Entity Changes After Sales Closing
Could Have Crop Insurance Impacts;
Farm Bill Ups Enterprise Unit Premium Subsidy Levels

Friday, February 20, 2009                         By Shawn Wade

      Growers contemplating changes in the structure of their farming operations as a result of newly announced Commodity Program eligibility and pay limit rules should strive to have such changes in place before finalizing their 2009 crop insurance policies.

      Growers need to be aware that even though the Farm Service Agency has extended the window during which entity structures can be altered for the 2009 crop, the Risk Management Agency has not made a similar announcement.

      The dangerous water for growers who do make a change in their entity structure at FSA after March 15 and establishing their crop insurance policy under a different set-up is the potential termination of insurance coverage on all of their farms

      Anyone contemplating a change in their entity or farming structure is advised to try and get those changes put in place BEFORE March 15.

      Getting this work done before the crop insurance sales closing date will help mitigate the chance that entities referenced on a growers insurance documents and the entities on file at the county FSA office match.

Farm Bill Boosts Subsidy Levels For Enterprise Units

      The 2008 Farm Bill may have given an insurance coverage option that most High Plains growers rarely considered a new lease on life in the world's biggest cotton patch.

      Interestingly enough the changes may be enough to encourage a few High Plains growers to rethink their crop insurance program in 2009.

      The change that was made involves a complete reworking of the premium subsidies applicable to the "Enterprise Unit" coverage option.

      Among the many changes made in the 2008 Farm Bill was Congressional authorization for the USDA Risk Management Agency to boost the premium subsidies available to farmers insuring crops at an aggregated level through the "Enterprise Unit" designation.

      The new subsidies are significantly higher than the subsidy levels in place for "Enterprise Units" in 2008. Prior to 2009 a single premium subsidy schedule applied to all multi-peril, crop revenue and revenue assurance insurance policies.

      In 2009 producers choosing to insure their crop under the "Enterprise Unit" coverage option will benefit from a completely different subsidy rate schedule, which may prove advantageous to growers. The new and old premium subsidy levels are shown on the following table.

2008 & 2009 Premium Subsidy Rates

by Unit Coverage Option

 

2008
Subsidy Rate

2009
Subsidy Rate

Coverage Level

All Unit
Structrues

Basic/Optional Units

Enterprise/Whole Farm Units

50%

67%

67%

80%

55%

64%

64%

80%

60%

64%

64%

80%

65%

59%

59%

80%

70%

59%

59%

80%

75%

55%

55%

77%

80%*

48%

48%

68%

85%*

38%

38%

53%

* Where applicable; Source: USDA RMA

      In year's past there was little incentive for a grower to take on the additional risk associated with lumping all of their cotton acreage under a single umbrella policy. The trade-off for a modest 10 percent premium rate cut and a small savings on their overall federal crop insurance bill, was losing the ability to have each farm or eligible sub-farm unit stand alone. In most cases growers on the High Plains choose to invest in the more expensive "Basic" or "Optional" unit coverage options that provide individual protection to each insured unit.

      With only a few weeks left before the March 15 sales closing date for cotton, it may be worth a call to see the very real differences in cost between an optional unit Multi-peril or Crop Revenue Coverage policy with the same policy applied at the "Enterprise" unit.

      Every farm's situation is different and growers are advised to consider their options carefully before making a decision one way or the other.

 

High Plains Calendar Still Brimming With Educational Opportunities

Friday, February 20, 2009                   By Shawn Wade

      Figuring out what to plant, how to maximize profit and learn about the latest developments in farm programs and their associated rules is a challenging task for farmers.

      Fortunately, farmers on the Texas High Plains have multiple opportunities accomplish these goals.

      On the profitability side growers have yet another opportunity to attend the "Profitability Workshop" at the Texas AgriLife Research and Extension Center in Lubbock. The March 5 workshop is the last of the two opportunities available to learn about this exciting new analysis tool and will be held March 5.

      Instructors for the workshop include: Dr. Jackie Smith, Extension Economist; Jay Yates, Extension Risk Management Specialist; Dr. John Robinson, Extension Cotton Marketing Economist; Jeff Pate, Extension Risk Management Specialist; and Mark Welch, Extension Grain Marketing Economist.

      The workshops will begin at 9:00 a.m. and conclude at 4:00 p.m. on both dates. Registration for the workshop is $20. Call Wendy Durrett at 806-746-6101 to make a reservation or to obtain additional information about the workshop.

      Included in the $20 workshop registration fee are packets containing printed copies of the workshop presentations, 21 crop budgets and a CD containing a copy of the "Comparative Profitability Spreadsheet" that the workshop is centered around.

      This spreadsheet is a Microsoft Excel file and includes budgets, breakeven tables, and etc. Also on the CD will be supporting files and web addresses that will help each participant use the spreadsheet.

      The primary objective of this workshop is to provide farmers the tools and the data along with the skills to evaluate the potential profitability of alternative crops for the 2009 crop year. In today's high cost, low price farm economy, increasing a grower's ability to examine the economics behind each potential crop choice is critical.

      In addition to the Profitability Workshop there are several other meetings and events on the calendar between now and planting time that will be of interest to growers.

      Meeting dates and locations are:

February 24, 2009Producer Meeting / Ag Production Meeting, 9:30 AM, Gaines County Civic Building, NW Avenue E & NW 5th Street, Seminole.

February 25, 2009Texas South Plains Peanut Production Workshop, 8:30 AM to 2:00 PM, Gaines County Civic Building, NW Avenue E & NW 5th Street, Seminole.

March 5, 2009Extension "Profitability Workshop", 9:00 AM to 4:00 PM, Texas AgriLife Research and Extension Center, Lubbock Located on 1294, ½ mile East of I-27 and North of the Lubbock Airport.

April 1 - Lower Rolling Plains Ag Conference, at the Scurry County Coliseum. Call the AgriLife Extension office in Scurry County at 325-573-5423 for more details.

April 1 – Cotton Economics Research Institute 9th annual Research/Outreach Symposium, at the Merket Alumni Center at Texas Tech University. For more information contact CERI at 806-742-2821.

April 1 - Cotton Price Risk Management and Pricing Strategies Seminar, at the Holiday Inn & Towers. Seminar sponsored by Cotton Incorporated in cooperation with Plains Cotton Growers, Inc. Space is limited so please register to reserve your seat by contacting Kay Wriedt at 919-678-2271 or kwriedt@cottoninc.com

April 2-3 – Texas Cotton Ginners' Association Trade Show and Convention, at the Lubbock Memorial Civic Center.

April 3 – Plains Cotton Growers, Inc. 52nd Annual Meeting, at the Lubbock Memorial Civic Center.

 

PCG's 2009 Seed Cost Calculator

      An updated version of the Plains Cotton Growers Seed Cost Calculator for 2009 is now available. Growers interested in comparing prices for their 2009 planting seed options can download the calculator at http://www.plainscotton.org.

      The 2009 version includes 112 conventional, Roundup Ready, Roundup Ready FLEX, Liberty Link, Bollgard and Bollgard II and Widestrike varieties, as well as numerous stacked gene versions of these technologies that will be available for sale in West Texas in 2009. Should information on additional varieties become available, an update to the spreadsheet will be developed and posted on PCG's website.

      The PCG calculator is an interactive Microsoft Excel spreadsheet that allows producers to calculate an estimated cost per acre, for both seed and technology, based on published suggested retail prices.