Forrest Rose
Information Specialist
573-882-6843
RoseF@missouri.edu
Jan.18, 2005
Farmers face March 15 deadline
to insure against soybean rust
“The U.S. Department of Agriculture Risk Management agency states that ‘Losses to soybean production due to soybean rust disease is an insurable cause of loss,’” said Ray Massey, MU Extension associate professor. “Any crop insurance decision for soybeans grown in 2005 must be made by March 15, 2005.”
The producer must be able to verify that any soybean rust outbreak was naturally occurring and that available control measures were taken, Massey said. “The major impact of soybean rust may be that it causes you to rethink your crop insurance choices rather than just take the same level of coverage you’ve had for the last several years.”
Three-quarters of Missouri soybean acres were insured in 2003. “For the past five years, Missouri farmers have received more than $2 for every dollar paid in premiums,” he said. Although the 2004 data has yet to be published, “I do not think it will pay as well given the yields and prices seen in 2004.”
Massey noted that there are two major categories of soybean crop insurance in Missouri. “Yield insurance contains the familiar catastrophic plan, the actual production history plan and the group risk plan,” he said. “All of them pay indemnities when yields are lower than a level chosen by the farmer purchasing the insurance.”
The second category, revenue insurance, includes crop revenue coverage and revenue assurance. “These plans are more complex, with indemnities being paid when either revenue or yields fall below a level chosen by the purchasing farmer.”
What type and how much insurance to buy, Massey said, “depends in part on what you expect the impact of soybean rust to be in your area and in the nation.”
He said catastrophic plans often pay poorly because the yield must fall below 50 percent of the farmer’s 10-year average. “If you believe that should soybean rust hit, it will devastate your crop, catastrophic insurance may be worthwhile,” but he also noted that the USDA-RMS expects farmers to take recommended measures to protect their crops from soybean rust.
A Group Risk Plan (GRP) might be advisable “if you believe that soybean rust, should it hit, will impact your entire county,” he said. “GRP is not often purchased and pays only with the county yield is below a certain level. It is less expensive than other forms of insurance but rarely pays.”
Massey said most farmers purchase revenue assurance (RA) plans instead of crop revenue coverage (CRC). “CRC differs from RA-base price in that CRC purchases benefit from higher harvest-time prices if prices increase throughout the growing season,” he said. “If you think soybean rust will significantly reduce U.S. soybean production and increase soybean prices, CRC or RA with the harvest price option specified would allow you to benefit from that price increase.”
He cautioned that determinations about 2005 crop insurance should be made in consultation with a financial advisor. “With so many farmers purchasing and benefiting from crop insurance, considering the impact of Asian soybean rust on their crop-insurance decision seems wise.”
Source: Ray Massey (573) 884-7788
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