Trend-adjusted APH yield endorsement gives farmers mores
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[December 10, 2011]
URBANA -- Beginning with the 2012 crop
year, farmers purchasing crop insurance for corn and soybeans in 14
Midwestern states will have the option to use the trend-adjusted
actual production history, or TA-APH, yield endorsement, allowing
farmers to increase yields used in calculating crop insurance
guarantees. According to University of Illinois Extension farm
management specialist Gary Schnitkey, electing to take this
endorsement will give farmers more coverage for the same cost.
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"Illinois corn and soybean farmers in the Midwest are interested in
this trend adjustment because they have yields that have been
increasing over time," Schnitkey said. "This trend adjustment takes
that into consideration and adds to the APH yield, which is usually
used to calculate guarantees. The APH yield is higher, more
accurately reflecting the actual yields that we're likely to
experience in the coming year." Schnitkey said farmers should be
starting to hear about this from their crop insurance agents soon.
They'll need to make a decision to elect the endorsement by March
15.
"The adjustment rate will vary by county," he said. "Generally
speaking, higher trends are in the northwest corner of the state,
and lower trends are in the southeast corner. Overall, the
average rate is 2 bushels per year."
In most cases, Schnitkey said the proposal adds about two bushels
of corn to the yield in Illinois per year. The 2011 yield would have
two bushels added to it. The 2010 yield, four bushels, and so on.
"The two-bushel trend is about right. If you have 10 years of yield
history, it'll add about 11 bushels to the APH."
Schnitkey stressed that this is an election. "It's an
endorsement. It's a pilot project available for corn and soybeans in
14 states, roughly from Ohio to Colorado and North Dakota down to
Kansas. If the actuarial performance of this product works out, it
will be expanded to other crops."
Because there is more coverage without an increase in cost to the
farmer, Schnitkey said he wouldn't see a reason for an Illinois
farmer not to select this endorsement for both corn and soybeans.
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Schnitkey provided an example using McLean County. The average
corn yields in McLean would reflect a 175-bushel yield. The trend
adjustment APH would be 11 bushels higher than that, so they would
be using a trend adjustment APH in that case of 186 bushels. The
trend rates for soybeans in Illinois ranges from about .4 to .5
bushel across the state.
"This will make a big difference in their crop insurance," he
said. "It obviously raises their guarantee levels, getting them
closer to what people actually expect from production.
For the full report, visit
http://farmdoc.illinois.edu/manage/
newsletters/fefo11_23/fefo_11_23.html.
The product concept submission to Risk Management Association was
sponsored by the Illinois Corn Marketing Board and developed in
conjunction with University of Illinois agricultural economists in
the College of Agricultural, Consumer and Environmental Sciences as
an attempt to fix the lag in APH yields as they relate to crop
insurance.
[Text from
news
release received from
the University of Illinois
College of Agricultural, Consumer and Environmental Sciences]
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