WINTER 2006/2007 NEWSLETTER
Another year has come and gone. We would like to thank you for allowing
Farmer’s Insurance Agency to provide your crop insurance for 2006. 2007 is a new year and with many changes instituted by the government. Please read this newsletter as most of the information
contained herein is new. Yes, some information is “recycled” from previous newsletters but was important enough to send again. Please take the time to read what is included here so that you have a
good understanding of your crop insurance. Don’t ever hesitate to call if you have questions.
2007 PRICE ELECTIONS ANNOUNCED
The following price elections have been announced for the 2007 crop year for APH (actual production history) crops. These prices shouldn’t be confused with revenue policy price (Crop Revenue Coverage and Revenue Assurance). CRC and RA prices will be announced in February for NC and
March for VA.
Tobacco - $1.62
Corn - $3.30
Cured Tobacco - $1.52
Sorghum - $3.10
Wheat - $3.90
The price for flue cured tobacco is a noteworthy change from the $1.35 that was paid last year for a shortfall of pounds.
SALES CLOSING DATES FOR CORN, SOYBEANS, GRAIN SORGHUM AND TOBACCO
If you plan to make any changes in your crop insurance policies or if you intend to insure a crop for the first time, these changes must be done by February
28, 2007 in North Carolina and March 15, 2007 in Virginia. If you wish to cancel coverage, it must be done by those dates as well. Any policy in force after the above dates causes coverage to be in place on the insured crop as soon as it is planted. It is important that you know that your multi-peril crop insurance policy is a continuous policy and premium will be incurred on planted acreage if the policy isn’t cancelled by the above dates.
CROP INSURANCE DINNERS
As we did last year, we will be hosting dinners for our crop insurance customers to discuss changes in the crop insurance program, strategies for
insuring your crops, etc. The meetings have not yet been scheduled. However, it is our intention to schedule these meetings for late February and early March in Roxboro NC, Reidsville NC, Danville VA
and Rocky Mount VA. We will be in contact with you by phone prior to the meeting that is closest to you to let you know the date and time of that meeting. If you have a preference regarding location,
please call us and let us know which location you prefer and we’ll call you two weeks prior to the meeting to let you know the date and time.
REPORTS DUE @ FSA ON MAY 15TH, 2007 FOR SMALL GRAINS AND MUST MATCH WITH OUR REPORT
We recently obtained an acreage report from each of our wheat policyholders. It is very important that you
turn in the same acres to FSA for your wheat that you have turned into us. If you don’t have a copy of your wheat acreage report that you submitted to us, please contact us and we will send a copy to you. All
wheat that was planted by the final planting date should be signed up at FSA as grain and not forage.
You should have received or will soon receive a summary of coverage for your wheat crop. We still have a
chance to make typographical corrections to acreage if you make us aware of the error within 10 days of receiving your summary of coverage. Please review your acreage and farm numbers to be sure that your wheat was reported
correctly. Changes of any kind are now nearly impossible to accomplish once a loss has been turned in.
DOCUMENTS FROM FSA
Per FSA Notice CP-606, FSA offices may no longer mail or fax documents to our office. The only method by
which we can obtain documents from FSA is by appearing in person with signed permission from you for those documents. Also, we have to pay a small fee for any documents that we pick up. Due to the fact that we, like most crop insurance agents, work with many FSA offices, it is impractical and nearly impossible for us to hire a courier to travel between our office and the 13 FSA offices with which we work. You,
the producer, can request documents and can then fax or mail those documents to us. In the future, we ask that you obtain a copy of your 578 producer print from FSA after reporting acres to FSA. We
ask that you then send us a copy of that report. If you are a small grains customer, please send us a 578 producer print once you report to FSA if you haven’t already provided us a copy of your 578 producer print. Most of the FSA office directors have expressed displeasure with the current policy. Several farmers and even one county committee have written complaints to the FSA state office or to their congressman. Any such communication to the Fed’s would be greatly appreciated by our agency to allow FSA and us to best serve you.
MISREPORTED INFORMATION FACTOR (MIF FACTOR)
There is a penalty that is assessed on any claim, on any farm serial number, where the acreage is over reported or under reported by greater than 10%. The
penalty is a percentage equal to the amount in excess of 10% that your acreage report is in error. This penalty applies not only to acreage, but also when there is an error in the liability amount due to incorrect production reported or
production for which there are no supporting documents (if audited). Please give extra attention to the acres and production that you report. The MIF factor is scheduled to be repealed in the 2009
crop year with the Grain Combination Policy that will roll all types of revenue grain policies into one policy with several options available. The Combination Policy should simplify crop insurance for grain crops by allowing for only one
period of time for price determination for each crop. Currently, there are several different time periods for which prices are determined for the different types of policies that exist. We will bring you up to date on this new policy before it is rolled out in 2009.
