Insurance Tidbits for Drought & Harvest

A combine unloading corn into a grain cart
08 Sep 2021

With most farmers facing widespread drought conditions in 2021, many questions have been asked about guarantees and how a potentially higher fall price affects claim payments.

Below is a listing of the crop insurance policies and how they work:

Revenue Protection
The projected spring price is used to establish a minimum revenue guarantee and set the year’s premium. When the harvest price is greater than the projected spring price, the revenue guarantee is recomputed using the higher price. This results in a higher revenue guarantee that you can collect on if you have a loss this fall.

As a reminder, the spring price is established by tracking the average of December corn and November soybean futures price as it trades through the month of February. The fall price is set in October by taking the average of the same futures prices as they trade throughout the month of October. Any increase in the harvest price is capped at two times the projected spring price. There is no downward limit. For 2021, the spring price was set at $4.58 and $11.87 for corn and soybeans, respectively.

Yield Protection
The projected spring price is used to establish your guarantee and premium.  Claims are triggered when a production shortfall occurs. This policy does not take a harvest price into account and will use the spring price when calculating a loss payment.
Revenue Protection with Harvest Price Excluded – The revenue guarantee is based on the spring price only and does not rise if the harvest price increases. If the harvest price increases, the bushel per acre guarantee decreases because it takes less bushels to get to the revenue guarantee. This can result in a reverse trigger yield.

Non-Delivery on Cash Contracts
Faced with current drought issues, producers may have concerns regarding the ability to fill contracts. The following are some of the common options elevators offer to producers with a bushel shortfall:  

  1. Roll delivery commitment to a deferred time frame
  2. Buy bushels from another source (neighbor) and have them delivered to the elevator in your name      
  3. Financially settle the contract

Producers should contact their elevator immediately to find out what options are available if there is a concern of not being able to fill their contracts. 

Harvest Reminders:
The Risk Management Agency (RMA) has extended the Multi-Peril Crop Insurance (MPCI) premium due date to November 30th for the 2021 crop year only. Interest will attach retro-active to September 30th for failure to submit payment by the extended deadline.

A notice of loss must be submitted within 72 hours of initial discovery of damage and no later than 15 days after the end of the insurance period (December 10th for corn and soybeans), or the earlier of harvest/destruction of crop. 

$200,000 Reviews – Any crop within a county suffering a $200,000 loss must have an APH review prior to settlement of a claim. Be sure to contact your insurance specialist prior to harvest if you feel you may qualify will aid in making sure your claim is settled timely.    

Commingling Grain – Grain remaining in the bin from a previous crop year must be measured by authorized personnel prior to commingling with the 2021 crop. Contact your insurance specialist to make arrangements for a bin measurement prior to harvest.

Production – Crop insurance requires production be reported by unit. We also suggest reporting actual yields versus an average of the crop.
A reminder that for claims purposes, a load ticket cannot be split. In the event of an APH review, records supporting the production reported will need to be provided.

Feeding Stored Grain – If you will be feeding any of your 2021 grain, contact your insurance specialist and request a bin measurement and document the production you will use as feed.  This is important in the case of a review.

Have a safe and successful harvest!

Lynn Johnson staff photo
Written By: Lynn Johnson
Senior Insurance Specialist - Willmar