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September Grain Team Tip of the Month

Sep 02, 2020

Grain Contracts
With the recent event of August 10th, 2020, many producers received excessive crop damage from the derecho type winds that moved through our trade territory.   The results of this event have caused substantial damage to the corn crop which has resulted in a lot of crop insurance questions. 
Mid-Iowa Cooperative has 7 licensed crop insurance agents that have worked diligently since August 10th to answer any questions that our insureds and other grain customers have had.   Below is a recap of some of those questions:
  • Does my field qualify for being destroyed?
    • There have been many fields in our trade territory that have been classified as being mechanically unharvest able.   In many of these situations, the adjusters have valued the fields at zero production which would consume the entire liability of the unit.  
    • In some situations, adjusters are either allowing for partial destruction or they are appraising the unit at a small yield per acre.
  • How will the indemnity be paid if the adjuster does deem it mechanically unharvest able?
    • It is important to understand the unit structure of your policy.   If you are using optional units, then the simple math for a field that has been zeroed out for production is:
      • APH x Spring Price X % Coverage
      • 210 x $3.88 x 85% = $692.58 Per Acre Indemnity
    • If you are using enterprise unity structure, all your units will be taken into consideration for indemnity payment purposes.   If all your units do have an indemnity payment due, enterprise units and optional units will pay the same.
  • If I do destroy my corn crop and I have Extra Harvest Expense do I still receive my Extra harvest expense payment?              
    • This has been a large topic of conversation since August 10th event.   I am happy to report that both companies that we insure under (Armtech and Rain and Hail), have agreed to pay the EHE if you destroy the crop
  • Can I defer may crop insurance indemnity?
    • There is no formal defer payment program with crop insurance.   We highly suggest working with your CPA or tax prepare to discuss your options
  • If I destroy my crop, do I have to take a zero yield for 2020?
    • There are two endorsements on most crop insurance policies.   The first if YA
      • YA will plug 60% of T-yield for the year
        • For example, your county T-yield is 200.  200 x 60% = 120.   The 120 will be the plug yield for 2020
      • YC will not allow your APH to drop by more than 90% of previous APH.
        • For example, your previous year’s APH was 210.  210 x 90% = 189.   Your APH for 2021 cannot fall below 189
    • Additionally, there is an endorsement to your policy that you can purchase before sales closing 2021.   This endorsement is called Yield Exclusion (YE).  The is an endorsement that will come at a premium, but your crop insurance agent can quote this on your policy by March 15, 2021 to see if it validates paying the premium to exclude your 2020 yield
  • Can I go ahead and destroy my field before my field is adjusted?
    • Absolutely NO.   Make sure before you destroy your field, that your adjuster does agree that this is a mechanically unharvest able field
  • If my adjuster says my field is unharvest able do, I have to destroy it?
    • No.   You can take the field to harvest and attempt to harvest it.   If you decide after attempting that the field is unharvest able, you can stop harvesting at that time.   The production that you do take off the field will be reported as harvested, but only the bushels you harvest.
  • After my field is classified as being able to be destroyed, what are my options?
    • Producers have been rolling or disking their fields.   Additionally, insureds can attempt to cut silage from the field or bale corn stalks. 
  • Will I have to go through an APH review with the crop insurance company if I have a large indemnity?
    • Yes, if your claim is more that $200,000 per crop per county, you will be pulled for a 3-year APH review by the insurance company.  If you know you have a large claim, you could start pulling the necessary information together for your review.   Copies of your grain delivery (settlement) records are needed to support your yields.  If you have done your business with Mid-Iowa Cooperative, your grain buyer can print these records out for you
I highly suggest continuing to work with your crop insurance agent on all the above questions as well as any additional questions that might arise.  Each producer has a substantial amount of liability per acre on their fields.   It is important to not leave any question not answer that possible would have a negative affect on your indemnity payment

 


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