PREVENTED PLANTED WHEAT
Many of our customers that have wheat policies have filed prevented planting (PP) claims. This year has been a very difficult year to get any wheat planted. For those
that have signed up for prevented planting, keep the following rules in mind that apply to prevented planted acreage.
1. A PP claim can only be paid on the maximum number of acres of wheat that
have been grown by the farmer in any of the last four years.
2. Your policy allows for 60% of the normal crop insurance guarantee to be paid
on each acre that was prevented from being planted. Most have signed up for the PT option when your policy was written. This option (Prevented Planting + Ten Percent) allows for 70% of
the normal guarantee to be paid on PP acres.
3. A cover crop can be planted on the land that was to be planted in wheat. The cover crop can be small grain mix, rye, spring oats, sudan, sudex, milo, millet or any other such crop. Any of these crops should be signed up at FSA as forage or hay and should not be signed up as
grain. However, if the cover crop is thrashed, hayed, grazed or harvested in any way, your PP claim on those acres will be reduced to 35% of the normal claim amount and a production of 60% of your current average wheat yield on those acres will
be given as the 2007 yield for the PP acreage. If a cover crop is planted on the PP land, you should expect the PP claim to be paid in full after November 1st, 2007. An adjuster will have
to verify that the acreage is not hayed, grazed or otherwise harvested prior to that date.
4. If you decide to plant a crop such as tobacco or corn on the land that was
to be planted in wheat, your PP coverage will also be reduced to 35% of the normal PP coverage due to the fact that this is not a normal double cropping rotation for wheat grain. Again, 60% of the average yield for these PP wheat acres will be
given for the 2007 crop year.
5. If you plant soybeans on the PP wheat land, you are eligible to receive 100%
of the PP claim on those acres if you have double cropping eligibility. Your double cropping eligibility equals the 2nd highest number of acres that you have double cropped soybeans behind wheat in the county in the last four years. PP acreage beyond your double cropping eligibility that are planted in soybeans will be reduced to 35% with a 60% yield shown for those acres.
may be planted on PP land after a PP claim has been filed and after the late planting period (after 11/30/06 in VA and 12/05/06 in NC) and will be covered at your PP guarantee. If you plant wheat after those dates, you should revise your report
to FSA and us to show the proper plant dates.
NOTICE OF LOSS TEAM
If you have submitted a claim recently for any crop, you were probably called by a member of RCIS’ Notice of Loss Team. The Notice of Loss Team has the job of calling you within 48 hours of a claim being turned in. The NOL team is responsible for qualifying your claim as one that can be worked immediately or one that should
be held until you complete harvest. The NOL team will hold your claim if it is a claim that can’t be completed immediately. The NOL team will recontact you over time until your claim can be worked.
If yours is a claim that is ready for completion, it will be released from the NOL team to a local adjuster. ALWAYS call us if you suspect a loss. Your policy requires that you notify your agent
within 72 hours of an event causing a loss even if that claim can’t be closed for a matter of weeks or months.
REPORT SUSPECTED CLAIMS NOW
If you suspect a loss on your corn or soybeans, please report your loss now. The end of the
insurance period was December 10th, 2006. All claims must be turned in within 15 days of the end of the insurance period to be payable. In other words, we must file a claim by December 25th
to have a chance of paying you a claim on those crops. When there is any doubt in your mind with regards to normal yields, turn in a claim to us. We can’t turn in a
claim for you unless you call.
RCIS RATED “A” BY A.M. BEST
A.M. Best, the “Consumer Reports” of insurance companies, rated Rural Community Insurance Company, owned by Wells
Fargo, with an A (excellent) rating and gave RCIC a “Stable” outlook. RCIS is the company that manages RCIC. You should feel confident that your crop insurance is with a very strong company and an agency that is committed to you.
TAX TREATMENT OF CROP INSURANCE
Every year, we get many calls at tax time regarding crop insurance. RCIS sends
a 1099 to everyone that receives a claim payment of any size. However, many farmers call and tell us that the 1099 doesn’t match with the checks that they’ve received from us. Keep in mind that
the 1099 will be for the entire amount of claims that are paid to you during the tax year. The 1099 doesn’t take into account the premium that may or may not have been deducted from your claim. When
doing your taxes, be sure to show the premium for your different crops as a business expense. You should show the full amount of your claim, not the net amount after premium is deducted, as income on your Schedule F. This will make the 1099 match with your taxes.
