Released: March 01, 2002
Kill Date: March 15, 2002

Crop Insurance Deadline is March 15

MANHATTAN, Kan. – The March 15 deadline for insurance on spring-planted crops is fast approaching, but there are some things producers may want to know before they sign on the dotted line.

"There are a few changes to crop insurance coverages this year, but farmers in some parts of Kansas can cut their insurance premiums," said Kansas State University agricultural economist Art Barnaby. "Revenue Assurance with the Harvest Price Option provides nearly the same coverage as Crop Revenue Coverage. However, many farmers will pay less premium for RA-HPO than the cost of Multi-Peril Crop Insurance."

Barnaby, who is a risk management specialist with K-State Research and Extension, said insurance contracts that were new last year – Revenue Assurance [RA] and Revenue Assurance with the Harvest Price Option [RA-HPO] are being offered again this year. Growers producing grain sorghum will not be offered the new RA contract, but they will be offered the Crop Revenue Coverage [CRC] and Multi-Peril crop insurance [MPCI] coverage.

In general, growers in low-risk growing regions will find the CRC more attractive than they would find revenue assurance with the harvest price option. The reverse is true in high-risk growing areas.

There are several reasons why revenue assurance [RA] contracts provide "CRC coverage" this year, he said.

RA-HPO now offers 80 percent and 85 percent coverage with basic and optional units. A unit is an area bigger than a field, but smaller than a farm, Barnaby explained. Each unit is insured independently of the other units. So, if one unit is hailed out, the farmer is paid.

Also new for 2002 is a change in the RA contract that allows for early indemnity payments when the crop fails early in the growing season.

"Farmers used to have to wait until harvest," he said. The change means that the insurance company will pay the grower at the time the failed crop is released for replanting to alternative crops.

These changes make the CRC and RA-HPO nearly identical contracts and farmers only need to compare the premium costs and select the one with the lowest costs. These changes did not apply to the 2001-02 wheat crop, although they may be implemented for the 2002-03 crop, he said.

In addition, the volatility number, which is the market’s measure of current price risk, is lower this year. That means a lower premium cost on RA for corn, he added. The soybean volatility value is unchanged from a year ago.

With the new RA changes, most peoples’ insurance decisions will be dictated by price, he said. And revenue assurance with the harvest price option [RA-HPO] may be lower, especially for growers planting dryland corn.

For more information about crop insurance, interested persons can visit the KSU Risk Management page on the World Wide Web at http://www.agecon.ksu.edu/risk/.

-30-

K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Mary Lou Peter, Communications Specialist
mlpeter@oznet.ksu.edu
K-State Research& Extension News