I post about law a lot, but another portion of my job is to work with Howard Leathers on our crop insurance education partnership program with USDA’s Risk Management Agency and the Maryland Department of Agriculture. Back in August, we released an updated version of the Trend Adjusted Yield Crop Insurance Option fact sheet, reflecting the 2015 crop year trend-adjustment (TA) factors for wheat. RMA has recently updated the soybean and corn TA factors, which remained the same as the 2014 crop year TA factors. The 2015 crop year TA factors for Maryland counties for corn and soybeans can be found in table 1.
As a quick background, the trend-adjusted yield endorsement allows a producer to adjust the APH yields to account for better genetics or farming techniques. These yield adjustments are based on historical county-level yield data from USDA’s National Agricultural Statistic Service. The adjustments also include trend controls for weather and spatial considerations. Coverage for qualifying producers who select the TA option will add the county-level trend to their individual APH. The TA endorsement has been available in Maryland since 2013.
To be eligible for TA yields, a corn, soybean, or wheat producer needs to farm in an eligible county. Currently all Maryland counties have a TA yield for corn, and all counties but Allegany and Garrett have a TA yield for soybeans. For wheat, Baltimore, Caroline, Carroll, and Cecil, Dorchester, Frederick, Harford, Howard, Kent, Montgomery, Queen Anne’s, Somerset, Talbot, Washington, and Worcester counties currently have approved TA yields. An eligible corn, soybean, or wheat producer must have an actual corn, soybean, or wheat yield in one of the last four years, and choose the TA yield endorsement for their existing or new insurance policy before March 15 for corn and soybeans and September 30 for wheat – the sales closing dates for these crops.
Organic corn, soybean, or wheat are ineligible for the TA endorsement. Corn produced for silage with a tonnage guarantee is also ineligible. The TA endorsement will not be available for Catastrophic Risk Protection (CAT), Group Risk Plan (GRP), and Group Risk Income Protection (GRIP) policies.
Calculating the trend-adjusted yield requires 10 years of yield history. For example, with corn, let’s say your farm was located in Caroline County and had the following yields in table 2 for 2005 to 2014. You would calculate the 2005 trend-adjusted yield as: (2015 – 2005) * 1.22 = 10 * 1.22 = 12.2 for 2005. In table 2, the middle column shows what the trend-adjusted for each year would be. Using the TA endorsement could potentially increase your APH by 6.71 bushels per acre.
The TA APH yield endorsement does not cost the producer anything to elect but will change the amount of coverage through the APH, which may change the cost of the premium. The same amount of coverage available using the TA election always costs less or the same as it would to purchase the increased protection by increasing the level of coverage without TA. The real benefit of electing the TA option is that it could allow a producer to buy a lower level of coverage, but because of the trend adjustment still receive the higher coverage.
Consider a producer with an APH of 135 who typically buys coverage at the 75-percent level at 101.25 bushels per acre coverage (table 3). By electing to use the TA endorsement, the producer could potentially gain the same level of coverage at the 70-percent level (table 3). A producer could experience premium savings by being able to buy down coverage levels.
To gain a better understanding of this crop insurance option, please see the fact sheet Trend-Adjusted Yield Option Introduced for Crop Insurance. To find a crop insurance agent in your area, please see http://www.rma.usda.gov/tools/agent.html . For more information on crop insurance, see the AREC Crop Insurance page or the Crop Insurance page on the UME Grain Marketing website.