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Does anyone really know how the American subsidy crop insurance works?

U.S. farmers set for huge government payouts despite bumper harvest - AGCanada - AGCanada

In reading this article, it says they use a galloping average similar to ours .... 5 year average, throw out the high and the low. But what happens after that. In Canada, I think we are subsidized to 70% of this average income level in our subsidy plan. This article doesn't specify but are our American cousins subsidized to 100% of this galloping average? There seems to be a lot of money involved!
 

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Both plans slightly better than the Australian plan, where we get 100% of zero...which I believe in most years equals...err let me think about this...err yep carry the zero...err...dam wish I had a calculator...I'm guessing zero...yes it's zero...we get 100% of zero...but the beer taste great so it's no all bad..

Ant
 

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Does anyone really know how the American subsidy crop insurance works?
The short answer is - no.

Sign up for the new programs just started this week. The Farm Service Agency has been holding meetings over the last few weeks to explain the new program, but the FSA personnel don't seem to have a handle on things yet, mostly because some of the rules are still being written.

Producers only know, so far, what they've read in the papers and what they've heard at the meetings. Signup doesn't end until the end of February. Presumably, we'll be fully informed by then. :rolleyes:

The article seems to have been written by people whose understanding of ag policy is about a mile wide and an inch deep. There are enough farms in the US that if only 25% of them received crop insurance payments averaging $25,000 the cost would be in the range cited in the article. Our farm isn't that large and a $25K payment would cover our real estate taxes and part of our utility bills. Our crop insurance premiums alone will be about half that amount next year. Unless a grower has a total loss, the crop insurance settlement isn't going to cover many expenses beyond the cost of the insurance. It's the number of farms which may have a loss that makes the insurance payments add up quickly, not the amount paid to individual farmers.

One thing to remember about news stories - they may be absolutely true while being absolutely useless. ;)

To clarify: the $25,000 is a number I pulled out of my ass. USDA says that there are about 2 million farms in the US. Twenty-five per cent of that number would be 500K. $25K X 500K would be $12.5 billion. Some folks might collect half a million in insurance settlements, some might collect $12.98. If half a million farmers collected crop insurance payments which averaged $25K the cost of crop insurance to the government would be really high, even though the majority of growers collected nothing and many of those who did collect wouldn't have received much.

Mark
 

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Do not believe everything you read! As of today I am officially a free man. No more over priced crop insurance,no more red tape, no more continuous corn, no more 100% no till. The cost of compliance for me on highly erodible land is nuts! I'm really happy to be out , been hearing about others by me getting out too. I know a lot of people that never bought crop insurance,too expensive. I called my FSA office this morning and pulled the plug, good riddance.........
 

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In reading this article, it says they use a galloping average similar to ours .... 5 year average, throw out the high and the low. But what happens after that. In Canada, I think we are subsidized to 70% of this average income level in our subsidy plan. This article doesn't specify but are our American cousins subsidized to 100% of this galloping average? There seems to be a lot of money involved!
I know when we signed for crop insurance this past year you chose the level of coverage you wanted, 75-85% is what most probably took, looking at stuff I had from this past winter range was 50-85%.

They keep talking of a bumper crop but we didn't come close... Below normal yields in our area and from looking at what yield trials have been posted they are lower than last year... The summer was just too cool for most corn to do very well. This is my first year running my own part of the farm since I will soon be taking over the whole works, and so my yields for crop insurance are based off 5 year county average. It goes out to 10 year average once I have been farming for 5+ years with my yields figured in.

Dad never had crop insurance up until 10 or so years ago, never needed it. I think he ended up needing to get it because we rent some of our land from one of his brothers.

They tried to make it better than older farm bills but still falls short in many areas.
 

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In Canada, I think we are subsidized to 70% of this average income level in our subsidy plan.
Thinking will get you/us in trouble here.;)

People that read this should know that payouts are calculated by the drop in reference margin x 70% but are capped at the level of eligible expenses:

3.5.2 Reference Margin Limit
Starting in the 2013 Program Year, payment calculations will be based on the lower of:

your Reference Margin, or
your average Allowable Expenses in the years used to calculate the Reference Margin

This means that a farm that is decently profitable won't see anywhere near 70% and will basically need a disaster to trigger a payout. Making this program pretty much useless now. Which is fine with me, I think all subsudies should be scrapped! Felt like I should point that out.;)
 

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I don't know how the big farmers get all the payments?

we get prevent plant if you don't get your crop in by a certain date, but there has to be another farmer within 4 miles that also couldn't plant, and the gov determines how much you get paid and how many acres of each crop you can claim.

we have no more direct payments, even when we did it was only 15$ per acre.
 