REVENUE ASSURANCE CORN
A number of corn growers that we insure changed their coverage to Revenue Assurance for the 2006 crop year. The RA program (without the Harvest Price option) offered roughly a $3 per acre savings in premiums over Crop Revenue Coverage that most growers previously carried. The gamble that was
taken was that December CBOT corn prices would decrease from $2.59 in February to a lower price in November. However, the average price over the month of November for December corn on the CBOT was $3.56. Due to the rise in price, claim settlements were diminished by the increase in price. For all those RA policyholders, we regret the effect of the futures markets on those that had claims. We
will contact you before the next sales deadline to see if you desire to change back to CRC or if you desire to add the “Harvest Option” to your RA policy. This will allow you to benefit if the price on corn increases through the crop year as
it did in 2006. Many of you will remember the question being asked “Do you think that corn will go down from $2.59?”, where it was in February 2006, and the frequent answer of “No” to that question influenced the move to RA. The RA Harvest Price option and CRC carry a higher premium than RA without the Harvest Price option. Due to the current volatility of corn futures, many have expressed a desire to be adequately protected
independent of the movement of the corn market.
PASTURE, RANGELAND AND FORAGE POLICY
You may have heard about a new policy that has been released by the USDA called the Rainfall Index Insurance Program and
the Vegetation Index Insurance Program. These programs will provide livestock producers the ability to purchase insurance protection for losses produced for grazing or harvested for hay. Currently,
the program is a pilot program in 110 counties across the nation, the closest of which are in South Carolina. Unfortunately, this program will not be available to our area until it is released from its “Pilot” status. You may wish to contact your congressman if this is coverage that you want in this area. Typically, the areas in which pilot programs are released are politically motivated.
CROP-HAIL PREMIUMS DUE DEC 1, 2006 IN NC AND JAN 1, 2007 IN VA
Most of you have already paid your crop-hail premiums for this crop year. If you have already sent your
premium, we appreciate the prompt payment. Many producers prefer to pay these premiums prior to January 1st, 2007 in order to receive the tax deduction for the 2006 tax year.
MPCI PREMIUMS DUE NOVEMBER 1, 2006
As of November 1, 2006, any unpaid MPCI premium amounts on corn, soybeans and tobacco have been accruing interest.
If you have an unpaid premium, it could affect your ability to have coverage for the coming crop year. Also, we don’t get paid unless you pay your premium. Just like you, we don’t like to
work for free.
If there is ever a situation where we have failed to satisfy, please let us know. We welcome
suggestions and even complaints, as they are the only way that we have of knowing where we are falling short.
PRODUCTION REPORTS DUE
If you had a soybean, corn, grain sorghum or tobacco crop on any farm that didn’t have a loss, we need to get your production on those
particular farms as soon as possible. These “no-loss” yields are generally higher than your average yield and tend to strengthen your yield database. Failure to report your yields will result in
an assigned yield that is 75% of your average yield, thus reducing your average. If you had a loss on part of your crop but not all units, the adjuster is not allowed to report the production on no-loss units on your behalf. Even if the adjuster gathers the production on the no-loss units, it is not on a form that we can use. Always use the forms that we have sent to you to report production on units that did not have
We have sent production reporting forms with a return envelope to any farmers for which we show farms that didn’t have a loss. However, your RCIS Schedule of Insurance is also a production reporting form. If you can locate that document, you can write your production amounts on the form in the right hand column; sign it and send
it back to us.
PRODUCTION RECORDS FOR TOBACCO
have asked this year about how they should be keeping production records for the different tobacco farms that they tend. Essentially, it is no different than in the past when marketing cards were used. Now, instead of selling bales of tobacco from different farms on different marketing cards, you should mark your settlement sheets showing the bales that came off of different farms.
As before, it is your responsibility to keep track of the tobacco from the field to the barn and then to the warehouse scales, by farm serial number.
LOAD RECORDS, BIN MARKING AND COMBINE MONITOR RECORDS ACCEPTIBLE IN 2006
2006 crop year, RCIS has allowed grain policyholders to use bin markings, load records or combine monitor records for production records and loss records. This is a very much improved procedure
considering that in the past, third-party weigh tickets or bin measurements by the adjuster or an FSA person were the only acceptable records for loss purposes. In the event that you had a loss on your grain crop, be sure to discuss with your
adjuster the types of records that you will keep as you harvest the crop. Bin markings, load records or combine monitor records will be allowed to separate commingled production from various farms provided the following rules are followed.
regarding bin markings – Bin markings are marks made on the side of your storage bin after you finish harvesting each farm serial number. The depth of production in the bin should be written on the bin in permanent marker with the farm
number from the which the production was harvested along with a date and your initials. In order to use bin markings, there must be no production from prior years in the bin, unless the production has been measured by an RCIS adjuster or a USDA
agency just prior to the current year’s production being added.
