CROP INSURANCE LGM-DAIRY

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1 SPRING 2014 Committed to providing the highest level of service in the crop insurance industry. CROP INSURANCE Investors Insurance Services is pleased to welcome Jessica Stemper as the newest addition to our crop insurance sales team. Jessica is a native of Random Lake, WI, where she grew up working on her family s dairy farm. Jessica was formally a district sales manager for ADM Crop Risk Services and a graduate from the University of Wisconsin-Platteville, where she received her bachelor s degree in agriculture business with an emphasis in crop and soil science. Please help welcome Jessica to the Investors team! Final Plant Dates & Late Plant Periods Most crops have a specific date they need to be planted by in order to be insurable. Crops that are not planted by the final planting date will be subject to a reduction in the guarantee or they may become uninsurable. Final planting dates vary by crop and by county so be sure to check the attached plant date maps for the final plant dates that are applicable to you. Some crops have a Late Plant Period. For example the late plant period for corn and soybeans extends 25 days after the final plant date for your county. Your guarantee will be reduced 1% per day on all acreage that is planted during the late plant period. THERE IS NO LATE PLANT PERIOD FOR FORAGE SEEDING. ANY FORAGE SEEDING PLANTED AFTER THE FINAL PLANT DATE FOR YOUR COUNTY WILL BE UNINSURABLE. Insured s who decide that conditions are unsuitable for planting may be eligible to claim prevent plant. Prevent plant qualifications include: 1. Prevent plant must be common to the area. 2. You must have eligible prevent plant base acres. 3. You must have at least 20 acres or 20% of the unit that you are unable to plant (whichever is less). If prevent plant becomes an issue this spring CALL YOUR AGENT ASAP to verify your prevent plant eligibility. Many crop policies include replant coverage. Call your agent BEFORE you replant any crop. To qualify for a payment you must have 20 acres or 20% of the unit that needs to be replanted (whichever is less). Forage Seeding does not include replant coverage. Forage Seeding policies are insured on a per acre basis. Therefore, call your agent if you see any dead or damaged spots in your new seeding fields before you do any work to them. Insurance ends May 21 st. WINTER WHEAT The rough winter already has producers submitting wheat claims. Producers have multiple claim options so be sure to call your agent before working up any damaged wheat. LGM-DAIRY Many of our dairy customers are taking advantage of the high milk prices by locking in LGM-Dairy contracts. LGM-Dairy policies can be tailored to your farm and they can be written the last business Friday of every month. Lock in your margins before milk price falls. Contact your agent for more information.

2 SPRING 2014 FINAL PLANT DATES Terminating Insured Hay Fields in Spring Every spring I like to remind producers the impact terminating insured hay fields can have on potential hay claims in the fall. Forage Production policies work by gathering all your hay production throughout the whole year and comparing that production to your guarantee at the end of the harvest season. IF YOU PLAN TO DESTROY INSURED HAY FIELDS THIS SPRING THEY NEED TO BE APPRAISED BY A CROP ADJUSTER BEFORE YOU DESTROY THEM. If you harvest first crop and then destroy the field, record your production from the first cutting and then the field must be appraised by a crop adjuster before you terminate it. When producers destroy insured hay fields in the spring without having them appraised first, it can completely eliminate any claim you might have come fall and drastically lower your average yield. Guidelines for proper record keeping for forage production policies are on the following page.

3 Spring 2014 FORAGE PRODUCTION A forage production policy is a great way to protect your established hay crop. With proper record keeping you can assure that your forage policy is a well oiled machine. Here are some tips to help you get the most out of your forage production policy this year. of the season. The forage production policy guarantees the producer tonnage per acre on established hay fields. Producers sign up in the fall and insurance covers their hay crop from sign up until Ocotober 15 th the following year. (Ex: Sign up for insurance in Sept to insure 2014 hay crop.) Claims are determined by comparing total hay production from ALL cuttings to the producers guarantee at the end One problem producers often encounter is terminating an insured hay field in the spring. When producers see hay fields with low yield potential, they tear them up and plant the field to a different crop. When the producer does this, the field must be appraised before it is terminated. Claims can be reduced or eliminated completelty when producers terminate insured hay fields in the spring without having them apprased first. The appraisal estimates a Potential Yield had the field been taken to harvest throughout the season. Here is how it works. Guarantee is determined as follows: Producers Avg. Yield: 5 ton/acre (13% moisture hay) Coverage level: 60% 5 ton X 60% = 3 ton/acre Guarantee Insured has 3 hay fields in Unit 1 with a 3 ton/acre guarantee. Field 1= 15 acres Field 2= 20 acres Field 3= 15 acres 50 acres X 3 ton/acre = 150 Ton Guarantee for Unit 1 Insured harvests 4 cuttings of hay on fields 1 & 3 averaging 3 ton/acre. 30 acres X 3ton/Acre = 90 ton Field 2 is appraised with a potential yield of ½ ton/acre in spring and then plowed up and planted to corn. ½ ton X 20 acres = 10 ton. Claim is determined as follows: 90 Ton harvested + 10 ton appraised = 100 Ton produced 150 Ton Guarantee Ton produced = 50 Ton shortfall x $180 Ton = $9,000 Claim

