Crop Insurance Payments May Vary More In 2016

Jan 08, 2016

A farm management specialist in Minnesota says crop insurance payments in the Upper Midwest are likely to be much more variable this year.

Kent Thiesse with MinnStar Bank in Mankato tells Brownfield higher corn and soybean yields in 2015 will affect benchmark averages used to calculate payments in the county yield-based Ag Risk Coverage, or ARC-County farm program.

“We use a five-year average to get those benchmark yields, so for 2014 it was 2009 to 2013. Now for 2015 (benchmarks), it’s 2010 to 2014. You drop the high and low and average the other three.”

He says overall corn yields in the region were good in 2009, which will be replaced by 2014 averages that were in some cases four to eight bushels lower.

“So you’re starting at a lower benchmark, which means your maximum payment level is less. And it also means that if you have the same yield level, your chances of payments is going to be less because relative to that percentage of benchmark yield-the high yield of 2015 along with the lower benchmark yields-are going to lower your chances of payments.”

More than 90 percent of U.S. crop producers are enrolled in the ARC-County program.

Thiesse says farmers using the county by county insurance will see payments vary more this year.

“I think in some cases, because the payments were pretty high last year and prices are relatively the same, there’s a big assumption that we’ll get the big corn payments again for 2015 that’ll be paid in October of 2016. That may be the case in some counties but not necessarily in all counties.”

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