Transcript SURE Farm Program North Central Iowa Crop & Land Stewardship Clinic Iowa Falls, Iowa December 30, 2009 Chad Hart Assistant Professor/Grain Markets Specialist [email protected] 515-294-9911 Department of Economics.

SURE Farm Program
North Central Iowa Crop & Land Stewardship Clinic
Iowa Falls, Iowa
December 30, 2009
Chad Hart
Assistant Professor/Grain Markets Specialist
[email protected]
515-294-9911
Department of Economics
Supplemental Revenue Assistance
Payments Program (SURE)
Part of the 2008 Farm Bill
Permanent disaster assistance
Provides payments to producers in disaster
counties for crop losses
Run by the Farm Service Agency, USDA
Covers the 2008-2011 crops
Department of Economics
Supplemental Revenue Assistance
Payments Program (SURE)
Based on crop insurance program, noninsured crop assistance program, and
disaster declarations
Whole-farm revenue protection, not
commodity-specific
Department of Economics
SURE Triggers
Declared “disaster county” by Secretary of
Agriculture or contiguous to one
Farm with losses exceeding 50% of normal
production (value) in a calendar year
At least one crop must have a 10% (or
greater) production loss
Department of Economics
All Crops Must Be Covered
But there are some exceptions
Pasture
Crops with an expected value of less than 5%
of the total expected value of production on the
farm
 Value = Crop insurance price X yield
Crops on which the producer has received a
waiver
Department of Economics
SURE Settings
Participation and revenue guarantee tied to
crop insurance
Farm revenue, including some government
payments, used to determine payment
Payments set as 60% of the difference
between guarantee and actual revenue
Limited to $100,000 per producer
Payments not known or paid until the end of the
marketing year
Department of Economics
SURE Guarantee for 2008
Farm guarantee is the sum of
 120%*Crop insurance price election*Crop insurance
coverage level*Planted acres* Max(APH or CCP yield),
for insurable commodities
 125%*NCAP price election*Planted acres* Max(NCAP
or CCP yield), for non-insurable commodities
 For an individual crop, the guarantee can not be
greater than 90% of the crop’s expected revenue
 Crop insurance coverage level minimum = 70%
Department of Economics
SURE Guarantee for 2009 and
Beyond
Farm guarantee is the sum of
 115%*Crop insurance price election*Crop insurance
coverage level*Planted acres* Max(APH or CCP yield),
for insurable commodities
 120%*NCAP price election*Planted acres* Max(NCAP
or CCP yield), for non-insurable commodities
 For an individual crop, the guarantee can not be
greater than 90% of the crop’s expected revenue
Department of Economics
SURE Expected Farm Revenues
Expected farm revenue is the sum of
Max(APH or CCP yield)*Planted acres*100% of
the crop insurance price for insurable
commodities
100% of NCAP yield*100% of NCAP
price*Planted acres for non-insurable
commodities
Department of Economics
Department of Economics
SURE Increases Guarantees
Crop
2008
2009-11
 Adds 20% to value
insurance
SURE
SURE
of crop insurance
guarantee guarantee guarantee
guarantee if signed
up by March 2008;
65%
80.5% 74.75%
else 15%.