4 Spring 2014 No potential yield exists when producers destroy insured hay fields without having them appraised first. Meaning, the insurance company has no idea what those fields would have yielded had you taken them to harvest. Therefore, since they were not appraised, the insurance company is going to assign a yield to those fields. The assigned yield will be whatever your guarantee was for the fields you terminated. In the previous example the guarantee per acre is 3 ton. Field 2 would then be assigned 3 ton/acre instead of the ½ ton potential yield. In this example it would completely eliminate the claim. Forage Production Unit Structures Optional Unit (OU) coverage Optional unit coverage generally means section-by-section coverage (not field-by-field coverage). Every section of land hay is planted in is insured seperately from all your other sections. The aerial photo to the left shows a farm with OU coverage. The green boxes are hay fields and the red boxs are sections. All the hay fields in each section make up a unit. All units are insured separately. Therefore, if one section has terrible hay and the other sections have good hay, the producer can make a claim on the section that is poor. Meanwhile the other good sections do not make a claim. Hay production must be recorded for each section seperately when the producer elects optional units on their forage policy. Ideally each load of haylage that leaves the field would be weighed and recorded. Producers who do not weigh loads should have a notebook in the chopper or baler tractor and record the number of loads or bales that leave each field (using tallies works well). Breaking the tally marks down by truck load or wagon load for haylage is reccommended (Ex: Red International Truck llll ll, White Volvo llll llll ll, ect.). If tallies are recorded per/truck, we can measure each truck and multiply that production by the number of loads and know exactely what you produced. Precision farming data and crop scout reports can also be useful. Basic Unit (BU) Coverage- Basic Unit coverage means all the forage across your entire operation is insured as one unit regardless how far apart your fields are or how many sections you farm in. Ex: Catostrophic (CAT) coverage. The aerial photo to the left shows a farm with BU coverage. Weighed loads are the most accurate records. Truck loads, wagon loads or number of bales tallied on notebook paper is acceptable. Crop adjusters can also measure bunkers or silos after each cutting to certify production. Precision farming information and crop scout reports are also useful. Basic Unit coverage resembles a blanket insurance policy. The entire crop across all your land needs to yield below your guarantee to make a claim. Production does not need to be seperated by section.

5 2014 FARM BILL OVERVIEW SPRING 2014 The Agricultural Act of 2014 (the Act), also known as the 2014 Farm Bill, was signed by President Obama on Feb. 7, The Act repeals certain programs, continues some programs with modifications, and authorizes several new programs administered by the Farm Service Agency (FSA). Most of these programs are authorized and funded through The Farm Service Agency is currently working to develop regulations for many of the new programs. CROP PROGRAMS The Direct & Counter-Cyclical Program and the Average Crop Revenue Election (ACRE) program are repealed and two new programs are established: Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC). Producers must make a onetime election between ARC and PLC in 2014 which will remain in effect for the crop years. If an election is not made in 2014, the farm may not participate in either PLC or ARC for the 2014 crop year and the producers on the farm are deemed to have elected PLC for subsequent crop years, but must still enroll their farm to receive coverage. FSA has not released the program regulations nor have they announced the sign up deadline yet. In 2015, producers in PLC have an additional option. Producers enrolling in PLC, and who also participate in the federal crop insurance program, may, beginning with the 2015 crop, make the annual choice whether to purchase additional crop insurance coverage called the Supplemental Coverage Option (SCO). SCO provides the producer the option of covering a portion of his or her crop insurance deductible and is based on expected county yields or revenue. The cost of SCO is subsidized and indemnities are determined by the yield or revenue loss for the county or area. COMPLIANCE with Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) provisions continues to be required for participation in most FSA and NRCS programs. The Act adds premium assistance for crop insurance as a benefit subject to compliance with HELC and WC provisions. FSA will make HELC/WC eligibility determinations for crop insurance participants based on NRCS technical determinations of HELC/WC compliance. The Supplemental Revenue Assistance Program (SURE), which covered losses through Sept. 30, 2011, is not reauthorized. DAIRY PROGRAMS The Dairy Margin Protection Program replaces the Milk Income Loss Contract (MILC) program and will be effective not later than Sept. 1, MILC continues through Sept. 1, 2014, unless it is replaced by the Dairy Margin Protection Program prior to that date Farm Bill Fact Sheet Farm Bill Fact Sheet. USDA, Mar Web. 17 Apr Investors Insurance Services is an equal opportunity employer