86 $3.28 $3.10 $2.80 January February March April May June July August September October November December
2016 Corn Example Bushel Guarantee 170 bushels per acre Revenue Guarantee - $656 per acre IF sold 50% of guarantee at $4.19 in June. New Guarantee $684 per acre. Using your guarantee for marketing opportunities can return your premium investment. RP Crop Insurance is the only input cost with a guarantee!
QUESTIONS? To set up your crop insurance appointment, call or email: 800.444.FARM ask@farmcrediil.com Visit: www.farmcreditil.com/locations
Thank you!