There are two basic types of coverage - Yield Protection (YP) with a fixed price - or Revenue Protection (RP) which also protects bushel prices. Either plan uses your own crop yield averages (your APH) - and both use a base price established from the CBOT - a month long average of the closes for corn and bean fall contracts during February. The Revenue (RP) plans take the coverage a step further by guaranteeing a minimum income based on those February prices. As an example, let's say your corn APH was 160 bu/a and you elected 75% RP, using the real 2024 numbers: that base (Feb.) price for com was $4.66 per bushel - your bushel guarantee would be a minimum of the 120 bu/a with either YP or RP coverage. Under YP, a claim would be paid on the bushels you are short times the $4.66 price. The Revenue coverage just takes it a step further - the 75% level would guarantee you the 120 bu. times $4.66 - or a minimum of $559.20 per acre. As we all know, prices dropped during the growing season, and the Harvest price (set from the same fall CBOT contracts as February using every trading day close during October) was $4.16 per bushel. Very simply, it took 134.4 of the cheaper bushels to get to your $559.20 guarantee. A.gain, we highly recommend the Revenue plans with the Harvest option.
You can play with the levels of coverage to fit your budget, but we've found the 75 or 80% plans fit most operations and are priced right - the 85% level would be great, but that takes a large step up in premium for another 5% of coverage. There are private company plans which allow for supplemental pricing using different months to "hopefully" set a higher base price -we haven't found any of those that we'd highly recommend. But now's a great time to compare and learn. As the "sales season" progresses, we can quote you premiums on any number of choices.
Enterprise Units (EU) - A wrinkle that "muddies the waters" is this election of unit structure for your coverage. EU is not a new concept, but starting in 2009, there has been a significant extra premium subsidy applied to EU. Maybe a little over-simplified, but this extra subsidy reduces the premium to around 1/3 the cost of the same coverage with optional or separate units. After years of recommending that we separate coverage as much as possible, the savings have been too much to ignore - you have to consider EU. Talk with your agent!
We will admit EU is not fair to smaller operators - it's sometimes harder for them to meet the requirement to qualify for EU. You must be eligible for at least two separate sub-units to qualify for the subsidy (premium reduction). Depending on the county you'll need at least 20% of your crop or 20 acres of it planted in at least wo different sections and/or FSA farm numbers. This qualification is something you need to clarify with your agent well before planting - you must elect the EU option by sales closing date (15 March) - understand that if you elected that option for the past year, it will automatically continue for 2025 unless you change it by the sales closing date. If EU is selected on your policy, but at acreage reporting time, the actual planted acres don't meet these 20/20 rules, you'll end up with a bill for the far more expensive basic or optional unit coverage!! Again, operations with a lot of acres makes qualifying easier, but the premium dollars are well worth understanding these 20/20 rules and how they apply to your operation.
We should mention that these rules also carry over to Prevented Planting - with the ugly spring weather we can get in this part of the world, PP is certainly not un-common. PP is a very valuable part of the policy - obviously more so for some areas and operations than others. One factor you should remember is that to get the cheaper EU rates on all of your PP acres, you still must plant enough to qualify for EU. We had instances where a farmer only mudded in 20 acres on one farm out of an intended 600 acres - he didn't qualify for EU - his PP claim amount was not affected, but his premium billing was basically tripled!