70%
84%
80.5%
 Minimum for 2008 is
80.5% (equivalent of
75%
90%
86.25%
70% guarantee x
80%
90%
90%
115%)
85%
90%
90%
 Maximum is 90%
Department of Economics
SURE Actual Farm Revenues
Actual farm revenue is the sum of
Harvested acres*Farm yield*National seasonaverage price for all commodities
15% of direct payments
All CCP or ACRE payments
All marketing loan benefits
All crop insurance or NCAP payments
 Net of premiums (to a minimum of $0)
Any other disaster assistance payments
Department of Economics
2008 SURE Map
Department of Economics
2009 SURE Map
Department of Economics
SURE Payment
Guarantee minus actual revenue
aggregated for all crops x 60%
Limit of $100,000 per year per payment
limitation
Department of Economics
Example
Crop insurance (RA)
75% guarantee
160 bu/acre APH yield
$5.40 indemnity price
$648 per acre guarantee for RA
$16 per acre premium
SURE guarantee
120% of $648 = $778 / acre guarantee
No additional premium
Department of Economics
Example
Crop insurance
Actual yield was 140 bu. per acre (12% loss)
Harvest crop insurance price was $3.74
Actual revenue was $524 per acre
Crop insurance payment was
$648 - $524 = $124 per acre
Department of Economics
Example
SURE
Actual yield = 140 bu/acre
2008 marketing year price = $4.06/bu
Market revenue = 140*4.06 = $568.40/acre
Crop insurance benefit = $124 - $16 = $108
15% of direct payment = $3
Total revenues = $679.40
Shortfall = $778 - $679.40 = $98.60/acre
Payment = 60% * $98.60 = $59.16/acre
Department of Economics
Will I get a SURE payment?
 Are you in an eligible county or have a 50% or
greater production loss
 Do you have a 10% production loss on at
least one crop
 Price declines matter
Corn
Soybeans
$5.40 to $4.06 = 24.8%
$13.36 to $9.97 = 25.4%
So, even higher yields, up to 120% of the APH
yield, on other crops could still result in a
SURE payment.
Department of Economics
Crop Insurance plus SURE Payment
$ per acre
$350
$300
$250
$200
SURE pmt.
Crop Ins. Pmt
$150
$100
$50
$100 105 110 115 120 125 130 135 140 145 150 155 160 165 170 175 180 185 190 195 200
Corn Yield-bu/acre
Source: Dr. William Edwards, ISU
Department of Economics
SURE Payment per Acre for 2008
(50% corn, 50% soybeans)
Insurance
Guarantee
85%
10% Yield
Loss
RA CRC
$ 7 $25
20% Yield
Loss
RA CRC
$33 $46
80%
$17
$35
$43
$56
75%
$27
$45
$53
$66
70%
$26
$44
$51
$65
65%
$36
$44
$61
$75
Source: Dr. William Edwards, ISU
Department of Economics
What to do?
Find out if you are in an eligible county for
2008 and 2009
Estimate potential payments
Ag Decision Maker calculator at
www.extension.iastate.edu/agdm/
Watch for FSA announcements
Department of Economics
Information Needed
Yields submitted for crop insurance, for
all land farmed
Crop insurance payments received
USDA commodity payments received
RMA will turn over yield and acre data
to FSA
FSA will aggregate data across farms
Department of Economics
Summary of SURE
SURE provides 15 to 20% added coverage
above the crop insurance guarantee (up to
90%).
All crops must be insured (except crops
that are less than 5% of total crop value).
All crops and all farms per producer are
added together to calculate coverage and
losses.
Payment is 60% of loss.
Department of Economics
Decision Points for SURE
If all crops will be insured anyway, there
is no added cost for SURE.
If additional crops have to be insured,
there is an added cost.
$300 per crop for catastrophic coverage
$250 per crop for NAP coverage
Standard APH or revenue insurance at a
low level could be cheaper for small areas
Department of Economics
How will SURE affect my crop
insurance decision?
May have to insure minor crops
Higher or lower levels of crop insurance give
a higher or lower SURE trigger
Producers who insure at the 80% or 85%
level get less additional coverage due to
90% cap
Department of Economics
How will SURE affect my crop
insurance decision?
SURE is for all crops and all acres together
SURE pays only 60% of the revenue loss
Department of Economics
2008 SURE Map
Department of Economics
2009 SURE Map
Department of Economics
SURE Sign-up
Sign-up for the 2008 crop year starts Jan. 4,
2010
See your local FSA office to sign-up
Sign-up will likely conclude by Mar. 1
Department of Economics
Thank you for your time!
Any questions?
My web site:
http://www.econ.iastate.edu/faculty/hart/
Iowa Farm Outlook:
http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/
Ag Decision Maker:
http://www.extension.iastate.edu/agdm/
Department of Economics