regarding load records – Load records are a tally of combine bin loads, truck loads, trailer loads, etc. that are harvested from each farm. In order to use load records, you must maintain a contemporaneous ledger, by crop, recording
loads of production for the crop identified by unit and field, date of harvest, identity of the conveyance used to transport the grain (or sileage) to the farm storage structure and the estimated production per conveyance. A conveyance can be
combine hoppers, grain carts, grain wagons, farm trucks, semi trailer loads, railcar, etc. A contemporaneous ledger is a ledger that is maintained as harvest occurs.
regarding combine monitors – Printed records from combine monitors must show the location of the fields, name of the crop, date and number of bushels for the crop. It should also show the farm number.
course, weigh tickets are always acceptable, as long as the farm number is shown on the weigh ticket. Also, bin measurements are still acceptable as long as you call the adjuster to measure the bin after you finish each farm. The above procedure for bin markings was allowed this year due to the limited availability of adjusters.
crops that are not harvested for whatever reason, be sure to file a claim so an adjuster can appraise production, even if you don't expect a low enough yield for us to pay a loss to you. Any insured crop that is cut for hay should also be
appraised to determine yield.
corn harvested as silage should also be appraised unless you are sure that you will not have a loss. In that case, you should tally silage loads as you cut the corn and the tonnage can then be converted to bushels (6 2/3 bu per ton). You should weigh at least a couple of loads of silage on each wagon or truck that is being used so that the total tonnage can be calculated.
TOBACCO POLICY TO BE REVISED
Currently, a new tobacco policy is being written by Risk Management Agency (RMA) that is scheduled to be in place for the 2008 crop. The most notable thing about the new proposed policy is that optional units (one unit per farm serial number) were not part of the policy. The proposed policy would have one unit per county. After negative comments were given by the crop insurance companies and agents, RMA has gone back to the drawing board to propose new language in the policy. We will keep you posted and will likely ask for your help in fighting any changes that will adversely affect your tobacco protection. Often, a letter to your congressman is very helpful in this type of government program.
EQUIPMENT EXCHANGE PROGRAM
It is our plan for the future to advertise equipment for sale and equipment needed in our newsletter. If you have equipment that you would like for us to list, feel free to mail your equipment descriptions to us or fax us and we’ll add your equipment to our list. This will be a service that is free to our customers as long as your listing is kept to 25 words or less.
Box barns needed - Martin @ (336) 504-9436
4420 John Deere combine for sale - John @ (336) 215-3160
Roanoke 1 row with tipping heads & defoliators and 6 trailers, $7500 - Greg @ (336) 656-3530
Gleaner F Combine, 13' cutter head, 1979 model, $3000 - Tom @ (434) 548-1321
ZURICH INSURANCE CLASS ACTION SETTLEMENT
some RCIS policyholders have received notifications about the settlement of class action litigation involving Zurich Insurance Companies. The notice is not from Zurich or RCIS. It is coming from
Complete Claims Solutions, a company that is managing certain aspects of the class action on behalf of the plaintiffs, including providing notice to potential class members.
Zurich’s companies, Empire Fire & Marine Insurance Company, has been and continues to be a policy-issuing company under RCIS and issues livestock and hail insurance that RCIS sells and services. This is how we believe that our customers
have come to receive class action paperwork. However, we have been informed by RCIS that their understanding is that the litigation and settlement do not affect any of the crop insurance lines sold and serviced by RCIS. You may wish to contact Complete Claims Solutions to gather your own understanding of the class action settlement.
GRAIN PRICES AT AN ALL TIME HIGH
Practically every grain that is grown in this area is selling at prices that we haven’t seen in many years. Don’t
miss out on the opportunity to contract some of your grain to be grown in 2007 to insure that you don’t miss out. Isn’t it a good idea to contract at least some of your grain at these higher prices rather than run the risk of selling it all
at rock bottom pricing? Your crop revenue policy is designed around forward contracting and will cover your cost of production and the cost of filling your contract in the event that you don’t make good yields.
If you’d like to know more about how crop revenue coverage and forward pricing tie into one another, give us a call.
DATES TO REMEMBER
are upcoming dates to remember that are of extreme importance:
Sales closing date for all Spring-planted crops in NC
Sales closing date for all Spring-planted crops in VA
Production reporting deadline for 2006 crops in NC
Production reporting deadline for 2006 crops in VA
keep these dates in mind. We do our very best to make sure that you don’t miss any deadlines. However, it is ultimately your responsibility to meet the deadlines outlined by your policy.
WE, AND OUR FAMILIES, GREATLY APPRECIATE YOUR BUSINESS AND WISH YOU AND YOURS THE BEST OF HOLIDAYS!