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Discussion Starter · #14 · (Edited)
Thinking will get you/us in trouble here.;)

People that read this should know that payouts are calculated by the drop in reference margin x 70% but are capped at the level of eligible expenses:

3.5.2 Reference Margin Limit
Starting in the 2013 Program Year, payment calculations will be based on the lower of:

your Reference Margin, or
your average Allowable Expenses in the years used to calculate the Reference Margin


This means that a farm that is decently profitable won't see anywhere near 70% and will basically need a disaster to trigger a payout. Making this program pretty much useless now. Which is fine with me, I think all subsudies should be scrapped! Felt like I should point that out.;)
Thanks for clarifying that because I forgot about the change. Yes our support system is based on how much money we can pump into our accountants to keep on filling the useless forms out! It also created a lot of government jobs to run this bureaucracy. We will never get anything out of this plan! I agree it is time for me to stop paying the required admittance to this plan and the accountants -scrap it. Never did get anything out of it but I did pay in lots over the years.:mad:
 

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Thanks for clarifying that because I forgot about the change. Yes our support system is based on how much money we can pump into our accountants to keep on filling the useless forms out! It also created a lot of government jobs to run this bureaucracy. We will never get anything out of this plan! I agree it is time for me to stop paying the required admittance to this plan and the accountants -scrap it. Never did get anything out of it but I did pay in lots over the years.:mad:
Glad that you finally seen the :D light. I think you described our Agristability program right on this time. Glad I don't have to pay the premium for this program anymore.
 

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Yea, I've been in every ag protection plan since about 1985 and I finally pulled the plug on AgriStability last year. I've seen 2 cheques since it's predecessor CAISE was started, and the first one got clawed back. I bailed before they had a chance to get the second one back. Over the long term it probably cost me more in accounting time than it was worth. I believe less than 25% of Canadian farmers are still enrolled in it. The only thing that triggered a payment was closing the hog barn. Now that I'm all grain, you would have to drop a nuclear bomb on me to trigger another payment. Still in Crop Insurance but over half my acres are only at the 50% level... another waste of time.
 

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If I owned everything I farmed I would be out in a milli second.... I had to go report my seeded ww acres today so they tried to teach me about the new program.... Told me I could update my yields... Told me all the ways I could verify ... They said no go on the yield maps ... Said I could use grain receipts from the elevator ... I said that will work great like the current bin I am pulling out of there are three depart farm that went into that bin .... I bet I can manipulate that to be way more than my real yield... I will not do that but unfortunately I will need to update some of averages otherwise landlords will cry ...
They told me I would probable get a good check for my barley base acres ...I asked how could that be? I probable beet my best overall yield average for a yeR by T least 10 to 15 an acre . And I sold most of it for malt on a decent contract... But being however they fig there price for barley I supposedly will get a check....what a waste... The smartest thing they ever could do would be to shut down the usda . But they won't because if a elected officially. Voted to do that they would be to scared that they would not get re elected ...pretty soon that money they keep handing out will not be worth a dime.... The onlthing the government should do is have it where insurance company's can compete for the farmers business with a open fair market to make it very competitive....so if a farmer want to insure he can if he wants to role the dice and not do it it is his business....
 

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It is crazy, I lease all my acre and have no end decision on how the land will be signed up. PLC, ARC-IND, ARC-County? The we can add on SCR, if we sign up for PLC. ARC needs more records and payments based on yields and price. We can sign up for PLC and that is based on price using base acres which matters nothing on what we actually seed only on base acres. Then ARC payment maxes out at 10% revenue, but should pay more over the long haul based on speculation. That 10% thing helped me make up my mind. I want covered in a disaster to keep from going under. After that I will hope and pray that good farming practice will do the rest. You get all that also? Then I love the meeting when every speaker had a disclaimer about what any and everything they said. Really good thing the one lady had that. Best part of that meeting was when an older lady got up and started walking out. Said out loud, louder than the speaker was talking, "this is boring". Grrr.... Just let us farm! We have everything to loose if we screw up. We don't need the government helping us out.
 
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