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What to Know Before Making 2018 Farm Bill and 2020 Crop Insurance Decisions

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Home > Education & Events > March 2020 > What to Know Before Making 2018 Farm Bill and 2020 Crop Insurance Decisions

Farmers last year dealt with a wet spring, which brought prevented planting, delayed planting and late planting. Then, storms throughout the summer brought hail and wind. That, unfortunately, wasn’t the end of what the year would bring.

Harvest brought on its own set of challenges, including light test weight, quality issues and tillage left unfinished. Thankfully, many also received some assistance through programs like the Market Facilitation Program (MFP) and the Prevent Plant Top-Up Payments.

So, can we expect more of the same for 2020? None of us have a crystal ball to know. The good news is, farmers can make decisions in the next month to benefit their farm operations and  help ease some of the unknowns that we can’t control.

Sign up for your 2018 Farm Bill decision at your local FSA Office by March 15.
As with 2014, farmers have three choices for the 2018 Farm Bill: Price Loss Coverage (PLC), Agriculture Risk Coverage-County (ARC-CO), or Agriculture Risk Coverage-Individual (ARC-IC). For 2014, many went with ARC-CO for most crops due to what appeared to be a guaranteed payment for the first year and a good chance for a payment in year two. The election was made for the duration of the Farm Bill.

For the 2018 Farm Bill, the decision depends on the county or counties you farm in. For example, several counties in southwest Minnesota experienced immense corn yield losses due to late planting and untimely winds during fast growing conditions. These producers may choose ARC-CO, a revenue-based program, which best meets their needs for the 2019 growing season. Those in decent yielding areas may choose PLC, which focuses on more of a price-only protection for 2020. Your decision should weigh the type of risk you want to protect against: revenue (price and yield) or price only. ARC-IC is also an option for those producers who had either 100% prevent plant farm numbers or had lower yields by farm number, but aren’t expecting an ARC-CO payment for 2019.

For those who elect the PLC coverage, be sure to discuss Supplemental Coverage Option (SCO) with your crop insurance agent to see if this is a good fit for your operation. SCO is a highly subsidized federal crop insurance option that allows the producer to obtain 86% area-based coverage. It is not for everyone, but is definitely something to look into with PLC.

A few other important reminders for the 2018 Farm Bill decision:
The sign-up deadline of March 15 is for 2019 and 2020. Producers will have the opportunity to change the election by farm number for crop years 2021-2023 in the future, on an annual basis. The producer who had the land in 2019 will make the election for 2019 and 2020, irrespective of who is farming it in 2020. Regardless of which program you sign up for, you also will be allowed to update your PLC yields by September 30. FSA has your current PLC yields on their 156EZ Form. This also lists what your base acres are for each farm number. Lastly, enrollment is by farm number unlike crop insurance, which is typically by crop, county and section and unit numbers.

Crop Insurance Highlights for 2020:
The March 15 deadline to add, delete or change coverage on any crops and counties for the 2020 crop year is also fast approaching. Here are a few items to keep in mind as you meet with your crop insurance agent.
Prevent Plant Buy-Up: For most crops, a producer can add an additional 5% prevent plant coverage in the case of another year like last year. This would equate to receiving 60% of your production guarantee for any corn prevent plant acre payments and 65% on soybeans vs. 55% and 60%, respectively. In most areas, adding this option to your coverage is usually at a minimal cost.

SCO: As mentioned above, if electing PLC for the 2018 Farm Bill Decision for 2019 and 2020, you can add SCO, area-based coverage, to your MPCI policy. SCO loss payments are triggered by an area (usually county); however, the amount of insurance/liability is calculated based on your individual approved actual production history (APH). SCO covers the difference between your MPCI coverage level up to 86%.

County T-Yields: RMA reviewed the corn county T-yields for 2020. In most cases, these increased and, in some counties, are quite significant. This impacts those APH databases that currently include county T-yields and possibly any added land for 2020, in which the county is now higher than your simple average.

Hemp: New for 2020, RMA released a crop insurance coverage option for producers growing hemp in certain states including Minnesota and Wisconsin, but not Iowa. This can be insured under an APH plan of insurance and allows for a yield-based coverage only. Many rules and procedures must be in place to insure hemp under the new program.

With the complexity of both the FSA programs and crop insurance options that are available, risk management can be overwhelming. Align yourself with someone you can trust to assess your needs and to help you achieve your farm operation goals for 2020. Whether working with FSA, your crop insurance agent or hopefully both over the course of the next few weeks, one thing is clear—you must take action as you have no time to lose.
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